The economics of deciding where to go to college

Once you (or your child) are accepted into college, you'll receive a financial aid package from each school (assuming you applied for financial aid - and why wouldn't you?). It turns out, though, that while the application is standardized, financial aid packages aren't.

According to this LA Times article, all financial aid packages are different. Some of the schools offer scholarships without stating whether they are renewable after the first year, some list loans without providing any details about the loans themselves, and some list "student employment" as a source of aid. And figuring out the "net cost" of attendance isn't easy because determining the cost of attendance at each school can be tricky, even if the school provides an estimate (and some don't).

But estimates are all you have to work with. So add up the fixed expenses (tuition, fees, and room and board if your child will be living in a dorm). Then try to estimate the discretionary expenses, using the school's estimate as a guide (this includes books, food and rent if your child will be living off campus, transportation costs, etc.). And both numbers to get the total cost of attending the school. You'll probably get a different total for each school.

Add up the amount of scholarships and grants - these are funds that don't need to be repaid. Don't include loans. Subtract the amount of scholarships and grants from the total expenses you calculated earlier. This number is your "bill" for the year, and the number you should use to compare the costs of attending each school. Just make sure that the scholarships and grants are renewable, and that the conditions for renewal are realistic.

Should your child attend the school with the lowest cost? I don't necessarily think so, but that's an issue for another day.

How do you pay for the portion that's not covered by scholarships and grants? Hopefully you've saved money for this day, in a Coverdell ESA, 529, or other account. If not, or if savings aren't sufficient to cover the expenses, it's time to investigate student loans. Before you (or your child) take out a loan, make sure you understand all of the terms, and have a plan for repayment (which is also an issue for another day).

Today's Reading: February 12, 2008

• Five Ways To Deal With the Diaper Price Hike at Baby Cheapskate - If you have kids in diapers, you should definitely read Angie's post.
• In Bronx School, Culture Shock, Then Revival - The title of the article is terrible, but the content is fascinating. It's all about how a Hasidic Jew is working to turn around a failing NY public school of mostly African American and Hispanic children. Via Neatorama.
• Preparing for tomorrow's work day at Unclutterer - Taking a few minutes to reduce a lot of stress is always time well spent.
• How The Game of Life Teaches Personal Finance at Free Money Finance - I was always more of a Monopoly kind of girl when I was growing up, but I might teach the boys to play Life after reading FMF's post.
• Advice for Fledgling Financial Professionals at Banker Girl - Heidi offers some sound, practical advice that new professionals often don't want to hear.

Today's Reading: January 16, 2008

• Start planning for your final expenses now at Dimes to Dollars - The personal perspective in this post makes it quite powerful. And since my grandfather pre-paid his funeral 20 years before he died, I know firsthand that Dimes is right about the importance of planning ahead.
• See Our Lower Utililty Bills! Save Money, Energy and Water With New Appliances at The Digerati Life - I can only hope that a new washer will produce the same kind of savings for us!
• Why I Do Not Intend to Pay For My Daughter's College Education at Single Ma's Fabulous Financials - Since I haven't made up my own mind on this issue, I found Single Ma's explanation very edifying.
• Ask the Frugal Momma: How Do You Do Your Menu Plans? at The Mother Load - Amy gives some good tips on menu planning.
• How I Overcame My Fear of Lending Money on Prosper.com at The Dough Roller - And DR gives some good tips about starting to invest on Prosper. This is still something I've been thinking about, and DR's tip about portfolios might just give me the push I need to get started. Note: That's an affiliate link, because I had to sign up in order to get paid for an ad that Prosper placed on CFO last month. If you sign up through that link, we'll each get $25 - and you only need $50 to start loaning money.
• Personal Finance Blogosphere Best of 2007 at Moolanomy - I don't know how you pick the best from a year's worth of posts, but Pinyo's got a nice "best of" roundup.

Being an active school parent can get expensive! (A few ways to keep costs down)

The daycare that Alex and Tyler attend is a nonprofit center that includes a preschool, so we plan to be associated with it for another five years. There are many ways to get involved in the school, but it can get expensive. Here are some of the ways I minimize our out-of-pocket expenses while still being an active parent:

