Financial Aid Crisis

Paying for College
21

<p>"If is "$81K" so much money to you, how come most of the money is going towards bills, insurance, mortgage, etc.? "</p>

<p>That can happen when people live beyond their means. This includes when people run up large credit card debts, which, from what you've described is what your mom has done.</p>

<p>I have lived in Detroit, and am very familiar with the cost of living there. Its cost of living is far below that of most major cities in the US. While $81,000 a year wouldn't go far in a place like D.C., Boston or San Francisco, it does go far in Detroit.</p>

<p>If the house that your mom inherited is burdensome, your mom can sell it -- to relatives if they are so insistant that the house stay in the family. If the taxes in Detroit are burdensome, your mom can sell her residence and move elsewhere to a place that would be more affordable. It's a hot housing market now, so she should be able to sell relatively easily. </p>

<p>With a two-person family that includes a college junior who goes to college out of state, your mom probably could downsize to a smaller place. </p>

<p>I agree that a 40% pay cut is very difficult. However, your mom still has alternatives. Yes, these are painful alternatives, but, truly that's life. Most people make major sacrifices to send their children to college. Most people in this country would be delighted to have the income that your mom now has, and they wouldn't have dreamed of making what she used to make.</p>

<p>If your family still has 3 cars for 2 people, that's another place where you could cut costs.</p>

<p>In addition, you and your mom could share one car. Yes, distances are far in Detroit, but, again, that's what people do when money is tight. Presumably, too, you don't need a car during the school year at Northwestern. If you really do need a car this summer, you could sell it after your internship. You could get another car after you graduate.</p>

22

<p>And the fact that my mother has lost nearly 40% of her income is just hurtful -- especially when you will now lose $1800 a month.</p>

<p>My bad, that $1800 only speaks of her first job; it doesn't include her second job.</p>

23

<p>but is she still making 81k? that is still quite a chunk of change particulary when in past she has been making 6 figures for a two person family- that would leave plenty for investments- etc. Detroit is not an expensive place to live- in fact I compared it to where I live- Seattle_ and in Detroit we would be spending 13.8% less to stay at the same level of income- however employers in Detroit pay 4.5% more for the same type job so it sounds like we would be doing well. :)</p>

<p>To put it in perspective- we have a family of four and have never made close to 6 figures- most families don't. Yes changes in circumstances are hard- we have tried to accomodate that- by staying in the same home that we bought 22 years ago- keeping our mortgage low. We have had fluctuating finances, and periods of time when we didn't have any income at all except for unemployement or strike benefits ( not at the same time)
I know this is a hard lesson to learn- but life is about choices and hopefully we learn from the choices we have made in the past so that we can make better ones in teh future. To project incurring over $100,000 of debt for all four years of undergrad is reckless.
I don't see how anyone could even think of taking on that much debt particulary at a time when their income is being reduced- how would they pay it back?</p>

24

<p>Tensighs,</p>

<p>Look. You and your mom are probably living beyond your means, if you complain that $81,000 isn't enough for two people in freaking Detroit.</p>

<p>Cut some costs, SELL the house (to the relatives, like NorthStarMom said), use ONE car, and for God's sake, GET A SCHOLARSHIP.</p>

<p>You do understand that you don't have to pay them back, right? That money is yours, free and clear.</p>

<p>$100,000 of debt in your undergrad years. Goddess and Gods, that's insane! It's also a HUGE financial risk.</p>

<p>But I have to say, you don't seem to be listening to any of the advice the people on this board have offered; you're just complaining.</p>

<p>You asked for advice; be courteous enough to listen to it.</p>

25

<p>
[quote]
While she did not have to spend $60,000 on a top of the line car, she could definitely get some reliable transportation. What part of this scenario makes sense"

[/quote]
</p>

<p>Tenisghs,</p>

<p>I am sorry for not clarifying. I know that your mom did not spend $60,000 on a car. What I meant to say is that your mom has $60,000 worth of debt that she has taken on for your education. </p>

<p>Now she has a car that is dying. Even though hindsight is always 20/20, when it comes time for her to actually replace the car, she may not be able to because the $60,000 woth of loans are now part of her credit history as outstanding debt. It may not be easy for her to get a new one. </p>

