FAFSA wrong in what a family can afford? Oh gee, what a shock

Paying for College
41

There is a lot of stuff that people believe that trips them up financially.

Always buy an extended warranty. Always get the lowest deductible policy for insurance, and file claims whenever something is covered. When you’re having trouble making payments on a credit card, apply for another card with a cash advance benefit, and use THAT card to pay off the first card. Real estate is the best investment you can make so you should "stretch " to buy the most house you can afford.

Agree it’s not nice to tell people they should have saved more after the fact, but what to do about the overall level of financial ignorance in our country?

42

various parts of the country.<<<<<<<<<

    This will be rebutted though, those living in more rural, cheaper, less serviced, less sophisticated locations won't feel that the San Fran or NYC crowd should be cut a better deal. Some people make active choices to live in lower COL areas. Everyone has their own violin.
43

It is nicer to tell people before they commit to expensive financial decisions (e.g. expensive house and other luxury goods), but that means fighting every company’s marketing to separate people from their money.

Unfortunately, some parents spend all of their money giving their kids the illusion of unlimited money for whatever they want, and it becomes a big shock when the kids’ first money constrained decision is choice of college.

44

UCB, agree. There is also an upper middle income trope that one parent can/should stay home, leave a lucrative (or at least a professional type career) and then get right back on track when it’s “time” to go back.

I don’t know any cases IRL where that has worked out the way it was intended. Banking, publishing, law-- these are fields which changed fundamentally over the 8 or ten year period that many of our contemporaries took as extended parental leave. You leave a 100K job in commercial lending at a bank- you don’t get hired back ten years later at 100K unless you have developed some really special skills in the interim.

I counsel friends, neighbors, friends of friends. The resume entry “planned and executed the school book fair which netted $1500 for the school library” is terrific- someone needs to do this stuff- but it can’t turn the years out of the paid workforce into an extended “executive residency”. And if I had a dollar for every neighbor who decided to get certified in yoga to “earn a living doing what I love”- boy, I’d have lots of dollars. Yes, you can do what you love. But unless you can live on $80 here and there, no benefits, no health insurance, and irregular hours with no job security, it ain’t a living.

So along with some financial literacy, gotta add some practical talk on the “intake” side of the financial house. Living on one income-- if/when you can swing it- is terrific. And many families do it out of necessity- ill child, grandparent, spouse, single parent. But it involves some trade-offs elsewhere.

45

Disagreeing with their choices doesn’t mean we don’t get it. When they realized cost wasn’t 14k/year, but 2-3x, they could have processed their options differently. That doesn’t take high savvy. It’s more a normal budget consideration.

The Mercedes dealer may have advertised “affordable” terms (or another lender,) but you make the final decision, based on the numbers in front of you.

46

I thinking living in a high COL is a choice for many, not a necessity (though some like to state that jobs require it). I’d like to know which jobs require living in a high COL area. I started my career in a high COL city and left quickly for to cost of living reasons. I took a HUGE pay cut, but ended up ahead financially due to lower COL. Sure there are career differences, but it’s all about trade offs.

47

Real- people can be limited in their thinking. I know people who bemoan how expensive everything is in the NY Metro area (and it is) but nobody forces you to buy a house in New Canaan CT. You can slide 5 miles down the parkway to Norwalk CT and home prices drop quickly, or a few miles in the other direction and live in Stamford where home prices are moderately lower but taxes are MUCH lower due to a big corporate and commercial tax base. You don’t need to join a private tennis/swim club; your kids can learn to swim at the YMCA (no bar! no dress code in the dining room because they don’t HAVE a dining room!)

If you live in a high rent district, your choices start to feel rational because you are surrounded by other people who also think you need to join a private club. Even high COL areas have towns and places with lower costs and lower everything.

48

@chipperd, my point was that the family probably had better choices in picking other schools that didn’t require OOS fees since the Animation major is very employable with a Community college degree.

There will be a point when this family will be tapped out and won’t be able to take out loans. If Mom is disabled, more medical costs may be in the future. A $6K loan for braces, at this point, with outstanding bills, just isn’t financially savvy.

49

Financially savvy or not, I think to not get your younger child braces because of the mess you’re creating with the older child would be inexcusable.
Especially since it seems evident that they will be able to contribute nothing to him financially when the time for college comes .

50

Well, there should be basic financial literacy taught in public schools. Just basic things like writing a check, saving money and how interest makes it grow, how to budget would go a long way. Limiting credit cards would help immensely esp for those under 25.

There are definitely jobs which need access to expensive parts of the country. I have one. Yep, some people need access and can’t move. Doesn’t matter to us as we have made good decisions. And believe me, not everyone in every area is living above their means. Many do have the resources to pay for the expensive house and send their kids to private college.

Where it gets ugly is the expectation by many people that these very expensive private schools are options for their children without the saved resources they need. ( They aren’t much as buying a Rolls isn’t an option for many families). Maybe, they remember a time when you could get merit money ( with less loans and more grants) and they have heard and read about kids only paying X or Y. This family used the available data and came up with one number only to be told the number was double. That’s pretty rough.

