Financing an education

Parents Forum
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<p>I have been lurking for months and finally decided to register and post. </p>

<p>My son is apporaching the end of his senior year and I am pondering the affordability aspect of tuition. He is looking at a private school - with the scholarship and student loan, the price will be about the same for us as sending him to a state school in Illinois.</p>

<p>I think we are okay with spending the 20K per year for our son to have that experience (neither his mother or I did). </p>

<p>So what do I need to know that I don't about financing an $80K education? And be frank - let me know if you think it's a mistake to finance it.</p>

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<p>Also, I will have limited availablity to check back in today but am interested in your thoughts and will be back tomorrow</p>

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<p>20K a year ain’t bad. considering some private school tuition is 50K</p>

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<p>Only you can answer your question. The cost of attending a state university instate is in the $20K per year range. If all works out and your son gets the scholarships etc…his education at this private would cost about the same.</p>

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<p>you have the scholarship already?</p>

<p>What are your’s and his alternative opportunities?</p>

<p>Here is one alternative
<a href=“http://talk.collegeconfidential.com/parent-cafe/1009383-opportunity-value-education.html[/url]”>http://talk.collegeconfidential.com/parent-cafe/1009383-opportunity-value-education.html&lt;/a&gt;&lt;/p&gt;

<p>Another:
DS recently was on a NPR program, 15 seconds to fame.
But this would have only occurred if he made the right choice on selecting his college.</p>

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<p>It’s hard to give a yes/no answer. </p>

<p>My only advice would be to do your financial homework and look not just at what the up front number is but what that looks like over the long term payback. It ends up costing a lot more than just that $80k. There’s of course interest and, the bit many people forget about, the opportunity cost of what else that money could be put towards (savings, retirement account, a mortgage). </p>

<p>If you do that homework and are comfortable with what the projections look like then go for it… but you can’t make the decision until you run the numbers.</p>

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<p>KingJulian – How much of the $20K out-of-pocket can you reasonably (or even stretching) finance out of current income or using some savings? If you can’t handle any of it, I’d be worried about $100K (which is what it would probably end up being with increasing costs and accumulated interest each year from financing all of it.) That would really push me towards recommending community college.</p>

<p>But… if you could swing $10K a year, and your son could earn 3500 during summers/vacations, that would leave $6500 a year to finance, which is practical.</p>

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<p>One had nothing to do with the other. </p>

<p>How is your retirement saving going? Employment prospects? Health? Going 80K in debt during middle-age is a very risky prospect for most people. If you can afford to pay as you go along, that’s one thing but when you say “finance” I think debt.</p>

<p>Also, what is your son interested in studying? Is he looking at careers that require grad school? Swimming in debt is not a good place to be when looking at grad school, especially not at this time in our economy. </p>

<p>This is really a question only your family can answer. It’s easy to be blinded by the promises that colleges make, be brutal and look at the numbers.</p>

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<p>Just keep in mind that your costs will almost certainly go up each year - so rather than saying $80,000 - visualize more like $90,000 to factor in yearly increases and see how that feels to you.</p>

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<p>Rockvillemom is right…the costs are going to go up each year.</p>

<p>Only YOU know how much “extra money” you have at the end of each month that can go towards loan repayment. If you don’t have much left over, then how are you going to make $1000 payments for 10 years? That’s like another mortgage. </p>

<p>Frankly, I would never borrow that much for undergrad. If you can pay for half or more out of current income and maybe borrow the other half, that might be ok.</p>

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<p>Also…do you have any younger kids?</p>

<p>There have some parents on this board that borrowed too much for their older kid(s)’ college costs, and then had no ability to help pay for the younger kids.</p>

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<p>I am not sure what your question is. $20K a year is a good price for a college education if the student is living at the college. Think about what living expenses are for him to live anywhere. So if $20K is the target entire cost figure, you are doing well. That it is close to what it costs to go to a state school gives your student a choice of one or the other without having to weigh in the cost implications. </p>

<p>If you can’t afford the $20k, then it isn’t a bargain. It still has to be paid and it isn’t a small amount. It would be difficult for your student to clear $20K a year, and that is what you are basically giving him in the form of his college costs. So it is a sizeable amount. If it can be managed without putting your family in financial jeopardy, that 's fine.</p>

<p>Most people who go to college do not go away to school because it is expensive doing things that way. They stay at home, work part time, and go to a local state school, bringing the cost down much lower. Just like most students live at home and go to the local public school. But when it comes to college, there are a sizable number of families who will send there children away to school You gotta pay rent for the kid where ever he goes (unless you have a relative or friend who will take him engratis) and the kid has to eat and has living expenses. There is a cost to that. Then there is the tuition, books and other costs that are specific to college. </p>

<p>If the $20K figure is doable–and maybe it means both you and the student borrow, pay money out of current income (meaning the kid works a few hours and during breaks and summers), and the saving accounts are hit as ell–then, the question come up as to which school is a better fit for your student.</p>

<p>If your student is accepted to University of Illinois at Urbana Champaign, that is a fine school with a lot of resources. Tough to come up with a private school that can match that. But perhaps a smaller school or a school with specific benefits that a students seeks could be a better match. Maybe the private school is one with more prestige, more emphasis on a certain field, has an atmosphere that the student likes better. Those can be good reasons to pick the private school over the public. </p>

