Rereading my posts I “hear” a couple as vaguely condescending. I didn’t mean to be. My own kid is currently applying to public universities, none of them the ones I mentioned in #138.
Here is a thought. If you have $100K on hand that you don’t have to spend on college for your child you could put it into a retirement account for him/her at 18. With a 6% return it would be $1.5M when they are 65.
That could be at least half or more of their retirement funds. One less thing to worry about in adulthood.
“If you have $100K on hand that you don’t have to spend on college for your child you could put it into a retirement account for him/her at 18. With a 6% return it would be $1.5M when they are 65.”
If you use it as a 20% down payment when they graduate then with a 4% return it would be $2.3M when they are 65. And that’s a lot more straightforward than a retirement account (it requires sufficient earned income so isn’t a viable option for that much money at the age of 18).
But I agree, $100K in savings goes a long way at the age of 22. Even if not invested it could provide the freedom to take more risk and earn a potentially higher reward, for example by working for a startup after graduation.
Other potential advantages of a financial cushion:
- Student can be less pressured by short term job finding needs when choosing a major. (This comes up in discussions about why some students may not want to choose liberal arts majors like history that are not directly associated with jobs that they want to seek at graduation.)
- Student can weather an extended job search at graduation, has more of an option to accept a lower initial pay for a job that is better in other ways like long term career development, and has less pressure to accept the first offer that comes along, even if it is a poor fit.
Isn’t it better that a kid be taught how to fish than being given a fish?
Isn’t it better that a kid be given free fishing lessons so they have money left over to buy a rod than having to spend a lot of money on the lessons themselves?
So the answer is- different families have different financial goals and priorities. Different kids have different academic and intellectual and professional aspirations. Some universities are good choices for some kids and terrible choices for others. College is expensive- no matter where you go- so figuring out how to inspire your kid to take full advantage of all the opportunities is a great way to maximize your ROI. Some people live in states with great public U’s. Some people live in states with OK public U’s. Many people are successful coming out of colleges you’ve never heard of, and many people are losers and failures coming out of the famous and expensive colleges.
I think I got most of it.
@blossom said it well…period!
@Postmodern: Yes, she could have put student loans into forbearance and gone six years with the loan amount growing as interest piled up. She spent a year living at home to pay us for the car we bought her so that she could start grad school with a car paid in full. Even with a car and no student debt, it is difficult to live on how much she earns.
I personally see no student debt as a way to help our children launch into adulthood. She knows we are here to support her, but all of us want her standing on her own two feet. So far, so good. She is in her second year.
She attended the state flagship, and one of her roommates from that college is in grad school at CalTech. There are a lot of smart kids at the state colleges. I personally have come to believe that what is most important in a college is that the students are most like your child.
There seems to be something of a false dichotomy being drawn here. Given that the thread is about full pay (high EFC) families – so the generous need-based aid offered by the elites isn’t at issue – it isn’t typically going to be a choice between Cornell and the University of Maine. The student who has the stats to win admission into Cornell also has the stats to qualify for significant merit money from many private colleges & universities, as well as some publics; so it very often ends up as a choice between an elite at full cost (~$75K a year) vs. a well regarded but lesser ranked/less prestigious school at $30K-$50K a year because of merit money.
What about all those offspring of high income parents who apply to, but don’t win admission, to elite schools? Obviously they have a list of matches and safeties, most of which are probably also going to be less expensive than than the elites at full cost (either because of likely merit money or other factors). So let’s hypothesize that a student applies to HYP also some other colleges, and gets offered half or full tuition scholarships at schools like USC or Tulane.
If that student doesn’t get into HYP then its easy – no one doubts that the schools which offered the scholarships are well-regarded universities that will provide an excellent education.
If the student does get admitted into one of the elites – the student then also has the choice to attend a significantly more expensive, prestigious college — but the math is still the same. The school that would have been perfectly acceptable to both student and parents without the competing elite admission is stil the same school, with the same offerings.
@calmom I disagree with this statement, “a well regarded but lesser ranked/less prestigious schooll” I challenge that there are schools that one describes as such that are incorrectly categorized. You have to look at what schools are highly regarded by the professionals holding each degree. It’s not what the layman thinks of a school, it’s what experienced doctors, lawyers, engineers, shaman, boogeyman, etc think of that school.
OP here. As @calmom says:
“it very often ends up as a choice between an elite at full cost (~$75K a year) vs. a well regarded but lesser ranked/less prestigious school at $30K-$50K a year because of merit money.”
And I’d add to that the possibility of a full ride at a less prestigious school. Often that choice is made on affordability grounds, though CC posters would generally advise you not even to apply to the elite school if it’s not affordable, and so I hypothesized that the full pay option is affordable, and therefore it is a viable choice.
My invocation of ROI is not meant to suggest a simple comparison of relative salaries, but to explore what it takes for people to attend the cheaper but less prestigious school (including all of the softer “life of the mind” considerations) when admitted to both. After all there are gradations of “elite” (say Georgetown vs Harvard) and gradations of “less prestigious” school (say Berkeley vs Rutgers) and gradations of cost (say full pay at an in-state flagship vs full tuition/full ride elsewhere).
