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College Tuition vs Roth IRA

Blues Man

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So much is being said about student loans and the debt people are accumulating for a 4 year degree I have started to think about alternatives for that money.

So now what if instead of paying tuition and hoping that you get some sort of return on that investment people actually invested that money in a Roth IRA that would provide tax free income after the age of 60?

If a parent contributed $6000 to a Roth IRA starting when their child is 16 and continued making those annual contributions until they are equal to what would be paid at the average state college what would the result be?

If we assume an ROR of 8% ( a conservative number) and a time frame of 5 years for a total of 30K when the child turns 21 he'll have 45288 in his portfolio

If we then assume a very modest monthly contribution of 100 for the next 44 years until the age of 65 at the same 8% at age 65 he will have 1.8 million in his portfolio.

Now after paying back loans and interest on those loans the question is will that 4 year degree result in the same return on the original 30K investment?

I know some of you will say there's no way a parent can afford that but if we assume a parent is saving money for college from the birth of the child say 100 a month at the same 8% for 16 years there will be 38000 saved for his Roth investments of 6000 a year

It seems to me that the Roth beats a college degree
 

Polishprince

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Why would a modern parent bother saving for a kid's college education nowadays? The young person can just borrow the money and have it forgiven.

Doesn't cost them anything.
 
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Blues Man

Blues Man

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Why would a modern parent bother saving for a kid's college education nowadays? The young person can just borrow the money and have it forgiven.

Doesn't cost them anything.
It's not the entire debt that might be forgiven.

Don't forget that Biden has no authority to forgive any debts owed to the US government and they are already walking the who debt forgiveness thing back a bit

 

Canon Shooter

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Why would a modern parent bother saving for a kid's college education nowadays? The young person can just borrow the money and have it forgiven.

Doesn't cost them anything.

Because some parents still choose to raise their children with a sense of responsibility and integrity...
 
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Blues Man

Blues Man

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Because some parents still choose to raise their children with a sense of responsibility and integrity...
And that has nothing to do with saving for college.
 

Canon Shooter

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I was an E-5 in the Navy when my daughter was born. We didn't have a lot of spare change back then, but we always made sure we put something into our daughter's college account. It could've been $20 a month or $100 a month, but it was something. As I advanxced up the ranks we put more and more in, and then when I retired and had a real job with good pay the deposits would increase even more.

My daughter was blessed with the same enthusiasm I had for school and, after a few semesters at Grossmont College in San Diego, she walked away. I couldn't really be pissed at her for it. After all, she was exactly like me. What she never knew, though, was that we had this college fund for her which, after putting money into it for 19 years (and an initial deposit of $10,000 from my folks) there was about $90,000 in it.

So we gave it to her.

She's smart with her money and now, at the age of 36 (man, I hate admitting that), she's turned that into a very comfortable nest egg for her and my soon-to-be son-in-law, and has opened up a photography and modeling studio in Seattle.

My late wife went to college and was a very successful woman. My daughter and I didn't go to college and we're both very successful. While I can certainly understand the desire to have that college degree, I'll never be convinced it's an imperative...
 

Canon Shooter

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