<p>If the student is going to go to an expensive school made more affordable due to scholarships, do keep in mind that some merit awards can be rescinded if the student does not maintain a certain gpa and/or courseload and kids who were excellent high school students fall flat in this regard each year and lose their scholarships. There may be some behavior requirements that need to be met as well. Make sure you and your student understand the circumstances under which s/he can lose this scholarship and what the alternatives are if that should happen. </p>

<p>Also, anyone borrowing for this experience, either you or the student or both, should understand the cost of repaying this loan. 10 years of paying $X a month can be tough. A lot of my sons’ peers are really sucking it down right now paying back their student loans when they are making barely enough to make ends meet as it is. Some are back home living with parents because of the loan.</p>

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<p>Is s/he really talking about borrowing $20k a year? I don’t get that impression.</p>

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<p>That is a reasonable number, in my opinion. IF you can afford it, it’s not “too much.” I pay less than this for D (top 20 private/need based scholarship) and for S (public with scholarship)… more than $20k/year total … but S will be transferring next year & I believe I will be paying at least $20k/year for our flagship public. </p>

<p>Can we afford it? Yes, we can, considering that we do not borrow. Is it easy? No. Each month, I breathe a sigh of relief to see that there is still money in our bank account. We have a HELOC open, just in case, but we haven’t had to use it. No vacation, no new cars, no fancy anything. It is worth it to us, though.</p>

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<p>Your education is something you pay for once and then resell it over and over and over again without ever getting rid of your investment.</p>

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<p>Great post and very interesting topic!</p>

<p>UIUC is a great school. If you get into Accounting , that is top ranking program (#2)in the country. A graduate can fetch about 50-60K per year working for top IB or Accounting company. The calculation on ROI(Return on investment) will show the positive numbers.
If getting into computer science, UIUC is , again a top program. A graduate can fetch any where from $50-100 per hour job. Again, it is a great school from ROI perspective.
While we all want to get into a school for “Great Undergrad experiences”, or “For finding ourselves”, at the end of the day, we need to eat, have a roof over our heads, and need to feed the family.
I am in the same boat with my S, who got accepted into UIUC and several other top state schools. When it comes down to making our choices, I will make up a spreadsheet and rank everything from 1-5. The items of interests are,

  1. Cost
  2. Location
  3. Strength of the program (or intended programs of interest, since my Son has yet to figure out what he wants to do when he grow up)</p>

<p>This is the fun time and a stressful time for a parent of an high school Sr.</p>

<p>Good luck and Merry Christmas to you all!</p>

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<p>OP: You need to at least plan for 5-10% more than what the school indicates. DD is full pay and it was suppose to be $50K. After all and said done for the freshman year it came out to be $53K. I’m already planning @ $60K for the next year (2011-2012).</p>

<p>Another thing, I was paying on the semester basis ($25K) in one shot but for the spring semester college offered the following monthly option for just $70 enrollment fee (0.28%) and I’ll be paying the $5K each month instead for the next spring semester which will be much better.</p>

<p>Check out if your child school is listed on this, the enrollment fee range from 0 to $100.</p>

<p><a href=“https://www.afford.com/(S(be2ezh55oouytdfxgpvpxz55))/index.aspx%5B/url%5D”>https://www.afford.com/(S(be2ezh55oouytdfxgpvpxz55))/index.aspx</a></p>

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<p>I am paying about that same amount for my daughter’s college, a little less for my son. Is it worth it? I believe so, in their cases. They are both in engineering programs. </p>

<p>The best way to look at it is as one would with any other investment. What is going to be the return? If they were studying art history (sorry to all those art history majors) I would not want to take on that kind of cash outlay. </p>

<p>As for those people that say they wouldn’t make that kind of cash outlay, how else are you going to get a quality education? The local (ie. commuting distance) state school near us is not that great. Sure, math is math and physics is physics, but the challenge and oportunities are just not the same. The engineering company I worked for would interview at a lot of schools but not there, just couldn’t find the level of talent they were looking for. So, once you are not living at home, even state school gets expensive because of the living costs. </p>

<p>My son schooling costs less than my daughters as she is a freshman and is in the dorm (read expensive). My son shares a house and does his own cooking. I am hoping that my daughter will be able to do the same next year. </p>

<p>One thing about looking at costs is you can figure that your “at home” food costs will be less as they are not at home. Depending on how far away they are at school, you may be able to drop the student fromm your auto insurance policy (even during the summer!! when thay are back at home as they are at that point “just visiting”).</p>

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<p>One thing I fogot to mention and it is a pet pieve of mine. Some schools (like the state school my son attends) have poor 4 year graduation rates. He is typical (ie. in the 80% category) in that he is in his 5th year, looking to graduate this coming June. You need to find the 4 year graduation rates and figure it into your cost projections. </p>

<p>The one with poor 4 year graduation rates tend to be state schools (at least in CA) due to funding issues. He would show me how he couldn’t get into the first class of a sequence as those were the ones that were hard to get into. Once you got the first class that acted as a flow filter into the second and subsequent classes, and you could into those. Nothing he could have done differently as far as I could see.</p>

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<p>As Cpt said above, the real cost is the $20K per year minus whatever the cost of living would be elsewhere. If it would cost you $20K at the in-state public and $20K at the chosen private, then I’d have to assume that your financial aid eligibility would make it close to that amount most anywhere. An alternative would be the nearly free community college, then transfer. Unless the financial burden would be crippling, I’d choose the $20K / year over that option.</p>