<p>A couple of weeks ago I opened my email to very happily discover that I had been accepted at Northwestern University. This school has long been at the top of my college lists, and when I was first accepted I was overjoyed and decided that Northwestern would be the place I would be come fall. But when we got our financial aid offer we were very disappointed; the FAFSA had stated that our EFC was $63,000, and Northwestern's offer conformed to this estimate, offering no grants and only $5500 in Stafford loans. My parents have explained to me that although is income is not actually too high, they have been saving for college for me since I was born and so I have about $100,000 at my disposal reserved specifically for college. They also say that this is the reason I got pretty much no financial aid.</p>
<p>My parents already contacted Northwestern's financial aid office to try to appeal our aid offer, but the only addition they could work out is the opportunity for work-study. My main concerns are domestic. I understand that students often find the need to take out loans for their eductions, but when my parents sat down and talked with me about financing college, they told me that I would have to take out $80,000 to $100,000 in loans by the end of undergrad. These estimates seem extremely high to me. This is not, however, a complaint about Northwestern's financial aid. </p>
<p>My first question: Does this amount of debt sound normal for someone leaving a prestigious school? And my second question: Doesn't an EFC of $63,000 mean that my parents have the means to pay $53,000 each year for college, or at least close to this figure? I would think that they would be able to pay at least more than half of our EFC without loans. I just want to know if what my parents say sounds reasonable. Thanks for all of your help.</p>
<p>Kudos to your folks for saving 100K for your college education, and apparently having sufficient income to give you, and them, options.</p>
<p>What’s the COA annually at Northwestern?</p>
<p>“Doesn’t an EFC of $63,000 mean that my parents have the means to pay $53,000 each year for college, or at least close to this figure?”</p>
<p>It’s what the formula calculated that your family can afford, annually, to send you to college. Most find the EFC too high. But if they mistakenly put the 100K in your name, that could be adversely affecting the EFC-- the formula severely assesses student assets.</p>
<p>If that’s the case, you can get it into a 529 college savings account, where it will be assessed at a much lower % as a parental asset, and your EFC will drop (for your second year, anyway). If those were counted as student assets, I think by spending some of them down and sheltering them in a 529, you’ll find that your second year EFC may drop and make you eligible for some aid-- perhaps enough to make it work.</p>
<p>If the 100K isn’t in your name, then most of the EFC is coming from your parents’ income (guessing 150K or more). Not much you can do about that. If your parents aren’t willing to get Parental loans for some of it, I’d consider cheaper alternatives.</p>
<p>If it’s mostly the $100K causing the problem (not high income and other assets), once you spend it it’s possible you will qualify for aid your last 2 years. Talk to NU.</p>
<p>Otherwise, $100K is 5 times the average college debt and much too much.</p>
<p>A lot of middle class families are in the same boat your family is in. It is unfortunate, but that’s the way it is. Your parents have done a great job of saving for you–$100,000 is a lot of money. However, it is definitely not enough for you to go to Northwestern if it means that you will have to take out $100,000 in loans. First of all, it will probably be impossible for you to get that much money–Stafford loans only allow you to take out about $27,000 max. Second, there is no way that Northwestern is worth that kind of debt. Harvard isn’t worth that kind of debt. You need to look at loan calculators to figure out how much you would have to earn after college to pay off each month’s bill. I don’t have the calculator in front of me but I’m guessing it’s too much. If you got into a state university, go there and be proud. If you don’t like it, THEN transfer to Northwestern as a junior. It will still be too much debt, but it will be half the debt it would have been.</p>
<p>You probably won’t like this suggestion, but you could get through college debt free if you spend the first year or two at a community college, then transfer to NWestern. You’ll save tens of thousands, and maybe your parents will reward you with the cash after graduating.</p>
<p>NW costs about $55K a year, leaving you and your parents about $30k a year to pay after using your college fund to pay $25K a year. That’s the kind of situation we have with our son. We pay a portion of that cost out of income since having him out of the house does reduce our cost somewhat, and we have cut back drastically too. We borrowed some money (which means nothing except emergencies are going to financed by us for a while–no new cars, basement redos, etc). My son is borrowing some money through the Staffords and has some money saved from summer jobs. He is also working during the year. That is how we are meeting the cost: with a combined effort. </p>
<p>You say your parents have the savings set aside for you. If the money is spent down this year, it can make a difference if it is in your name. 20% hit is usual. If it were in your parents’ name, it would have been a 5% assessment of the amount.</p>
<p>Why don’t you run the FAFSA forecaster without the $100K in savings and see what the EFC looks like. If it is a lot lower, then you know how the savings is impacting your possible aid.</p>
<p>Then ask Northwestern what your aid package might have looked like without the $100K. If it changes it a lot (to the better) then spending down the $100K your first two years is probably a good idea. Meanwhile, if your folks can put some more aside (in an account in THEIR name) for your final two years you ought to be pretty decent. If, on the other hand, Northwestern wouldn’t have given you much if any grant aid even without the $100K, then you need to decide if a lot more debt is worth it.</p>
<p>I hope you give your folks a big hug for saving all that money for your education. That’s going to be a big help no matter where you end up.</p>
<p>Your probably gone to be in alot more than 100,000 in debt. Did you consider the effect of defering payment for 4 years and capitilzing your loan. The interest will kill you.</p>
<p>Thanks for all the advice. I should probably mention that KU is my safety school (in-state tuition + $40,000 national merit scholarship) and my parents have been pushing me to go since we moved here ten years ago. Part of the reason I posted this is because I’m afraid that the reason they’re telling me that my debt will be so high is so that I won’t “waste” their money by going to an expensive school.</p>
<p>Here’s some more stats:
