What I particularly love about Singletary’s column is that she speaks to people who may have been raised in an environment where there not only was little to no money, but where there was the risk of losing any money saved. It might go to a relative’s dire need (someone died, needs to be buried, and no one else has any money saved), or that saved money would make one ineligible for government assistance. Therefore, the mindset in which they may have been raised was, “Spend any money that comes to hand immediately on something you want, since if you don’t, the money will go to something else, and you won’t have the thing, nor will you have the money.” I’ve seen this in people of all races, both immigrants and US born, but the one thing that they had in common was that they felt that they had no control over their own finances. Either they were dependent upon government assistance, or they were dependent upon someone else who called the shots on how any money was spent, or they had family who would need any money they saved, and they would have to give it to them or it would be a violation of family loyalty.
In this context, it becomes understandable how people might feel that the opportunity to go to college, any college at any expense, is an opportunity not to be missed for that child, who may be the first in their family to go to college, and that the parent and child should take out loans to accomplish it, since after all, the whole concept of ever paying back loans is just way off their radar - there’s no real comprehension of it. Meanwhile, the parent and child may be taking out massive loans for a degree (if obtained) that would earn them not much more than they could have earned without a college degree.
I’ve seen this in my work - a low-achieving student who should have started out at the community college down the street, from which they could have transferred to the excellent flagship state U, instead chose to go to a bottom of the barrel private college (now closed), for which the parent and student took out massive loans, for a degree (which BTW they never got) that would essentially qualify them to be a security guard.
She lays out the basic essentials of how to handle money, so as to become financially stable and secure. I don’t always agree with everything she says, but almost always, she is spot on.
The column highlights an extremely important element for HS students, too: don’t take loans to attend a public university out-of-state if you have a well-funded university in-state. In her case, being a Maryland resident who wanted to attend UNC.
On these threads we have every possible combination of states. I have read just yesterday a student from NC with a very good chance at UNC-CH who wants to attend OOS flagships…
For students who have a good reason to want to study in another state, they need to know to look for universities that give scholarships rather than apply for scholarships and hope that’ll be enough.
It was interesting to observe several friends’ kids in this income bracket who simply didn’t apply to the UCs because they wanted to go to prestigious east coast schools, but then ended up last March with a disappointing set of admissions, and have ended up paying $80K per year for schools they didn’t expect to attend (eg Vassar, U Miami) and were not any better than the UCs they could have got into.
I may be one of the more anti-debt people here on CC, but I agree fully with this. I took out a modest loan for my master’s degree, and it also was a very good (and carefully considered) investment. In retrospect it paid off very well and was not a significant problem going forward.
In the spirit of the original point of this thread, I do agree that students often under-appreciate their in-state public university. There are a lot of very good public universities in the US, and for many students (not all) their in-state public university, or one of their in-state public universities, may be the best choice. Of course, for a student from California or New York or another large state their #3 or #4 or #5 in-state public university might be worth considering (not just the flagship). Similarly for a student from a WICHE / WUE state the various WUE schools might be worth considering.
The most common reason that I hear for kids not wanting their in state flagship is that they want a fresh start, socially. They dont get it that maybe 20 kids from their high school will be in their class of 10k students.
My daughter had 4 kids from her HS who attended her instate public college, and they were not all in the same year.
When her sibling toured Cornell, she said hello to 16 kids from her HS, and she said they all lived in the same dorm. She said that there were even more attending that we did not run into (Cornell accepts a lot of students from our HS).
Sometimes they try so hard to leave their instate public, that they don’t stop to think that not many from HS actually attend.
It also depends on major (if you plan on Engineering or premed you may well see kids you know but it’d be in a large lecture hall, so does it matter? What about if you’re doing Studio Art or Spanish?) and on how unpleasant to traumatic HS was. The thought of attending a university where one’s tormentors attend, even if odds are low you’ll ever see them, is a nightmare (actual sense of the word) for bullied kids or sexual assault victims for example.
Rationally speaking though if the entering freshman class has 5,000+ kids, pick a Living Learning Community of personal interest and your odds are limited you’ll be with ppl you know and don’t like.
But if there’s a good reason (not like the daughter listed in the OP, who randomly thought UNC CH would be so different from UMD) the issue is going to be finances.
NYU and now Northeastern seem to tap into the pool of upper middle to upper class kids who want a city and not attend their flagship regardless of debt incurred.
Good point. My D22 felt the same way. In her case, being in a WUE state opened up a lot more state schools so the number of students from her high school were distributed among a greater number of schools, further reducing the number she would encounter in most cases.
If the family can afford for the student to pay OOS tuition to avoid a hs nemesis, great. However, going 2000 miles away isn’t going to guarantee you anything.
My daughter and her frienimy from a rival high school were 2 of 9 girls on the same sports team in college. They survived. Other daughter kept telling me she wasn’t going to be roommates with my friend’s daughter in college (they’d gone to school together for 6 years, k-5) and I said that was fine. Turns out they were in the same sorority and really needed each other during that first year.