We’ve heard the suggestion that Berkeley or UCLA (in-state) over Cornell (or Georgetown?) seems like a reasonable choice to make for some people (though we personally know people who chose the more expensive school in this situation) and anecdotes about some Californians choosing Berkeley over Stanford. What about other examples? I asked about UVA Jefferson vs Harvard previously, but there are many other combinations with substantial cost differences, such as Berkeley/UCLA vs a full ride, or even Oxford vs HYP.
My son chose a near-full-ride (full OOS tuition plus partial R&B) at one of USNWR’s “Top 20 Publics,” which is ranked in the top 10 for his major, over an Ivy and a couple of other elite privates that would have cost up to $250K more. Funding was not an issue, thanks to an investment account his grandparents set up when he was born, but he can use that money for whatever he wants if he doesn’t use it for college: grad school, home ownership, investment/retirement account, world travel, supplemental income allowing him to take an interesting but low-paying job/internship, etc. He has access to honors classes, top professors in his field, undergrad research opportunities, and plenty of equally bright and motivated peers. And since they accepted his DE courses and he was able to test out of several other GEs, he was able to jump right into 300 & 400 level courses in his major as a freshman. He felt that a degree from a strong public flagship with a highly ranked department + a $250K nest egg easily trumped an Ivy degree and an empty bank account.
When I was a student, I also chose to follow the money. I was a National Merit Scholar and attended a small CTCL LAC on a full ride. I got a fantastic education, found a great mentor, and was accepted into every grad program I applied to, including Berkeley and UCLA, which were (and still are) top 10 programs for that major. No regrets at all!
I think the argument that students at more elite schools are “better” is interesting. I have hung around all kinds of schools and taken classes at universities all the way from CC to Ivy to European and the idea that an Ivy or pseudo-Ivy has more brilliant students just because it is highly selective just does not reflect reality. Some schools attract the thinkers but a lot of elite schools attract young people who have just been hothoused through school and enjoyed a ton of advantages on their way and are good at gaming the system. Ivy grad schools are always going to have lots of great thinkers, but the undergraduate elite schools? It think that’s very highly debatable whether that is always going to be a great intellectual atmosphere.
Or here’s another one. At the time my oldest (high school class of 2015) was applying, we put a budget restriction on her of “UC in-state cost, or not a lot more”. She got into a number of schools - the ones that stayed in consideration with that restriction and what she liked were Willamette (where she ended up), Lewis and Clark, and UCSD. Willamette and Lewis and Clark were both a bit more expensive than UCSD but she did get merit aid at both. She also got into Occidental which is ranked higher than Willamette and Lewis and Clark (39 vs 76 or 68 this year) but without any merit aid. So we just crossed that one out entirely. But there’s another thought… would you pay a lot more for #39 vs #76? It’s more clear when it’s a top 10 vs a #76. What if the options didn’t include UCSD? I know there are parents who would probably have pushed for UCSD as it’s a higher rank at a value price, and other parents who might have gone for Oxy (especially if the kid had been really enamored with it… mine actually preferred the idea of moving to Oregon which made dropping Oxy easy).
@Corraleno , what’s interesting about your story is that it’s your son that made the choice. Most of what we see (judging by this thread ) tends to be the parents making the choice. Then again, in your son’s case it was very clearly his money.
@Corraleno’s example is a very good one. As @SJ2727 points out, it was his son’s choice and his son’s money.
We also gave our kids the (529) money and let them decide what they considered to be the best ROI (by their own criteria) for their future. Both chose the cheapest option, and although money was certainly not the only factor in the decision, neither saw the justification for spending an extra $100K over 4 years.
I thought this was another good thread with similar considerations of cost vs prestige: http://talk.qa.collegeconfidential.com/college-search-selection/2068839-brown-full-pay-or-tulane-full-ride-with-stamps-scholarship-p1.html
I’ve been on CC a long time, and at least among people who post here, the ultimate choice is generally made by the student – not parent – although parents set the budget.
Probably there’s a different cohort of parents who don’t come to CC to share their decision process. But I don’t agree at all with the assertion that it “tends to be the parents making the choice.”
@Twoin18 I was in that situation. Everyone is different, but for me, there was 2 or 3 that statement was and is not true. In short, I am very aware that we could have made a wrong choice from ROI perspective, but I was willing to take a chance because my only kid felt Stanford was the best school. I told him I will give him $300k after undergraduate graduation towards investment, but he said he rather go to Stanford with the money. That was that. But you know what, he’s happy with his decision.
By the way, I am a guy who drives 7 year old $25k car (worth 6k) but my wife drives a nice car. My wife wants me to drive a nice car, but I keep my car too dirty to feel comfortable driving $70k car. I don’t even have a coverage to fix my own car if my fault.