But did they and their kids end up worrying about money in April when all of their acceptances were too expensive?
We told our sons well in advance that we had saved enough to pay for any of our instate publics. We also told them that we wouldn’t take out loans for college nor would we allow them to… If they earned scholarships/merit money to cover the gap between instate public and OOS or private college that was fine. Our goal was for them to finish college with no debt.
We have a really good public university system. Both sons were happy to attend and really happy to start life after college with no debt.
The conversation started years ago with my kids. They would receive what help we could provide out of savings and current income, but we would not be taking out loans in our name for their education. Savings were minimal due to various circumstances including some past health issues in the family, but the kids were always made aware of this. Anything more than we could afford would have to come in the form of financial aid and primarily merit money. By the time the college search got fully underway this year (D is a junior, son is still in middle school), D was well aware of our position and by talking about the value of money generally over the years she has developed a very healthy skepticism about going into debt for college or most reasons beyond buying a house and car eventually.
D and I have worked very diligently together to research schools, majors and she has kept her part up by excelling in a very good public high school that she knows we pay a hefty tax bill to live in the school district every year. There were some issues in her middle school years when one of her teachers, ironically the only one we have had problems with in all of the time our kids have been in these schools, basically said that you should do anything you could to go to the highest ranked school your grades would get you into, including borrowing as much money as needed to go for the ‘prestige.’ We asked this teacher during a conference, a teacher who seemed to suffer from a bad case of Ivy Envy, if she was willing to foot the bill for D’s future schooling. That ended that bit of trouble very quickly.
D’s college search has always included all admissions criteria for the schools that might interest her, including cost, chances of merit awards, etc, looking for schools that will make her happy and leave her with minimal or no undergrad debt. Hence, her list has schools that are financial safety, match and reach schools on it as it develops, with the reaches possibly in reach if, as it looks now, she gains NMF status.
My eldest son from a prior marriage was told the same thing by me, but his Mother was more than willing to sign off on huge undergrad loans for his ‘dream’ school, so he will graduate in a year with gobs of debt which will limit his future job choices to seeking employment that will pay enough to keep his head above financial water,
No loans at all? Why, exactly? Does your family take out loans for houses or cars?
I don’t mean to be obnoxious about this, but it seems to me that some folks “no loans at all” position is somewhat arbitrary, and is certainly inconsistent if the same family uses debt to fund other large expenditures.
We’ve been talking about college for a long time. Our kids knew from the beginning that we don’t take on a lot of debt, but we do sometimes take on small amounts short term for important purchases (such as a reliable used car). Our only large loan was for our home. I think debt can be a useful tool so I don’t mind taking out loans for college, but we’d like to keep them at or below the federal student loan level. My son decided to commute to a local 4-year college which we’ll be paying for out of pocket, so he won’t have any loans at all. He had a pretty broad range of choices (net costs ranging from $4k/year for our local cc to $25k/year for a private school), but because we’d been discussing finances for so long it didn’t seem too difficult for him to decide which he wanted. We even offered to pay for him to live on campus for a year, but he doesn’t want to spend the money to do that. He’d much rather use it for a car and/or a study abroad program or set it aside for whatever unexpected expenses come up.
D got back from a college tour last night and said she has no intention of letting us take out a loan for her, nor will she take one for herself. She does plan on applying for a TEACH grant if necessary, but that would not have to be paid back if she follows the guidelines. She has good stats and will get a full-ride or near to it at the colleges she is looking at, but should that change, she has no issue with going local (public), like austinmshauri’s son. That is something that we could manage without loans. It’s not something we asked of her, but she is very firm on this.
Hunt, I’m an anti loans person, especially for uneducated 18 year olds, which is what most students are. I don’t think loans should be part of the plan for paying for college if there are other options - cheaper school, working for part of it, working harder to find other sources. Unsecured debt is not a good thing, whether it be for credit cards, payday loans, or student loans.
Loans are the last choice for me, even if it means going to a different school, living in non-luxury dorms, working during the school year.
I wanted to share a friends’ daughter’s issue which surprised us - she had not taken out any loans in college - neither did she sign up for a credit card. She went to a prestigious school. The odd result for her was that when she started her new life in a new city, in a company with a high profile, it took a long time for her to be able to get any kind of credit/credit card or even approval for an apartment. She had no credit history.
This feels counterintuitive, but perhaps a small loan in college, or a credit card senior year, is important in providing a basis for a credit history. Please don’t all jump on me. I am just sharing her experience.
There are other ways to built credit besides a student loan, and the student loan isn’t really going to help all the much until you start paying it off - 6 or 8 months after leaving school. A credit card (even a secured one), a department store card.
A credit card, paid off in full each month, would be a fine way for a student to start off a credit history.
But if the student does not pay it off in full each month, that can be seen as an indicator of his/her inability to manage debt and/or spending habits.