Middle Class Squeeze

September 4, 2014 at 8:15 am Leave a comment

This is a huge day for the Meiers and millions of other families across the country.  My five year old daughter starts kindergarten today and my 11 year old begins 7th grade.  So, don’t get me wrong, I am extremely excited, but forgive me for the gnawing question in the back of my mind:  just how the hell am I going to pay for all this?

The USDA recently released its annual report on the cost of raising a child.  Since 1960, the report has provided a crude but important snapshot of what it costs to take part in the great American middle class,  Nationally, it costs $245,340 to raise a child through age 17 in a middle class household.  Families in the urban Northeast incurred the highest cost at a mere $282,480.  In contrast, it cost $223,610 to raise a child in the urban South.  In 1960, it cost $25,229 nationally or $198,560 adjusted for inflation.  This number does not take into account the cost of higher education and all those community-based extracurricular activities we sign our kids up for — soccer, swimming, dance, etc. (you get the idea).

And this statistic also assumes that my children are going to fend for themselves starting at age 18.  They’ve already been told I expect them to go to college.  As the report points out, this is not a minor expense.  In 2013-2014, the College Board anticipates the annual average tuition and fees to be $8,893 for a public 4-year institution with in-State tuition and $30,094 at private, not-for-profit 4-year institutions with an additional $9,498 to $10,823 in room and board expenses.  That’s just the average, folks.  There are non-Ivy-league schools that are charging $50,000 tuition per year with a straight face.

I always laugh at parents who actually think that the way they are going to pay for college is with a sports scholarship.  Statistically speaking, that’s not going to happen.  By the same token, I am fooling myself if I think just getting my kids into college is good enough.  As this excellent blog from the New York Federal Reserve points out, college pays off but not for everyone.  So, as my daughters start school today, I hope they enjoy themselves, learn a lot, and prepare for the life competition that has, for all intents and purposes, already begun.

Entry filed under: Economy, General.

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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