The cost of putting your kids through college is huge, and growing. The good news is, most physicians can pay for their kids' educations without breaking the bank. So long as they do a little planning.
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A month ago, I was reading this article that's titled "Would You Pay $47,000 for the University of Oregon?" and this really just fired me up as I was thinking and reading about it.
In regard to physicians, I think one of the biggest cash-flow sucks is how many docs end up paying for so much of the educational cost of their kids. Take this example that Lynn O’Shaughnessy writes about. At $47,000 a year, if you paid all of your kids’ education expenses (including tuition and housing) and they attended an out-state university (in this case University of Oregon), you’d end up paying nearly $200,000 all in! You could buy a whole house for that!
I want to encourage everyone to think about these questions:
How much could you really afford to pay for your kids for college and how will that affect your retirement?
Are you willing to work longer to see your kids through school and graduate school?
What if they end up deciding they want to go into medicine and go into medical school for an additional four years? Will you pay for that too?
The best thing that most people can do is to plan and understand. Think about how this will affect them. Additionally, we can talk about 529 plans.
I encourage you to check out a little booklet I have called 45 Secrets to Finance a College Education. It’s a nice little workbook on Amazon that gives you some great suggestions of how you can get the best financial aid.
Outside of financial aid and what that workbook talks about, the biggest obstacle is cost. Could your kids have an in-state university that is cheaper? Are they talented in an extracurricular activity like chess or dance or sports? Could they can get a scholarship for it?
It’s unbelievable! I read the other day in a newspaper about this gentleman. He’s a chess geek. I was shocked—there are a few colleges that have this incredibly competitive chess team that goes across the world. This guy moves all the way across from the Philippines over here to the US and got a full ride scholarship for chess of all things. I was blown away by that.
Consider this… what are your kid's talents? What are their abilities?
As a matter of fact, you may not know yet what your kiddo’s talents are. I would push you towards finding colleges that cater to them. If they are thinking about one major in particular, what are school that might have need for those kinds of kids?
I challenge you to think about these things, and think about how it will impact your financial picture. One of the best things we can do is look up a financial plan to answer these questions: What if I wanted to do $20,000 a year for my kid's education? What if I want to do $30,000 a year for my kid's education? How much do I need to save to do that and how will that impact my retirement?
The great news as physician you have plenty of income, you have plenty of resources and decisions to make and none of them are wrong. It’s just a trade-off. If you have any questions about this, feel free to give me a shout.
Dave Denniston, Chartered Financial Analyst (CFA), is an author and authority for physicians providing a voice and an advocate for all of the financial issues that doctors deal with. He is the author of 5 Steps to Get out of Debt for Physicians, The Insurance Guide for Doctors, The Tax Reduction Prescription, and his new book, The Freedom Formula for Physicians. He hosts a podcast for doctors and the issues they face at www.DoctorFreedomPodcast.com.