• Volunteer in class. The teachers at our school welcome parents who want to read a story, play an instrument and sing songs, or even whip up some ice cream with an ice cream maker.
• Contribute supplies. Keep an eye on the class calendar and see if there are any activities coming up that you have supplies on hand for. For example, I noticed that Alex's class was making felt books, and I just happened to have some extra squares of flannel left over from a long-abandoned project. I took them in for his teachers to use and they used them today to make houses.
• Show your appreciation to the teachers. The boys' school actually has a group of parents who coordinate "Teacher Appreciation Week" once a year. Each day of the week, the teachers are treated to coffee, cookies, fruit, etc. Each teacher also gets a basket made up of donated items, such as gift cards, pens, stickers, etc. Since I like to keep the love going year-round, every Monday, I bring in a tub of cookies or another similar treat. Homemade treats are much appreciated and less expensive, although lately I've taken to buying cookies from Trader Joe's for about $3 per container.
• Fund-raising events. The most expensive activity I've gotten involved in is fund-raising events. The money raised is important for the school, since it's used to improve the physical environment (for example, last year, the school got a whole new playground). I say this is the most expensive activity for me, however, because I don't get reimbursed for things like stamps to send out letters soliciting donations or for items sold at silent auction or raffled off as prizes. The key to minimizing these expenses is to keep detailed records and get a receipt for any expenses so they can be deducted as charitable donations.* I'm also on the lookout for the best deals on auction and raffle prizes. Now that I've been involved for two years, I have a pretty good idea of what can be used, and I'll be sending away for any appropriate freebies. Thus, in the coming school year, I should be able to donate a substantial amount at a minimal cost to myself.

*Donations to all schools may not be deductible, so check with your tax professional before donating or taking any deductions.

Your options when your local public school isn't a real option

I've mentioned previously that Marc and I have decided to send our boys to private school when they reach kindergarten age, in large part because we feel they won't get as good an education. If you aren't satisfied with your local public school, you may want to consider the following alternatives:

• Moving or Relocating. This is a pretty drastic measure, but one that many families have taken throughout the years. In fact, I have a couple of friends who've moved to the supremely expensive Palos Verdes area on the theory that they will invest their money in a house instead of paying for private school. For us, moving is too high a price to pay because our commuting time would triple and we'd be moving away from family, and that's assuming we'd stay in the LA area. I've already explained why we won't move out of LA.
• Magnet schools. I'm not sure if that term is specific to Los Angeles or California schools, but magnet schools are public schools for children who are gifted and talented. I looked into this, but the nearest magnet to us doesn't start until first grade, and magnet schools for higher grades are a pretty good distance from our house. Also, there's no guarantee our children will get in, or that their friends will continue on to the same school as they get older.
• Public school exemption. Some of the public schools in our area have a better reputation than the one that's a few blocks from our house. I looked into getting an exemption for the boys to attend one of these schools, but we wouldn't find out that we had gotten the exemption until a month before school starts. And again, the boys would have to make new friends when they enter middle school.
• Homeschooling. I don't think I'm up to the challenge of homeschooling, and I think there's a lot to be gained from the social aspects of attending school. But I'd be remiss if I didn't point this out as a legitimate choice.
• Private school. I've listed this last simply because it's the most expensive option out there. There are a wide range of tuition prices, though, so it could very well cost less than a full-time daycare or preschool.

What we're giving up for private school and why

I've mentioned before that we'll be sending the boys to private school when they reach kindergarten age, and I'm a little hesitant to talk about this because you, my valued readers, may very well think less of me for it given the high cost. However, you should know that this wasn't a decision we made lightly - we thought long and hard about paying somewhere in the neighborhood of $20,000 per year per child if they go to one of the top schools. (The figure goes up to $35,000 for seventh grade and up. No, that's not a typo.)

We considered other options (and I'll write about them separately), but it comes down to safety and academics. While we (thankfully) don't live in a gang-infested neighborhood, we do not live in a gang-free area (is there such a place in LA these days?). And the more distance we can put between our children and gang members the better (without actually moving to a new house - more on that in a forthcoming post also).

Equally important as safety, our local public schools at best have a mediocre academic reputation, while the top private schools send their graduates to the nation's top colleges. Because Marc and I both received first-class private school educations and attended highly ranked universities, giving our children the same opportunities is a top priority. And I freely admit that comfort level plays a role in our decision - because it is what we know, we think we'll be more comfortable in a private school environment. And our comfort level will be a huge factor in our children's comfort level . . . even if the other children's parents make ten times more than we do.

And speaking of money - yes, we can afford this while still saving enough for retirement, but barely. Obviously, we would have a more comfortable retirement if we directed the tuition money into retirement accounts instead, but according to my calculations, we'll manage to save enough. In addition to a more cushy retirement, we'll also be giving up things like a bigger house, vacations, and college savings. Marc and I agreed that paying for college was less of a priority than paying for private school, since there are alternatives for college tuition, like state universities, merit and athletic scholarships, etc. We also agreed that what the boys learn academically and socially during their childhood is much more important than which college they end up attending.

