A way to solve the tuition crisis

Log in / Sign Up

List of Forums + New Post Recipe Box Usergroups Following My Posts Bookmarks

Private Messages Advanced Search Rules New User Guide FAQ Advertise Contact Us

Forum -> Household Management -> Finances

1 2 3 4 5 6 7 Next

View latest: 24h 48h 72h

amother

Sun, Jun 30 2019, 6:22 am

Please bear with my math here....

I recently started looking into investing. It turns out that index funds, without management, AVERAGE about a 7% return over time, after adjusting for inflation, although some years drop and some gain.

I tried to figure out a number that, if invested at birth, would pay for tuition + camp + chasunas.

Here's the numbers I used:
$8,000 annually for K to 4th grade
$10,000 for 5th
$11,000 for 6th
$18,000 for 7th and 8th
$22,000 for 9-12th
$25,000 for 2 years thereafter
$50,000 for chasunah

The magic number turned out to be $125,000. With a 7% annual return, that left about $0 at the end. Using actual annual gains, from a 20 year period, it left about $225,000 at the end (despite several years with severe losses).

So, if every frum child had $125,000 invested at birth, their tuition and chasunas would be paid for. If the market did well, there would be enough left over from each child to put an additional TWO children through a complete Jewish education and marry them off!

Now how do you get that kind of money?

Let's take a hypothetical 1,000 frum families. We'll give them each an average of 7 children, for a total of 7,000 children, born over a 50 year period. If each of those families would give a very generous $1,500 a month ($18,000 a year) for that same period, it would be enough to set up a fund for each baby born to that group.

Of course this only works properly if it is done before the children are born. But it does demonstrate that if a Kehillah tax of $1,500 monthly (or less, depending on number of families, average number of children, and how many are over childbearing age) was levied on families, and this amount was invested specifically to provide an education fund for each child, then there would be no more need to fundraise for tuition or for chasunahs.

And, I venture to say, $1,500 monthly is much less than most of us are paying for tuition now.

amother

Pink

Sun, Jun 30 2019, 7:01 am

Interesting but the numbers are low and don't account for inflation. Further, you're asking families for 18k a year, which is a lot. Let's assume that the money goes to a tax-deductible body, which then parks the money in an index fund. Consult a lawyer, but I'm not sure that all the withdrawals will be tax free.

And then you have the logistics. What about the family with twelve kids? What about the family that wants to send to a school or camp that doesn't align with the hashkafa of the fund? What about the family that moves to town but didn't pay in from the beginning?

I think the idea of a conservatively invested community fund that subsidizes tuition is wonderful, but there are quite a few details to work out. And I don't think that wedding expenses should be lumped in with tuition.

ETA: 7 percent is the average for the recent market, but sometimes things are flat for years at a time. The stock market generally rises over time, but individual years can be tough.

amother

Gold

Sun, Jun 30 2019, 7:54 am

instead of "taxing" people why don't we just suggest people invest? I think the issue is that people often don't have that type of extra money to spend BEFORE the kids are born.

I think reality looks more like this. Penniless Jane marries penniless Jack, they are either in school, kollel or working in low paying jobs. They either live very frugally, and or living on student loans or being supported by family and/or racking up debt. They are told don't worry. Your income will rise as your kids get older and more expensive. Don't worry. They would rightfully laugh in your face if you told them they need to pay an extra 18,000 a year.

Otherwise you are asking people who DON'T have kids in the system to be paying that amount. To ask people especially for a example each retired couple to be paying 18000 a year to pay for other people's kids tuition is a lot and I don't think is really reasonable.

I think what would be a good idea is to encourage people to start investing and putting money aside for their own children and grandchildren.

My grandfather put aside money for all of his grandchildren which helped buy a house, pay for my wedding... Now we have a nest egg b"H for each of our kids so that by the time they are ready to get married they could use a portion and save the rest to continue investing and have for their kids... We didn't buy the most expensive house we could, the most expensive car we could... these savings are important to us.

I realize this too isn't feasible for most people but I think is more realistic than the other option and should be heavily recommended. The problem still stands that for most people this is just not realistic.

The parents now won't be paying 18000 INSTEAD of tuition because they still need to be paying tuition since the money isn't there yet. So it would have to be in addition to tuition until the investment is earning enough. How many mothers on this board have an extra 18000 a year to invest in this, especially after they save for their own retirement.

My dh has thought about this a lot. According to his calculation to make such a thing work you would need to START with a very large amount of money and then you can have people paying in to the system like you described but it can't start with zero.

southernbubby

Sun, Jun 30 2019, 7:59 am

Those ideas have been floated around but there is not enough cohesiveness to get everyone to cooperate.
Everyone should read the eye opening article in this week's Monsey View. You can probably read it online about the tuition collector.

amother

Olive

Sun, Jun 30 2019, 8:17 am

Very interesting idea, op.

My issue would be the past performance is not indicative of future results. How big in terms of years is our sample size of the market? 100 years maybe? That's kinda small. The market could easily be flat or down the next 10 years. What happens in that scenario?

amother

Green

Sun, Jun 30 2019, 8:23 am

Any community wide tax won't work because you have no authority to tax people. It's a voluntary donation. Not sure why you think people will contribute to your fund versus all the other competing tzedukahs.There isn't a chance I would contribute a penny.