<p>Since the 2 of your rely on this one car, you wil both be in a precarious situation. I am just saying if she knew then what she knows now, part of the $60,000 worth of debt she would have incurred would have been for a reliable car. </p>

<p>I know that you may think that we are all beating up on you. I know for my self, I think that you may have blinders on regarding your financial situation. You do not seem amenable to making any changes (example : maybe transferring, or having to go part time and working, selling off assets, etc) but are placing all of your eggs in one basket that Northwestern is going to give you more grant aid. What is your plan B in the event that Northwestern does not give you any additional grant money? Even if they do increase yoru grant money, they probably are not going to replace the whole $29,000 worth of loan aid with grant aid. Is it your mother's buy-in to keep assuming debt for the next 2 years at this rate?</p>

26

<p>Tenisghs
I am sorry that you are in this pickle. I post here instead of replying to your email because I want this to be a caution to others who are determined to have as their first choice a school which has a reputation for not giving aid.
You do have some tough choices, but life is full of such choices.
Just last year, my daughter who was a junior and at a school that she loved, was forced to make a decision. She had to retake a critical course for her major. She could take it in addition to her senior year thesis which was out of the question. She could transfer or she could return home, attend a community college retake the course and return the next eyar. She opted to return home and finish her senior year after her friends from freshman year had graduated. THis was a hard decision, but IMO it gave her experience in making tough choices that will serve her well in her adult life.
You and your mother have several ways to go. I wouldn't suggest moving- but most families do not have a 2nd home, certainly not one that is not bringing in income. As a two member family- there is a lot of room to reduce expenses, but only you and your mother can decide what is worth it.
You do have a lot of choices, you are very bright and Northwestern is a very good school, it would be unusual for a college not to give credit for courses that Northwestern is giving you credit for. As you get closer to graduation however, that will become more problematic as schools will expect a certain number of credits from their school to recieve a diploma.
You might try stepping back and thinking about what you would advise a friend whose parent was close to retirement and had taken out a large loan for college with the expectation of taking out more.</p>

<p>( and actually Seattle is a lot more expensive than Detroit- housing is more- income is less- if your mother earns $81,000 in Detroit- to attain the same standard of living in Seattle she would have to earn $121,321 to stay level- needless to say, most people don't make near that much)
<a href="http://houseandhome.msn.com/pickaplace/comparecities.aspx?FromState=MI&FromCity=Detroit&ToState=WA&ToCity=Seattle&btnCompare=Compare&EarningFromCity=%2481%2C000&EarnToCity=%24105%2C587&Changed=1&prevFromCity=0&prevToCity=0&prevFromState=MI&prevToState=WA&EarningToCity=65177.7137367915&Ratio=1.30355427473583%5B/url%5D"&gt;http://houseandhome.msn.com/pickaplace/comparecities.aspx?FromState=MI&FromCity=Detroit&ToState=WA&ToCity=Seattle&btnCompare=Compare&EarningFromCity=%2481%2C000&EarnToCity=%24105%2C587&Changed=1&prevFromCity=0&prevToCity=0&prevFromState=MI&prevToState=WA&EarningToCity=65177.7137367915&Ratio=1.30355427473583&lt;/a&gt;&lt;/p>

27

<p>What is this major that is not offerred anywhere else?</p>

28

<p>First of all, don't even tell me about taxes, insurance, ect. I live in northern New Jersey...taxes are high as well as insurance, and jobs are not easy to come by. My family somehow survived on peanuts for 2 years without a substancial income. Even now with a job, my parents income isn't even half of what you and your mother live on...and there are 5 of us! Detroit isn't like living in NYC, San Francisco, Boston. I don't know what kind of bills you people have, but something dosen't add up. I say it again...81k is a lot of money for 2 people. One thing you didn't mention...do you work? What do you personally contribute financially to your education?</p>

29

<p>She mentioned somewhere above that she is doing an internship. Not sure if that is a paid thing??</p>

30

<p>I guess I can't add much more than what has already been said. A few red flags have been raised in my mind. You indicated that your mother borrowed 29,000 for each of the past 2 years for your college and borrowed money from retirement accounts. How much of your mother's or your incomes actually went toward college expenses? Although many on this site do have pretty good cash flows to work with, few would have trouble living on 127,000 for 2 in the household. If you couldn't swing it on that income you are right to be in a panic now. Many posters have offered good, solid advice but as in the past you seem to have an excuse why none of it would work for you. I honestly think your mon needs to sit down with a financial advisor and do some heavy duty studying of why your household finances are in such a state. You might say your mom can't afford the fee but I'm not sure she can afford not to.</p>