Incidentally, whether our children would attend private or public school is a conversation Marc and I started having before Alex was even conceived. This helped tremendously with our financial planning - I'll also discuss this in more detail in the future, but for now it's enough to say that a big part of how we will be able to pay for private school is because we have planned ahead.

Two Tricks to Teach Your Kids About Physics

There are two balancing tricks posted at Curbly that look intriguing. I haven't tried them yet, and I'm really not sure how I would explain the physics to the boys - but lucky for me, they're not old enough to understand anyway. I do, however, try to explain as much as possible to Alex, at least, even if most of what I say goes over his head. So I would probably try to explain the concept of balance (and have him try to stand on one leg). Is there anyone who can explain the salt shaker trick?

10 Bizarre Facts About the Human Body to Teach Your Kids

Did you know that you have 4,000 wax glands in each ear?

Neatorama has a list of 10 Things You Might’ve Been Better Off Not Knowing About Your Body. Ew!

Back to School Tips: Help your kids do their homework

The American Academy of Pediatrics offers the following tips to develop good homework and study habits:

• Create an environment that is conducive to doing homework. Youngsters need a permanent work space in their bedroom or another part of the home that offers privacy.
• Set aside ample time for homework.
• Establish a household rule that the TV set stays off during homework time.
• Be available to answer questions and offer assistance, but never do a child's homework for her.
• To help alleviate eye fatigue, neck fatigue and brain fatigue while studying, it's recommended that youngsters close the books for 10 minutes every hour and go do something else.
• If your child is struggling with a particular subject, and you aren't able to help her yourself, a tutor can be a good solution. Talk it over with your child's teacher first.

25 Super Bizarre Animals to Teach Your Kids About

Including the Dumbo Octopus. See the complete list here.

Via Super Punch.

Making the First Day of School Easier

The American Academy of Pediatrics offers these tips for making the first day of school easier for your child:

• Remind your child that she is not the only student who is a bit uneasy about the first day of school. Teachers know that students are anxious and will make an extra effort to make sure everyone feels as comfortable as possible.
• Point out the positive aspects of starting school: It will be fun. She'll see old friends and meet new ones. Refresh her memory about previous years, when she may have returned home after the first day with high spirits because she had a good time.
• Find another child in the neighborhood with whom your youngster can walk to school or ride with on the bus.
• If you feel it is appropriate, drive your child (or walk with her) to school and pick her up on the first day.

Kindergarten is still three years off for us, but I have a few friends at work whose children will be starting school in just a week or two. I don't know who's going to have the harder time: the mommies or the kids! One of my friends did say that the kindergarten teachers do not allow parents in the classroom for the first few weeks, to give the children a chance to adjust to being in school.

Comparing College Savings Plans

Bankrate.com has a handy chart comparing 529 plans, prepaid tuition plans, and Coverdell education savings accounts. However, the difference in contribution limits for Coverdells ($2,000 per year) versus 529s ($200,000+ per plan) is omitted. Via The Dollar Stretcher.

Bankrate.com also discusses a couple of other college savings vehicles: U.S. Savings Bonds and custodial accounts.

Pre-K Orientation

We're very fortunate that the daycare Alex and Tyler go to is also a preschool, so they'll be able to stay with familiar faces until they start kindergarten. Even though Alex won't be starting kindergarten for another three years, I went to a Pre-K orientation the other day for parents of kids who will be in the pre-K group this coming school year. I didn't really know what was going to be discussed, but I figured it couldn't hurt to find out what was in our future.

It turned out to be a useful meeting. Most importantly, I was reassured that the pre-K teachers focus on actual teaching. They have a curriculum and they have objectives. I'm now confident that Alex will get as good an education in this preschool as he would at any other preschool in our area, so I won't worry about whether he'll be prepared for the private school that I hope he'll get into.

It was interesting to learn what the pre-K objectives are and find out what the kids are generally expected to be able to do at age 4 or so (count to 10, read upper and lowercase letters, etc.). I didn't know (though it wasn't surprising) that kindergarten readiness focuses primarily on literacy and math skills. But the teachers engage the students in other subjects like science, music and art. I was happy to hear that the low student to teacher ratio (9 to 1) allows the teachers plenty of one-on-one time with each student, and that they are able to tailor the curriculum to best address each child's strengths and weaknesses.

I was also happy that the teachers consider emotional and social development to be as important as academic learning. They take every opportunity to help their charges learn to respect themselves, their friends, and their environment.