The choice of an expensive art school might not seem strange to them. That’s the field their daughter is interested in and she’ll need a BA just to get a basic job. And to @“aunt bea” 's point that a CC degree in animation is going to cut it, I would highly doubt it. In many parts of the country, CC degrees are looked upon with some disdain ( especially if the state colleges are good).
Sadly, these parents have the combination of many factors hitting them hard. If the mom weren’t sick her income could likely help a lot.
I feel for them. And I feel for everyone who wants an expensive education and has no money saved to obtain it. There are always options like working multiple jobs while in college ( I worked 2 or 3 every semester) and living off campus. The daughter could work as a waitress and make quite a bit of money in cash.
How did so many Americans convince themselves that they could offer their kids the best education available with no money to pay for it? Seems like a leftover idea that is pretty pervasive on these boards. And so many cannot reassess so they go into massive debt rather than change their thinking. Then they blame everyone for massive student loan debt.
And the cycle continues. Their kids now owe too much to get a decent start in life.
Bad financial decisions seem to replicate across generations. And so do good ones. Friends of mine whose parents were generally more financially literate are generally the same. They learned from their parents you cannot spend more than you make ( wherever you live). And you cannot buy the shiny car even if it’s pretty.

51

A talented, motivated young person can get into animation with a CC degree. Just not the 80k+ jobs. Or rarely. More likely, she likes the idea of “animation.” Nothing is mentioned of the kid’s background or experiences.

Plus, she could have done the 2 years at cc, then transferred. Nothing truly lost. Or started at U Southern Maine, commutable.

I imagined this is a family truly living close to the bone. Not the sort that “should have” 200k set aside.

Saving for college is only a choice when there’s breathing room in the budget.

The problem is agreeing to 150k in costs.

52

The EFC is something that should be defined as the very minimum you will pay unless your student pick a school that costs less or gets enough merit money to reduce that cost(understanding that merit can reduce financial aid).

Too often, people believe the propaganda that a top school takes the very top students regardless of what that student can pay. That money is not in the picture of getting to go to, say Harvard what is left out, is that if a student’s PARENTS are deemed able to pay, whether they are willing or not is a crucial factor.

My son was shell shocked when a fellow classmate had to withdraw from college because during heated divorce proceedings, his father refused to pay. Student returned to school, taking out a parent/student loan with his mother. But the college wouldn’t get involved in the matter, and ability to pay was not on part of the student who was an excellent student and a great member of the university community. I think both that student and my son have a far more jaundiced view of the college’s campaign based on money not having to dictate college choice. Clearly, it does.

Families like my brother’s have managed their money well, balancing lifestyle choices so that they has as stress free, safe, good school and support services during current living, saving as they should for retirement, emergencies, really living pretty much an exemplary life, managing and balancing finances.

The curve ball in all of this is private college. Yes, they can afford to fully pay sleep away in state public choices. But what if a school like the HPY et al crowd, a private LAC are possibilities…but the price tag does put family finances asunder? It’s not like driving a Hyundai vs aMerceded, as many like to cite. Going to college is not analogous to driving a car. Those schools that brag money should not get into the way of any student attending them, do have qualifications as to who pays how much.

Ironically, the very choices that helped make their kids selective college material, are the ones that cost the money so that it’s not saved so that making $70-80k a year for 3 kids’ college educations is possible without upsetting family finances.

53

We tend to assume all areas are like ours.

This family lives in southern Maine. There is no graphic design or animation program at the local CC. The closest thing the Southern Maine CC system offers is a single course in illustration. The rest are 100 level general arts courses (drawing 1, photography 1, ceramics 1, etc.) with a smattering of 200 level courses (printmaking 1 and 2, etc.)

There is a graphic design program at Eastern Maine CC, but that’s in Bangor, 2 1/2 hours each way by car.

Tuition and fees alone at Maine College of Art are $36,424. According to College Factual the average debt upon graduation is more than 41K and at every income level the average cost to attend is more than 26K per year.

The family’s best bet financially would have been the University of Southern Maine, but it’s possible the family was scared away by the low graduation rate (32% vs, 75% for U Mass Amherst.)

In any case this is a cautionary tale, reminding parents to do their research before allowing their kids to apply to schools that may not be affordable.

54

After reading through the various comments by posters, it’s clear there are so many leaps of conclusion and assumptions based upon the very limited information in the article.
What we know: We have a little idea what the household income is annually (other than "solidly middle class, which if taken literally, in Mass, is 77k/year).The family in the article has an EFC of $14K. The school sticker price is $47k. The school gifted the family $10,200. The true cost for this student to attend, ( which is before loan and work study) is $36,800/year in after tax dollars. If the above assumption is correct, that is almost half of the family’s take home income annually. The student is going to contribute her $5k in savings. The school in the article has an endowment of over $17 million. Those are the facts.

