Financial Advice needed --

Paying for College
1

<p>Calling all parents with experience, please help. My daughter is choosing between 3 colleges as follows:
A. Prestigious, no financial aid or merit, about 47K
B. Less prestigious than A, no FA or merit, 30K
C. Somewhat less prestigious than A, 38K
D-E-F Colleges, FULL RIDES , daugther will not consider!</p>

<li>Is prestige worth the price of college A?</li>
<li>Do most parents use home equity to pay tuition?</li>
<li> Although we do have investments, I would prefer not to clean out my savings here, but to finance the tuition–is this how most people handle this?</li>
</ol>

<p>Yes, we can pay for either, I suppose, not without sacrifices.
My daughter applied to colleges D-E-F to make me happy, but I knew that she probably wouldn’t go.<br>
Thanks in advance for any help–we are getting lots of advice, but mostly from people who have never dealt with the issue.</p>

2

<ol>
<li><p>Picking a college is as much an economic decision as it is anything else (oh there are some on this board that hate it when I bring this up). I am thrilled that your daughter was admitted to a prestigious school, but money talks and debt will be a albatross around somebody's neck. Without knowing more, I'm inclined to say "no", it's not worth it.</p></li>
<li><p>Home equity is a very common method of paying for college. There are smart ways to do it, so do not just run down to the bank and take out an HE loan without first examining the rest of your debt and cash-flow.</p></li>
<li><p>DO NOT bankrupt your retirement to pay for your daughter's education. She has much more time to prepare for her retirement that you have to prepare for your own.</p></li>
</ol>

3

<p>JMom</p>

<p>In our household, paying for college IS an issue, so we sat down with our son when he was a sophomore and explained the situation. He can choose any college he wants, but we can only afford x amount; everything above that, he would have to take out loans.</p>

<p>Most of our FA packages have arrived, and like you daughter, my son was surprised to find two schools willing to give him a full scholarship. These are not his first choice schools, but even his first choice school looks like it will come under our predetermined x amount. So we said, the choice is yours. Choose the full scholarship school and have money for grad school, a car or whatever, or choose your first choice school and use the funds that were earmarked for college with our blessings.</p>

<p>Only you and your family can determine what you can realistically afford to spend on college. We have two other sons, a farm, and not as much in our IRA as we would like, so the right decision for our family was pretty obvious.</p>

<p>Good luck.</p>

4

<p>We made clear to our son from day one, and are making clear to our daughter as she starts to contemplate college, that there was no guarantee that he would be able to attend any college to which he was accepted. That the selection would include financial considerations after reviewing financial aid packages from the several colleges.</p>

<p>I suspect that a lot of parents don't make that clear to their kids as the process starts-- and the kids get their hopes up about attending this college or that college. And they get very excited when they're accepted-- and then it would be very hard to tell them at that point: "Sorry, we just can't afford your first choice."</p>

<p>But that's the reality. Cost HAS to be a consideration for most families. It's not fair to the other children yet to attend college, and not reasonable to give your kid a blank check to attend any college, regardless of cost.</p>

5

<ol>
<li>I am amazed how many people say yes to A; I would ask which school has the top rated program that she wants to study and compare it that way.</li>
<li>Home equity line of credit is great - use it when you want and pay it back as you can.</li>
<li>We also use the college's tuition payment plan, no interest and can take up to a year to pay it.</li>
</ol>

<p>If you can afford any of them, then concentrate on where she will do best/fit in/be happy. Then hopefully she will do well.</p>

6

<p>I think that sometimes we look at these numbers conceptually and we don't think about them in terms of real money and unless you are sitting on this money and can easily write a check to cover it, this money has to be borrowed and repaid.</p>

<p>This is the main reason that the advice to many parents is have the money talk upfront, and let your kids know how much you can or are willing to pay/borrow for their education.</p>

<p>while we as parents have a moral and social obligation to give our kids a college education, they are not entitled to one nor do we owe them an education at a price that will be onerous to us (especially if there are other kids coming down the pike).</p>

<p>Say it with me slowly, $188,000.</p>

<p>Not counting 4 to 5 % tution increases each year will put this number close to $200,000.</p>