You can find articles on finding a good preschool here and here. I have two tips myself: 1. Know your top priority, whether it's academics, convenience, or social development. 2. Spend as much time as possible at the preschool to see if it's a good fit for you as well as and your child. If you're not comfortable with the teachers and how the school is run, your child will sense that and not be comfortable himself.

Choosing a Private School

I’m sure I’ll talk more about this topic as my boys get older, but for now, it’s enough to say that we’ve decided that they will attend private school and that it’s going to cost a small fortune. Alex will start kindergarten three years from now, so I’ve begun seriously researching our options. I liked this post at Lifehack, which discusses factors to consider in choosing a private high school. I think they’re generally applicable to choosing any private school, and included one point in particular that I’m not sure would ever have explicitly occurred to me:

How long a honeymoon will you endure? As it will take one to two years of research, Shopping around and open houses to attend, your decision should be given some time to play itself out. Don’t let one negative interaction with one secretary undermine several years of thoughtful discernment. On the other hand, if you see a pattern of poor communication or worse yet, irresponsibility on the part of the school administration, a red flag may be emerging. I recommend giving the school one to two years of honeymoon time.

Affordable Alternatives to Preschool

According to this Smart Money article, the average cost of preschool is $7,000 a year. I'm not the type to leave things like preschool research to the last minute so this wasn't news to me, but apparently the sticker price comes as a shock to some parents. And not surprisingly, there are parents who can't afford it.

The article suggests some alternatives to reduce preschool costs:

• Parent Co-ops: "Parent co-op preschools are usually nonprofit organizations where parents take turns working in the classroom with the kids and teacher."
• Family Childcare: "Family-child-care program guidelines vary by state and provider, so parents must do their due diligence when looking for a family child care home."
• Home school: "Home schooling can prep a child just as well as for kindergarten as a traditional preschool."

One thing that's mentioned only obliquely is sending your child part-time, which can significantly reduce costs.

Another alternative to consider is bartering. Since many, if not most preschools are small, private businesses, you may be able to negotiate some sort of deal with the owner - say, serving as a receptionist in the office while your child's in school. One manicurist I know got a reduced rate in exchange for doing the owner's nails.

Via The Consumerist.

Around and About the Blogosphere - August 11, 2007

Here are some posts I found interesting this past week:

• Top 10 Wealth Building Ways Of People I’ve Met at The Digerati Life
• 7 Home Security Tips via Curbly
• Is Your Child Ready for the Cash Crunch of College? at Money Smart Life - Although these tips are written for parents of college students, I think it's a useful list of what children should know by the time they go off to college.
  
• How I saved Money by changing the way I Pay my Chase Credit Card at HowISaveMoney.net - This is a good tip for paying bills that I wouldn't have thought of.
• Is It Really Possible To Talk With Your Spouse About Finances Without Getting Into An Argument? at No Credit Needed
• Online Banking Comes of Age? at Five Cent Nickel - Just when I thought I had it all figured out, Nickel's making me think again about where to stash my emergency fund.
• Free Tools for eBay Auction Listings at No Credit Needed
• How to Recycle Cell Phones,Printers and Computers at The Frugal Duchess
• Baby Einstein & Buy, Buy Baby at Nested
• Health Editor's Hiccup Trick at Goodyblog

Preschool Primer

Now that Alex and his buddies are two, the subject of preschool keeps coming up. I found this interesting guide to the different types of preschool curricula, which gave me some food for thought.

The National Association for the Education of Young Children (NAEYC) has a brochure with great suggestions on how to pick out a quality preschool here (pdf). You can also search for preschools accredited by the NAEYC on their website.

Teaching City Kids About Nature

I'm a city girl. I grew up in the city, I've always lived in the city, and the thought of camping terrifies me. But, for the same reasons that The Dangerous Book for Boys is appealing, I feel like my kids should learn more than I know about nature. It's just one of those childhood experiences every kid should have.

I know of a couple of farms that are less than an hour's drive away, so that's one thing we'll do to learn about nature together. There are also some good tips in this article from Bright Kids that we can implement - in fact, Alex already enjoys chasing squirrels and ducks at the park.

Soda Can Stove

Lifehack offers these directions. This is one of those things that I always feel I should know how to do for pure survival reasons. Maybe when the kids are older, I'll try it as a educational activity.

Orange, Red, Blue . . .

Alex has recently begun to master his colors, which got me wondering: How would I know if he were color blind?

The American Academy of Pediatrics and the American Academy of Opthamology recommend that children be tested for color blindness at age 3. Meanwhile, here are a few signs to look for:

• confusing red and black
• confusing pink and purple with gray or blue
• confusing dull yellow, orange, and light green with each other
• confusing pastels