We have no idea if there are other siblings and if any are in college at the time the student in the family will attend college.
We have no idea what this family has in savings.
We have no idea what the mothers disability income is per month nor how long she has been on disability.
We have no idea if the family provides or cares for other family members in some way, shape or form.
We have no idea what the home equity situation, if a home is even owned, nor if other property is owned
We have no idea what the family’s uncovered medical costs are the past few years.
We have no idea if the family ran the NPC for the school, and if they did, how many times over the past how many years.
Yes, many family’s rely on the EFC to produce a number that corresponds with it’s name sake. I agree with some that the title of that calculator needs to change, or just get rid of it all together. It’s at least misleading as it stands today. I mean, expecting a family of 4 to live on just under 30K/year( the amount shielded from the EFC formula) is laughable. It seems we know which side of the student/education industry equation has the better lobbyists.
Some posters assumed that the family was doing it’s best and that there was financial hardship.
The rest seem to assume that there was financial hardship and that, in spite of the EFC number being less than half of the true cost to attend the school, that the family could have done something in prior years to prepare better. I think we can all agree that hindsight is 20/20 and if the family had any idea this school would be this expensive, they could have prepared better. And yes, other options for post high school education in the chosen field are maybe available. That wasn’t in the article.
My assumption, and perhaps incorrect, is that the school can afford to gift this family more than the $10,200 listed in the article. Further, my experience has been, broadly (and there are many exceptions) that schools seem to have the ability to give more to a student’s education, and less to the facilities arms race that is taking place in the post high school education industry. The school in the article has a lengthy mission statement that says nothing about getting the most $ out of a family, as seems to be in this case. : file:///C:/Users/ASUS%20Family%20Computer/Downloads/Mission%20Statement.pdf

My main point was that, given the little we know from the article, a little less preaching and “holier than tho” would be the order of the day. I often wonder reading some posts, how many are quietly shills or have a conflict of interest, or if the main goal is good old fashioned shadenfruede. If you expect others to come to you for your expertise and advise, assuming we are all doing our level best is probably a good starting position to take.

55

But will that make much difference compared to what kids learn from their parents (including by observation)?

If the parents have raised their kids for 17 years giving them the illusion that money does not restrict the kids’ choices and activities, then when the first time the kid’s choice is money limited is college choice, that can be a shock to the kid and parents, or the parents may try to avoid the reckoning with cosigned or parent loans for expensive college.

56

Sue22, just saying, there’s Digital Media offered locally, a legit basis for animation. Animation study involves getting a background in art and tech, some marketing principles, beyond your own designs.

Perfect? No. But a different debt scenario.

57

If this were my family we would have told our child what we would contribute. Let’s say for argument $14k/yr. If after the financial aid package came in and we had to pay $33/yr our response would have been “well that school is not an option”. They would have had to have chosen a school they had applied to that was in the budget. I learned early on what EFC meant and didn’t mean. I also learned early on that what I can pay is up to me not a university or the government. Just because my child was accepted didn’t mean they were entitled to afford it.

58

@ucbalumnus Agree with you there. As a high income family, my kids have rarely seen me buy anything without a discount/code or value assessment. Yep, even expensive stuff like a night in a fancy hotel gets a thoughtful review. We don’t care about designer duds and keeping up with the Joneses. The kids went through a phase where others tried to impart these marketing needs on them and they just rejected them with a laugh. Then again, there were kids in our town of lesser means and their parents often bought them $200 jeans, expensive shoes and much more. They never said no. And the kids became entitled and thought they “deserved” these things. The drip feed of parents is certainly more important that a single course.

There are many kids (myself included) who did not get good financial skills from their parents and had to learn them along the way. So, learning outside the home is also a good option.
If parents have dripped fed the notion that kids should work hard and they will be able to go to any college, that’s just wrong and sadly mistaken. Parents need to be realistic about their means. Kids will eventually learn the truth and it makes no sense to look at million dollar houses when you earn 50K. Or look at expensive private colleges when your budget doesn’t allow it. It also undermines the kids idea of parental truth.

59

@Leigh22 My upbringing in the ‘hood/barrio must be showing.
Those of us, with very limited financial backgrounds would not put a $6000 loan on ourselves if we were struggling to pay our bills. When I grew up, neither my siblings, nor I, were able to get braces because money was always tight. We all needed them. My parents’ priorities were keeping a roof over our heads, keeping our bellies somewhat full, and being able to transport to work in a sometimes failing car.

Now I just live with the smile that I have, and appreciate that I can now pay for ortho bills and dental bills on my own.
I think it would’ve been very hard on my parents to take out a $6000 loan for braces.

My point was that there are ways to work with orthodontist, on payment schedules and other things, if you’re willing to go that extra mile, and admit that you need help financially. The problem is most people don’t admit that they need financial help until it’s too late.

I feel for this family but I really think that, given their situation, they could have asked more questions, and looked at the cost of the school before promising something to their child.

60

I think I have five colleagues at work who have “adult braces” right now, and my dentist has pestered me to think about it. (I had braces as a kid, but they fixed one problem- the overbite, and nothing else).

Put me in the camp of braces not falling into the “survival” category of parenting unless it’s a severe maxilofacial issue that impacts eating and chewing. There are lots of people in their 20’s, 30’s and 40’s who get braces because their families couldn’t afford them growing up.