My son has told me this. He was down to 3 in the end. Top choice was Rose-Hulman at about $38k. He had really tried for more scholarship and I was willing to pay for him to go, but $38k would involve loans for him and us. Towards the end, he said “fine, I’ll just go to Michigan”. Michigan is obviously great, but he did not love it and it was still $33k, lol. We could do it with no loans, but why spend that much when he didn’t love it? I told him I’d rather him go to MSU for half the price, or Rose-Hulman with the loans. In the end, he picked Alabama for nearly free. I give him tons of credit for never looking back and jumping in fully. The only time he has pointed out that maybe Rose-Hulman would have been better is for the upcoming eclipse in April! Other than that, there have been no if-onlys from him. And last spring, he told me he was very happy there and was so glad he was not taking loans. Some of his friends have loans and he is hearing their stress already. And now he’s encouraging his siblings to join him.
So the result is the same as in the article - thankful for no debt, the way he got there is different. Michigan doesn’t offer much for scholarships and we don’t get need based. He did get a one-time $1500. And we know lower income students that did get some great grants and assistance, which is awesome.
You have a wonderful son, for his having realized that he could get a perfectly fine education at Alabama for nearly free. But most students aren’t in the same position, don’t have the academic credentials to get a merit free ride at any school, let alone at a flagship state U (albeit a “lesser” one). It’s not just the loans. If you earn enough to not qualify for any fin aid, it’s likely that your last dollar earned is taxed at 40%, or in some locales, even closer to 50%, once you factor in federal, and often state and local taxes. That means that to pay 150K for college for a kid at a state school, you still had to earn 300K to do it. If that money can go towards retirement for a parent, or buying a first home for the kid, it’s a beautiful thing.
That is true about him :). But, we are not close to 40% in taxes, if I add up state and Federal. 26% total? We do well, but will never see close to $300k or even $200k for a yearly income. My parents gave us 2 years of pre-paid in-state tuition, which helps a lot at U of M and less at other places. And we have almost 2 years of tuition saved (for each of 3 kids). Finally, we’d stop/reduce contributing to retirement to cash flow the rest. We started young and have a good amount saved, so we can do that and be good still.
You have to look at it as taxes paid on the last dollar earned, not overall taxes paid. If the two of you have a combined income of under 190K/yr, you’re paying the feds 22% of every dollar over the first 90K. Let’s say you also have a state income tax of 6%, and the misfortune of living in a municipality with a 4% wage tax. So you pay 32% of every dollar earned over 90K combined, in taxes. Now let’s add in social security tax, which is 6.2% of anything up to 160K/yr for each of you, so the entire amount. We’re now at about 38%. Plus 1.45% for medicare tax, right up to the top. So we’re getting pretty close to 40% on every dollar over 90K/yr for your combined income, 36% if you don’t pay a local tax, 30% if you also don’t have state tax. That’s what you’re paying in tax for the extra money you’d have to earn to pay for college, since I’m assuming that you need all of the first 90K/yr combined to live on (on which you pay only 12% to the feds, but the same on all the other wage taxes). The federal rate goes up to 24% for every dollar on joint income over 190K, 32% for over 365K, 35% for over 462, and 37% for over 693.
So yes, a middle class family has to earn 1.5 dollars for every dollar spent on college, and an upper middle class family pretty much has to earn 2 dollars for every dollar spent on college. The loss to your retirement savings is substantial if you have to divert retirement savings into college savings.
When you look at it this way, an upper middle class child who chooses the full ride over the rack rate Ivy education could be saving his parent about 700K in earnings needed to pay for that now 360K Ivy education.
I have heard this as well. But our flagship has like 37K kids, so I tell them to do the math - the entire senior HS class would have to go there and that would only be 1% of the entire flagship population.
DC2 didn’t want to go to our state flagship because it was overwhelmingly big for themr. But we told them that they had to apply because it was their financial safety.
Both of my kids were grateful that we paid for their school and they had no debt when they graduated (no loans for us or kids due to years of saving and prioritizing.) I was grateful that they were grateful - I thought it might be years or decades before they recognized and appreciated it
When I read about kids who don’t have the money for certain schools, and they are willing to take out a six-figure loan (because it is their dream school or they don’t want to live close to home or they don’t like their affordable state school for whatever reason), I want to ask, “ever heard the phrase beggars can’t be choosers”?
And scream, “don’t go into that kind of debt and don’t let your parents go into that kind of debt!”
Sure, a Ferrari would be great, but I can afford the Honda, and they will both get me where I want to go.
One of my kids who had been going through a stage where they did not seem to appreciate at all the 100% help we gave for college, got a reality check when they went to the admitted students event in June, met and made friends with other admitted students, one of whom then had the financial rug pulled out from under them during the summer when their parents said, “Never mind, we’ve now decided (after you’ve been accepted, and have accepted the school’s offer) that we won’t give you any money for college.” And it wasn’t anything the kid had done, or not done. They just decided that they weren’t going to pay for college, once the time to pay the first bill came nigh.
My kid will graduate debt free. However picking an in state school was the last option. She wanted her to have the full college experience. That meant flying back and forth between home and college. She also wanted to be in her dream city. She got accepted to a great school in her dream location. She was offered a great merit scholarship plus prepaid tuition made it all possible.
I agree with all that you said, but a small complaint on the WUE/WICHE is that the top state schools seem to opt out of it which is so frustrating for my high achieving children that are also cost-sensitive
