The vast majority of universities in America do not provide Financial Aid to meet the financial need of every student. For these universities, it is almost like going to buy a car.
If the car costs $30K and you do not have $30K in savings, the only way for you to purchase the car is to get a loan. So, many students/parents take out loans to attend college.
Staying with the car theme … if repaying your car loan each month exceeds the amount you can comfortably afford, you might have to take a part time job to provide money to live.
Many students who don’t have enough money to afford college without loans end up working a work-study job or summer job to earn living money.
Then, I take back what I said upstream. I must have gone to a college that did not meet full-need because EVERYONE I knew at the time had an EFC that included a loan, work-study and earnings from a summer job.
One point posters are making is that there are many families who can not afford their EFC as calculated by a given school…for those families, and there are many, they can not choose meet full need schools, because they can’t afford them (unless they take out loans).
For example, if a family’s EFC is $50K and they can’t afford that, it doesn’t matter that the schools meets their full need…$50K is greater than the family’s budget, so they must work their college list to include schools that give merit, or have a lower COA than their EFC.
Beyond that, I agree with everything econpop said. Adding that many meet full need schools do require ‘self-help’ earnings via work-study or summer jobs.
Not necessarily. Many Full-Need schools require students to take out DS Loans (the guaranteed government loans of about $5K-$6K/yr) as part of their Full Need financial aid package.
Within the overall grouping of Full Need universities, there is a much smaller subset that will meet Full Need without requiring students to take any loans at all.
Also, going back to the part of your quote that I bolded … Full Need does not always mean the Financial Aid provided by the university will be the amount the family needs. Full Need schools assess the financial status of the family and calculate the Financial Need according to the school’s formula. It is not unusual for this amount to be different than what the family actually needs. So, a Full Need school could provide $30K/yr for a student, but the family might still take out a loan to pay the “gap” between what the school calculates their need to be and the family’s actual need.
So, it really seems as though we are talking about three possible buckets of loan aversion with a lot of overlap:
DS loans with a cap of $5-$6K/yr that may be part of a family’s EFC.
Parent loans where the EFC may not be what the family expects,
and,
Parent loans where the family is “full-pay” but where the situation is clearly like buying a brand new SUV every year (who can blame them for being skeptical?)
Just trying to keep all of this straight in my own head.
We might be odd (many times I think we are!), but H and I thought a lot about things ahead of time. We knew we wanted to enjoy the time with our kids growing up, and for us, travel is what we enjoy - a biggie anyway, because of course there are other things, though “stuff” has never been it.
We had also seen grandparents and parents get older and pass away before they could do everything they had hoped to do when they were older. Therefore, we made the conscious decision to not save every single penny for retirement and/or college. We saved some and spent some enjoying the journey.
We knew this would require loans, but as I stated before, loans worked well for us going through school, so no big deal. They get worked into a budget, and our budget now can handle more than it could during our early working years. What we have is very low interest (3-4%) so leveraging it to enjoy life with our kids when they were younger is still something I would do over again. Others obviously choose differently and plenty don’t make enough to be able to choose.
We also know we may be working for a longer time vs retiring early. Due to some good investments, this part may or may not happen, but no regrets if it happens. We had a lot of wonderful trips with our kids from their earliest days on.
We’ve also had discussions with our kids telling them we might have to rely on them a little bit in our old age if we guessed incorrectly. At this point I don’t think we did, but who knows the future? All three of them have assured us it won’t be a problem and thanked us for giving them the experiences they had growing up.
I love travel too, but it was not always so fun with the kids, especially when they were little, so we did not do as much travel as I would have liked because it turned out that my travel style and their travel styles did not mesh well. There were times when I was ready to get out walk around and see San Francisco or London and they were like, “can I just stay in the hotel room?” We got a few big trips in (about 3), but turns out the kind of trip that they like is a beach trip a few hours away where we rent a house and they can just come and go when they want and just hang around the house when they want. I like those too, but also like a big trip where there is a lot of new stuff to see.
Anyway, we have been fortunate to buy a house at the right time (before prices got high), live somewhat modestly, and through some fortunate inheritance of investments when my parents died have enough to be able to send them to a 35K annually or less school w/o loans.
We did pay the mortgage off a few years ago (felt great!) and are using the “extra” income for DC’s last year of undergrad next year. No debt for us, no debt for them. If we had to, we would have used our line of credit on the house for school.
Each kid also had a budget, which was our flagship’s in-state costs tuition (funny how going through this process makes $25K per year feel like a deal )
For whatever reason - genetic/environment, etc - our kids love traveling as much as we do and did from the beginning. It didn’t have to be a specific style or place. A campground in a National Park was as good as Disney or the beach. Road trips, airplanes, trekking, they loved it all and we had a lot of fun in their growing up years. We all just enjoy seeing the planet.
Mine didn’t like kid’s menus either. They were appreciative that essentially all restaurants would make a kid’s portion of an adult dinner.
It definitely cost more to enjoy it with them, but again, no regrets. I reminisce fondly with each parent loan payment knowing it went toward a trip we enjoyed.
For our daughter, loans are going to be inevitable, but we’re not going to be taking on extra debt or co-signing. Anything we contribute will come from savings. The rest will be her sacrifice from working part-time/summer jobs. We’re happy to send her to a private school if the financial aid turns out to be affordable.
I think the tough thing we(spouse and I) found was we had debt coming out of college. It was not a small amount. We spent our first 6-7 years of marriage paying it off. Then we had D19. After D19 was 1 we decided to have my spouse stay home and she did for 8 years. Then she came back too the professional world. First at part time and being overqualified for her job, but the job worked well with the family schedule. Then as the kids got older she got back into her career.
The tough part was on the FAFSA we had a good income, but we only had that income for about 2 years. So we didn’t qualify for much aid if any at all. But we hadn’t been able to save a huge amount for college.
The only saving grace was D19 got good merit and will be able to graduate without debt. But she had to make a choice of where she went based on scholarships and available funds.
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