High EFC Shock!! 40K Good Grief

Parents Forum
141

<p>"where the heck does all that money go?"</p>

<p>Everyone thinks that if they only had 20% more income, let alone 50% more, that they would have money to burn. I know famililes worth $10 million, with income to match, who feel poor and imagine that if they only had a bit more things would be easier. It's same with those who have $100 million. They might not be worrying about the cost of tuition, but it bothers them that they don't have another vacation home or a bigger jet. Sometimes they even work too hard. No one is ever satisfied.</p>

142

<p>and as a family who makes about $100,000 less I can actually see lots of places there where money can be saved- it just depends on what your priorities are :)</p>

143

<p>Well, I just finished our federal taxes (God bless Turbotax)
and am satisfied to see in black and white that we really ARE moving backwards......thought it was all in my mind!
About 10% less income this year than last. Explains my chronic cash flow problem!!!
At least another tuition payment isn't due for a few more months.....</p>

144

<p>The social security statement that comes out at least once a year, will also how your income has gone up and down over the years, this can be useful in explaining to finaid offices why you don't have the amount of savings that your income would otherwise indicate.</p>

<p>I am thinking about doing my taxes today- I have started- but ugh....</p>

145

<p>dstark, I wish my both my medical insurance and my property taxes ran around 5,000 each. For our family either of these at 5,000 would be a bargain! Oh well, easy come and easy go.</p>

146

<p>It posted twice, sorry.</p>

147

<p>"No one is ever satisfied."</p>

<p>We say that, and then feel like it's out of our control. </p>

<p>Our family actually chose to halve our income (at least, we'll probably get back to half eventually), and we're doing okay. We don't miss what we never had. My H can live like a normal person, not the stressed-out guy on his way to a heart attack he'd become. With him home more, and taking over more than half the chores, I'm happier (and may even finish that novel I've been talking about my whole life.)</p>

<p>There's a lot to be said for living below your means--it really is possible to be satisfied with less.</p>

148

<p>
[quote]
I would also like to see an example of someone who is "washing dishes until they bleed" who pays full freight tuition! It probably doesn't work that way. Those people usually qualify for need based aid.

[/quote]
</p>

<p>Undocumented immigrants (non-citizens or non-permanent residents) often do not qualify for federal aid and make up the majority of people in these jobs</p>

149

<p>It's interesting to see dstark's spending. I think we were lucky to have negligible costs for medical/dental (80-90% covered by insurance, with some co-pays), far less car maintenance (one old car -- but of course depreciation is an implicit cost, and dstark is saving to ammortize that), far less home maintenance (as I mentioned, deferred a lot during run up to college and during college years of my kids), far less on clothing/haircuts, far less on mortgage (remember, we're still in our starter house). Our contribution to retirement is much lower but matched 2X by employer so may net out to more. We have far higher spending on holiday gifts (3X dstark's). We have substantial contributions to charity (well, $2K-$3K or so), probably inadvertently left off the list by dstark.</p>

<p>Sure wish we had $16K left over. But we started saving for college and accumulated over the years.</p>

150

<p>Here's ours....I changed some of the amounts. I did NOT include the 16K for retirement because I am comparing this to my AGI for the year which does NOT include the retirement contributions which are pretax. BUT I also did NOT include the $52K that we will be spending next year for our kids to go to college (2 kids). Clearly our total of $103900 leaves us with $13100 to offset that $52K bill. The $52K does NOT include the stafford loans both kids will take out, the school grant (#2) or the scholarship money (#1). Clearly, we will be in the hole...which is why we will NOT be contributing as much to retirement accounts, AND we will probably tap into our home equity. We feel fortunate to be able to make these choices. </p>

<p>-45,000 taxes (federal, state, SS)
-10000 food
-3,000 clothing, haircuts
-1200 medical insurance
-1,000 dentist
-1500 medical and dental not covered
-5,000 electricity, water, heating, garbage, daily newspaper
-2000 flights for kids to come home (#2 going to college on opposite coast)
-5,000 gasoline
-2,000 car maintenace
-3,000 car insurance
-1200 homeowners insurance
-6,000 property tax
-3,000 household maintenance ( painting, things breaking etc. )
-12000 mortgage
-16,000 retirement savings, savings to buy a new car, etc.
-1000 cable for internet and tv
-1000 cell phones
-1000 gifts for Christmas, birthdays, weddings, etc.</p>

151

<p>Quote: "Undocumented immigrants (non-citizens or non-permanent residents) often do not qualify for federal aid and make up the majority of people in these jobs."</p>

<p>If you live in Massachusetts (I don't) there are several legislators who are pushing hard for free tuition to "undocumented" immigrants. In fact, a woman was nominated as a running mate for one of the democratic candidates for Governor and her claim to fame is that she supports such a measure. Ironically, she had to withdraw her nomination for Lt. Governor for failure to pay taxes, loans, and repayment of her own student loans!!</p>

152

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<p>This is wonderful, and can certainly make a HUGE difference when doing retirement planning and contributions. Sadly both DH and I are the only ones contributing to our retirement accounts. Our employers contribute NADA.</p>