<p>$200,000 will make a nice chunk in the cost of med or law school.</p>

<p>It will make a nice down payment on a first house (in some parts of the country it will pay for a very nice house).</p>

<p>Unless there is truly an appreciable difference other than the name factor, having to swallow $200,000 in this stage of your life when you are coming into retirement before this debt is paid is not a financially feasible option.</p>

<p>Say your house is paid for and you decide to pay the cost of all 4 years upfront in order to not incur any increases.</p>

<p>if you were to take out a 200,000 equity loan at 6.25% for 15 years, your monthly payments would be $1724.85 per month, $308,671 over the life of the mortgage and $108,671 in interest.</p>

<p>Prestige is a relative thing, college is what you make of it, and more than one route will end up taking you where you need to go (from a person who attended City University as an undergrad, and went to an IVy for grad school). If your D really desires to do well and achieve, she will do that no matter where she attends. </p>

<p>The numbers and the money is very real, sit down, talk to your daughter and hopefully you can find a happy medium. good luck</p>

7

<p>you have the money, your child has been accepted, you apparently allowed her to apply to the schools of her choice and made her apply to the schools of your choice, which according to you, you knew she did not wish to attend. As I see it, you're pretty much stuck. Tell her to overnight at the 2 or 3 of them and pay for the one she wishes to attend. Hopefully she will be happy there and graduate in 4 years. If she wishes to go to grad school, she can pay.</p>

8

<p>Stuck? Far from it. Part of being an adult is making decisions that result in temporary dissappointments.</p>

9

<p>If you are set on prestige then finance it, DO NOT empty your investment accounts.</p>

10

<p>Given the fact that you do not apparently qualify for need-based aid (you've mentioned merit aid only) -- I assume that you have a decent income and assets, even if they are not liquid. So to answer your questions:
[quote]
1. Is prestige worth the price of college A?

[/quote]
That one is up to you. I don't think prestige alone should be worth extra money, but there can be a connection between prestige and the quality of the college. Of course for many people, prestige is worth more - but that is an intangible only you can decide.
[quote]
2. Do most parents use home equity to pay tuition?

[/quote]
The financial aid system is calculated with the assumption that parents will borrow, and many do the borrowing either via a PLUS loan or a home equity loan.

[/quote]

[quote]
3. Although we do have investments, I would prefer not to clean out my savings here, but to finance the tuition--is this how most people handle this?

[/quote]
How "most" people handle things really isn't the question - its what is best for you. Either spend some time with a calculator and spreadsheet to work out the best combination of spending/borrowing for your situation, or get some financial advice from someone knowledgeable about your situation. </p>

<p>But I think your main question was: do most parents borrow? And the answer is - yes, most do.</p>

11

<p>Jennsmom--we have similar choices. I feel your pain.</p>

<p>Speedo, it's not that we had our heads in the sand about the cost of choices A, B, and C and unrealistically allowed our kids to apply. It was a long shot, maybe, but we had hoped for better aid or scholarships of some kind. There has been a lot of media publicity about competitive financial aid policies at Princeton, Harvard, etc., so it seemed schools at that level were beginning to do more than the bare minimum of meeting the EFC. There was also, and still is I guess, some hope of getting a school to match or come close to a good offer at a less desirable school. In addition, the children in our geographic area are subject to societal pressure/expectations, such as from school GC's, which entail getting into an Ivy/top LAC if you can. In his HS climate, it would have be unthinkable to not try at least.</p>

<p>Secondly, our full ride or almost full ride schools were much more attractive several months ago. When S first visited the almost full ride college (let's call it D) before applying, he liked it, but when he went back for an extended stay he really didn't care for it at all. Our colleges E and F are state institutions which have in the last week announced the impact of major state budget cuts. Despite their good intentions, this could mean the eventual elimination of the scholarship funding and I suspect a possible reduction in the quality of the educational programs. Should S then go to one of them when the only reason he even applied to begin with was cost?</p>

<p>The good news is that most of our children have a decent college to attend that they can afford. My S has college D. He'll just have to get over the disappointment, learn to find things there he does like, and make do. So will we. Life goes on, and I don't want to be a whiner.</p>