31

<p>Oh my god I would love to know how 81K is spend on bills, and little room for anything else. For two people no less.</p>

32

<p>Me too! This is ridiculous!</p>

<p>She needs to get a job or scholarship or sell that house!</p>

33

<p>My mom is currently speaking with a debt consolidation lender. That right there speaks volumes. She is doing everything to avoid bankruptcy. If she has to consolidate her debt (which is over her head by the way), that is why we are panicking when the current financial aid package does not reflect our current situation. We don't (and won't) make $127,000 anymore.</p>

34

<p>I am currently majoring in Social Policy and adding another major in Black Studies. Chances are, not all my credits will transfer and I'm almost finished to the point that I can graduate early. </p>

<p>Emerald, are you paying $6000 a year in car insurance for just two cars and two people? And these are not expensive cars? I'm not gonna say anything to the guy from New Jersey because I know auto insurance rates there are just as high (if not, even more) than Detroit.</p>

<p>The problem here is that it's just only my mom and me. I don't have a father figure in my life. If anything happens to her, my life is pretty much gone. If all the bills goes to her, she may feel overwhelmed and very stressed out. All of her money goes towards what two people would share in the cost and payment of bills. It's all about having a safety net. She's not a millionaire -- she is human like everyone else. She has a debt consolidation lender -- I have no idea how much debt she is in, but it's an amount that she qualifies for assistance.</p>

35

<p>If you knew your mom was in debt, why would you even think of having her add another 30k a year onto what she already owes to pay for your college? Did you think that 30k would fall out of the sky, or are you just that selfish? Why didn't you go to a more affordable school to begin with if you knew there was not a great deal of money set aside for college, and your mother, not even you personally, would have to borrow such tremendous amounts of money?</p>

36

<p>The financial aid they gave us for freshman year was not bad at all; it was affordable. It's only as a returning student did I realize and the current financial situation that we are facing now, we must contest the reward package.</p>

37

<p>Tenisgh,</p>

<p>Maybe it's me, but I don't understand how a 29,000 loan in the first year and another $29,000 loan for the second year is considered affordable, especially when your mother also borrowed against her retirement. My concept of affordable is when you pretty close to debt free, have the $$ sitting in the bank, you can write $58,000 worth of tuition checks with no sweat and not miss the $$ and using this $$ does not impact your ability to do something else.</p>

<p>You realize that:</p>

<ol>
<li><p>Your mother's reduced income is going to be reflected in her debt ratio</p></li>
<li><p>Once she consolidates her credit (the whole concept behind credit consolidation is her is to pay off your debt and not to take on any new debt and this will also be reflected on her credit report)</p></li>
</ol>

<p>that she may not be leigible for a PLUS loan (because the loan would be based on her credit worthiness and both 1 & 2 impact her credit worthiness).</p>

<p>If she cannot get this PLUS loan, it means you can get an unsubsidized loan for an addtional $4000. However this will not be enough to meet the loan portion of your financial aid. For the most part FA does not care about the amount of credit card debt that you are carrying. Say you do contest your package, you are not assured that the shcool is going to give you the $$ you need. You should not expect to be takedn from $29,000 in loans to zero.</p>

<p>DO you have a plan in place on how you will cover the gap?</p>

38

<p>The difficult thing here is that colleges do not (nor should they, in my opinion) consider overburdened debt service on the part of families. Simply put...if a family has taken on debt beyond their means, it usually does not factor into finaid unless it is for unforseen catastrophic medical expenses or something of that nature. Tenis...as I recall, you had similar angst over your finaid packages every year even WITH your mom's income. The reality is what others have posted...an $81,000 income, with a home equity (that house has worth!!), puts you in a situation where you likely will not see a huge increase in your finaid package.</p>

39

<p>Why is she in debt? What is the $81K a year spent on?</p>

40

<p>UPDATE: We talked to the Financial Aid Office. They told us to download a form and provide the necessary verification and documents. They will reassess my financial package based on the information we give them, including the signatures of her employers.</p>

<p>Bluealien, the money is spent on bills.</p>