<p>My dear friend's eldest child goes to a private Catholic university with merit aid that covers about a quarter of the coa. Mom pays for books and running around money. Loans make up the rest. I've gently tried to suggest this is an immense debt to assume, but feel like it's not for me to judge. Now her middle child ( hs class 2011 ) is looking at pricey privates also, and she won't have the stats for a lot of merit aid. Mom says if they don't take out loans, her children can't go to college as there are no funds to help. </p>
<p>We live in a high income area so our kids classmates tend to have lots of options as far as college choice goes. I can't imagine having to tell my DD to go to community college, but no way would I cooperate with taking on a crushing debt. </p>
<p>Is this an investment in the future or a trainwreck?</p>
<p>One rule of thumb I have heard is that a student should NOT EVEN THINK ABOUT graduating with a total debt load greater than a year’s salary for a new college graduate with the major the student is pursuing. In today’s economy, in recession, one shouldn’t be overoptimistic about predicting a steady salary–or even employment–after college, so that had better be a pretty fine college offering a very lucrative major to warrant much debt. $30,000 per year is definitely more than I would suggest borrowing.</p>
<p>Just wanted to add that even though it would be tough to tell your child you can’t afford a fancy private and to instead go to a CC, you’re doing her a HUGE favor in the long run.</p>
<p>But since when are the only choices…pricey private or community college?</p>
<p>What are the state schools?</p>
<p>Someone needs to ask this mom what she thinks her kids will be likely earning upon graduation? Will the kids “live at home” for free for many years after graduation to pay back all this debt?</p>
<p>A state school is not always the answer. It depends upon the state and whether they will commute and have access to a car, or public transit. That said, borrowing that amount of money is a horrible idea, IMO. </p>
<p>Just because this student does not have stats that they think is good enough for merit aid, can this student still apply to 3rd or 4th tier schools and get some merit money. Still, if the sticker price is 40,000, and the student gets 10,000 in merit money, it is not going to work. Do they qualify for financial aid?</p>
<p>A public university may not always be the answer…but many times it is, and many times parents don’t even consider sending their kids to the public university. You don’t have to commute to make it cheaper. For example, the tuition, fees, room, and board for a Georgia state resident at University of Georgia (my home state’s flagship) is just over $15,000 per year. A state resident with a 3.0 or higher gets their tuition paid for through HOPE, so that brings the cost down to just $8,000 per year (or $32,000 over four years). You don’t have to commute, at those prices.</p>
<p>Even if the kid does live at home for 10 years, $30K per year is $120K after four years. Under a traditional repayment program, that’s $1400/month for 10 years - which will be a millstone around her child’s neck even if she’s making $50,000 before taxes straight out of school. (She’s definitely not going to be making $120,000 - even i-bankers with only bachelor’s degrees don’t make that.) Even if she does income-based repayment that caps her loans at 10-15% of her income (depending on whether the loan reform bill passes), that’s still meaning that she’s got to fork over 10% of her income for 25 years.</p>
<p>Thanks, everyone, for confirming my hunch. I think my friend got into this mess by assuming the school would meet their need and was dumbfounded when the bill arrived in july for an additional $12000 or so. Of course by then, they were committed. I think there is denial going on here. And I think picking colleges can be an emotional decision. I guess you all have confirmed that I have to say something. Normally, I’m such a mind your own business person! </p>
<p>My H and I are older parents and are financially able to cover our DDs costs, which i imagine my friend realizes. I’d be sick at the thought of hurting her feelings. I think I’ll do some investigating of our smaller state schools ( Penn St is no bargain ) and urge her to visit with D2. I think the trainwreck with D1 is just inevitable={</p>
<p>Moreover, at least in my state, there is NO “private Catholic university” with a more credible program for several kinds of majors than several of the state university branches (not just the flagship campus). If that private university were to show that its alumni network has an especially strong pull in certain occupations, so that some career opportunities the student desires are only available for graduates of that university, that might be one thing, but where I live both better undergraduate education and better career opportunity can be found by choosing the state university system, especially the flagship research university. </p>
<p>Its very justifiable if the kid is expecting a 6 figure salary with that private school diploma. If the kid becomes a lawyer, doctor, or investment banker, I’d even say borrow 250k total would make sense.</p>
<p>In terms of investing, most people are TERRIBLE investors. Investment in education undoubtedly holds one of the best returns ever. $200k now in exchange for $80k a year for the rest of your life. How is that not a good investment?</p>
<p>^ However, there have recently been in the news many stories about students leaving law school heavily in debt, and without job offers. Not every college is a good return on investment, just as students are finding that not every law school is a good return on investment. A moderate, with emphasis on moderate, amount of student (and perhaps also parent) debt to make possible attendance at a better rather than worse college may be a very good idea, but it’s not clear that the family being asked about in this thread weighed their choices with economic reality in mind. </p>
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<p>What if the $80K a year for the rest of your life can equally readily be achieved without the $200K debt?</p>
Pennsylvania does have a lot of state schools. Pennsylvania state colleges also have a lot of impressive literature. Pennsylvania state schools do NOT have a lot of financial aid for the middle class.</p>
<p>In the original post I assume that the parents are borrowing $25k per year and the student is borrowing $5k per year. If the parents can afford the loan payments and are willing to make those payments for the next 10 years, does that change anyone’s opinion?</p>
<p>I know that the rule of thumb is to not have the student borrow more than a certain amount, however is there a rule of thumb about how much the parents should borrow to put their kids through college?</p>