I pay full tuition. I have set my kids up with funds that I use to pay their expenses like tuition, tutors, summer vacations. What has to be done is to encourage the community to stop spending ridiculous sums on what I call flash. I am not subsidizing the ridiculous levels of conspicuous consumption voluntarily.

southernbubby

Sun, Jun 30 2019, 8:40 am

amother [ Green ] wrote:

I agree. There are several chassunah malls here and from the ads, it looks like these very young newlyweds start married life with Italian furniture and other fancy accoutrements.
My dining room furniture is the foldable Lifetime plastic stuff that works just fine for me so I don't understand why they need more.

amother

Cyan

Sun, Jun 30 2019, 9:53 am

$1500 a month is a lot of money for most people I know, even before kids or after marrying off kids. I'm curious what your income is that you think this is a realistic amount to ask people to pay.

Im not trying to knock your idea, op. Just that I can't see it working realistically in my community. Or even in most. Most communities will have richer and poorer people and a mitzvah of tzedaka...

Discouraging flashy spending is great. I actually don't see much of it in my community.

Encouraging the wealthy to support local mosdos is also good.

naturalmom5

Sun, Jun 30 2019, 10:11 am

amother [ Pink ] wrote:

A). Over fifty years the S&P earns around 4.1 % a year

B) many families prefer bugaboos and designer clothing and vacations to giving so much to a fund
If you don't give to your school they can't throw your children out
If you don't give to this fund what are the repercussions

C) for starters we need our schools to give a decent education so the children can have a better chance with Hashems help of making an above average living
And Collel shouldn't be for every tom d!ck and Harry
There needs to be some sort of entrance exam 6 months to a year after marriage

southernbubby

Sun, Jun 30 2019, 10:35 am

Schools could decline to accept families who are steeped in gashmius the same as they won't accept mothers who drive or use smart phones.

amother

Floralwhite

Sun, Jun 30 2019, 10:56 am

Trying to figure out why people are conflating a billion different issues in this thread if it's supposed to be about affordable tuition solutions. Don't we already have threads on materialism, pros and cons of kollel, etc?

leah233

Sun, Jun 30 2019, 10:57 am

In theory this is a good idea but

(1)A community that does not have a system that guarantees all children acceptance into schools has about a zero percent chance of people agreeing to pay eighteen thousand dollars a year for community schools which their children aren't in and might not get accepted into

(2)In the transitional period where the investment is growing but schools still need tuition to get by , eighteen thousand dollars a year for a future investment is a very high tax

(3)Who is going to manage and have custodial rights over this fund? What is to guarantee the money and power won't get to their heads and they start abusing their it?

As an aside, historically, schools and investments are a bad match. I know of a certain Yeshiva which almost declared bankruptcy because of bad investments. That school had a board of directors which consisted almost exclusively of partners in the most prestigious law and accounting firms in the United States and super successful business men.

Because at the end of the day it is a lot easier to lose someone else's money than your own.

amother

Black

Sun, Jun 30 2019, 11:05 am

amother [ Floralwhite ] wrote:

bashing frum people never gets boring

naturalmom5

Sun, Jun 30 2019, 11:07 am

southernbubby wrote:

Schools could decline to accept families who are steeped in gashmius the same as they won't accept mothers who drive or use smart phones.

What if those families are wealthier
And give more to the school
Unlike what hosiery you wear that applies to everyone rich and poor

chestnut

Sun, Jun 30 2019, 11:14 am

Some newlywed families actually live on not much more than $1500/month before kids. Good luck having them contribute this much to the fund.
Also, tuitions vary greatly between different communities. Not to mention wedding expenses.

southernbubby

Sun, Jun 30 2019, 11:30 am

naturalmom5 wrote:

What if those families are wealthier
And give more to the school
Unlike what hosiery you wear that applies to everyone rich and poor

Some Rebbeim have instituted takanas on the entire kehilla, regardless of how much they donate.

Mommyg8

Sun, Jun 30 2019, 11:40 am

southernbubby wrote:

There are some communities that give their children Italian furniture, etc. I think it's mostly in Chassidish communities.

Where I live, and in my community, young couples do not get dining room sets. They either use a dinette set, folding table, or buy a second hand set. I bought my dining room set second hand when I got married (many years ago) with my own saved money.

Most people I know (even the ones living in big fancy houses) have a folding table or dinette table in their dining room. At least until they can figure out a way to buy a set (usually later on when they're more financially settled).

amother

Green

Sun, Jun 30 2019, 11:41 am

amother [ Floralwhite ] wrote:

Because you can't discuss solving funding for something without discussing the cause of the need.

I don't like supporting people who earn less than me and live larger than me.

naturalmom5

Sun, Jun 30 2019, 11:41 am

southernbubby wrote:

Some Rebbeim have instituted takanas on the entire kehilla, regardless of how much they donate.

I think it is a lot easier to enforce on a kehilla where everyone is loyal to the Rebbe ad opposed to stand alone school

Mommyg8

Sun, Jun 30 2019, 11:45 am

southernbubby wrote:

Schools could decline to accept families who are steeped in gashmius the same as they won't accept mothers who drive or use smart phones.

Yeah, but that would be like biting the hand that feeds them.

I'm not really sure what the aveirah is of living well if you have the money?

Page 1 of 7

1 2 3 4 5 6 7 Next