my parents combined annual income: $150,000
parents’ savings (not including retirement): $120,000</p>
<p>We’ll be done paying off our mortgage in just a few years and then we’ll be debt free.</p>
<p>Northwestern’s estimated cost of attendance is $53,000. And like I mentioned above, there is 100k in my name explicitly for college.</p>
<p>Does me having to take out 20k-25k in loans each year of undergrad sound reasonable? I know that each family’s situation is different and personal, but I’d really appreciate it if you could just let me know your impressions.</p>
<p>I think on their salary, your parent’s have done well to sock away $100K for you and to have a mortgage almost paid off. It sounds like they have lived conservatively and done right by you. Most making their salary can not comfortably pay for a $53K/yr school.</p>
<p>Kudos to your parents for saving $100,000; that’s an amazing gift to you, especially with the way the economy is now. </p>
<p>RE: “We’ll be done paying off our mortgage in a few years and then we’ll be debt free.” Your parents will be done paying off their mortgage and then they will be debt free. Not you. As of right now, you have no debt. And most financial counselors tell their clients to save for retirement first, and college second because while you can take out loans for college, you can’t take out loans for retirement. It sounds like your parents have been able to do a good job saving for both. </p>
<p>As to whether or not $20-25K in loans is reasonable or not, I suggest that you run the numbers through a loan calculator and see what the payments will be per month when you graduate. Ask yourself if you plan on going to graduate or professional school. And also how you plan to finance a car or home on top of that student loan payment. </p>
<p>I would not want my child to take out those kind of loans and start off their adult life with that much debt. Ask yourself this: what does Northwestern offer you that justifies $100,000 in debt after your parents pay $100,000? And what will KU cost? If you’re looking at grad/professional school, will your parents pay for part of it if you go to the lower cost school? </p>
<p>NU’s four-year cost will be about $220,000. You have 100k in the bank, so you need to know you can come up with another 120k before you are done. As you note, your parents happen to have this amount in their savings. You seem to think they should hand it over to you, on top of the 100K they have already provided.</p>
<p>Some reasons they may not want to do that: </p>
<ol>
<li><p>Fear of losing one or both of their jobs. It is happening everywhere, and it could be tough for someone their age to step into an equivalent job.</p></li>
<li><p>Health issues you do not know about.</p></li>
<li><p>Elderly parents for whom they may have some financial responsibility.</p></li>
<li><p>Concern about unexpected need to relocate.</p></li>
<li><p>Do you have younger siblings?</p></li>
<li><p>They believe, based on their experiences and acquaintances, that higher-priced degrees do not pay off in the long run, and they think you are better off inheriting their savings than spending it on an undergraduate degree.</p></li>
<li><p>They want to have savings in the bank for you to use for professional or graduate school, or to help you buy a house someday.</p></li>
</ol>
<p>You can’t force your parents to place a high value on an expensive undergraduate degree.</p>
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<p>I caught this pronoun error, also. It isn’t your money, it is theirs. If you have children yourself, you will probably feel the same way.</p>
<p>Thank you midmo for your insightful post. I suppose you’ve reached the heart of the issue: My parents don’t believe that an expensive degree from a selective school is worth the money. And I suppose I can’t change that.</p>
<p>To the posters above, the reason I made this thread is because I am definitely not going to be $100,000 in debt at the undergrad. I guess I’ll be at KU next year. From the beginning of the school year up until a few weeks ago everyone thought I was going to get into Yale, but now I’m glad I didn’t because I’m sure I wouldn’t have been to go there either. I just feel like an idiot for knowing my parents’ values and not realizing this would happen. I guess the best thing I can do is have different values for the education of my children.</p>
<p>I’m not at all bashing my parents’ values. They’re admirable, and I truly believe that. They’re just different from mine.</p>
<p>I’m sure that many people reading this still think I’m a whiny brat. But I feel there is legitimate shame in watching about ten of your close friends go to places like UPenn, Duke, USC, and yes, Northwestern, all of whom you beat in GPA, class rank, and test scores, while you go to the same college as the the people who almost flunked out of your high school. I just feel like all the effort I put into the last four years of my life was a huge waste.</p>
<p>Thanks again for all of your advice. You’ve convinced me.</p>
<p>Not a waste, at all. You’re learning lots of things, and in this process you’re learning and gaining experience and insight that some of your peers are not.</p>
<p>My guess is that in 5 years, you’ll be in a better place than many of your current peers.</p>
<p>Trust me, you don’t fit into the brat category often seen here lately. I think you stated the issue with great maturity and your children will benefit from your beliefs.</p>
<p>OP the bloggers here can be closed minded when it comes to debt, given that it often appears like a straight forward situation. </p>
<p>When I first got my fed aid package from UMICH oos, I had no idea how I was gone to pay it without going into big debt. But, if there’s a will there just may be a way. I have been budgeting I have come up with a plan. Though this plan is gone to require much, much more effort from me than if I simply had listened to my parents and gone to a cheaper school, I would have taken the easy way out. If Northwestern is not worth extreme dedication on a whole other level than what you have experienced in High School, than gone to another school.</p>
<p>I’m not saying it’s possible for you to go to NU without going into extreme debt, but don’t give in so easily.</p>
<p>Ok here’s why: You have 100,000 in the bank for college!!! Whats your efc gone to look like when that’s gone in two years, have you talked to the fin aid people because I don’t know. Second, you can make 5,000 over the summer if you know where to look, that’s 20,000 right there. </p>
<p>And most importantly sholarships. If you bust your asss (and I think you have the ability considering you got into NU), freshman and sophomore year getting a high GPA and putting yourself in leadership positions like research you will be able to find scholarships to cover a good amount of the gap a new fin aid offer will leave. And therefore you would have to take out little in loans.</p>
<p>Have you considered these things in your decision???</p>