153

<p>That cumulated retirement (which was mandatory, not optional--5% of my gross matched by 10% from employer) is adding up. But during last 10 years or so, had virtually no opportunity to contribute to a supplemental 401K; have just started this in last year, with goal of putting in $10-$15K per year. Of course, the stock market could go all to hell. . . so it's not guaranteed, but I'll take my chances on that versus any defined benefit plan these days where employers may default on their promises.</p>

154

<p>There is already plenty of government subsidization of higher education and financial aid in the US. State governments fund public universities and community colleges to give their residents access to affordable education. The federal government and state governments also underwrite much of the financial aid that is doled out at both public AND private universities, including work study, grants, and subsidized loans. In fact, some have suggested that part of the reason that tuition has gone up so much is because of such government subsidies. </p>

<p>One thing that has bothered me in reading this thread is the assumption that a low EFC means you will pay nothing or less to go to college.
Last time I looked, very, very few colleges offered financial aid packages comprised of 100% grants. Most financial aid packages include loans and work study -- students (and sometimes their families) have to work to go to college if they need help. A low EFC doesn't mean you get "free" money. Your child will be paying in the form of loans and work study in almost all cases. I myself would rather have a high EFC and not put that burden on my child, as I remember well what it was like to work my way through college and then pay off loans afterwards. </p>

<p>I myself like the Canadian system. The government will match parental savings for post-secondary education, and matching is a sliding scale based on income. But the message is clear: the family has to contribute in order to get the direct government funds.</p>

155

<p>"but to hear stories of families who drastically cut back on their spending to send their kids to college w/o debt is so touching."</p>

<p>Hmmm. I would not call it "touching," but would simply say that their priorities differ from mine.</p>

<p>I truly don't understand why some parents would make such sacrificies so that their kids graduated from college debt free. After all, the kid's college education and any debt that the kids incur is an investment into their own future.</p>

<p>I took out loans to help pay for my college. I did not resent my parents for my having to take out loans. I felt very grateful that I was able to go to the college of my choice, and I took real pride in paying back those loans on time. I will never understand some people whom I met who did things like virtually having to be sued before they paid back their loans. Indeed, that was one action that caused me to turn down the marriage proposal of a former boyfriend. </p>

<p>I also don't think that it's an almost unthinkable sacrifice for students to be expected to work while in school or during summers to help earn money for college. Again, they are investing in their own future. I don't see doing such jobs as being particularly arduous or worthy of special praise. I did it myself, and didn't feel sorry for myself while doing those things. </p>

<p>Finally, I don't understand people who seem to think that professional folks who have offices are working as hard as are people in menial jobs.</p>

<p>Sure, the professional folks may work long hours and have to travel, but anyone who has taken the time to get to know people in menial jobs will realize that they are working 2 and 3 jobs and still are having difficulty earning money for basics like food, a basic home, and if they're lucky a car. Those basics often don't include health care, and certainly don't include things like private schools, music lessons, summer camps (except for perhaps a cheap vacation Bible school). </p>

<p>I have had professional jobs that required long hours, lots of travel, and lots of stress, but I have always felt so lucky that I didn't have to do the kind of jobs that my great grandmother did. Although she was a smart woman (who managed to send 3 of her 4 kids to college despite their not being scholarships for those students back in the early 1900s), she probably didn't even get past 6th grade. She spent her life working as a hospital laundress -- back in the days before washing machines, when all of those filthy, germy linens had to be washed by hand.</p>

<p>She literally worked herself to death, and there are people now who do similar hard jobs for low pay, no benefits. There is absolutely no way that I would compare the comfortable type of work that I have been able to do with the hard, thankless tasks that people do who spend their days working at places like McDonalds, and then do things like clean offices in the evenings. </p>

<p>So, I'm in the category of middle income people who will get either no or next to no need based aid. My son could go to our state public schools reasonably comfortably for us as those schools are within our budget. Our son also could get merit-based support that would allow him to go without greatly stretching our budgets to many second tier and possibly some first tier private colleges.</p>

<p>Yes, his choices are restricted by the fact that my husband and I aren't willing to pay out of our pockets $40,000+ a year for S's college. But IMO we are a lucky family to have the lives we have, and S also is very lucky to have so many options. I don't feel that these options ruin S's life. I don't feel that the world or the government owes S the opportunity to attend the best college that he's able to gain admission to.</p>

156

<p>
[quote]
I truly don't understand why some parents would make such sacrificies so that their kids graduated from college debt free. After all, the kid's college education and any debt that the kids incur is an investment into their own future.

[/quote]
Call it family tradition in my case. The day I left for college my dad gave me a little talk about this and that, but his final line was this: "We can't promise you an inheritance, but we can guarantee you a good college education." And off I went. I felt the same way about my kids. Launch them debt free if I can. My dad (an engineer) did the same with his 5 kids, 2 of whom went to private colleges, and 3 to public ones.</p>

<p>Of course I definitely see the option of borrowing as an investment in one's own human capital as a viable option if it's not excessive. But I also look it as something of a gift to the kids: here kids, educate yourselves!</p>

157

<p>Our kids will not graduate debt free. They will both take the Stafford loans to the max offered to them. This means they will have about $16000 in debt each when they graduate. We think that is reasonable. They also have to earn all their own expense money, including books. Hopefully we can fund the rest...hey, if the FAFSA says we can, we must be able to :)</p>

158

<p>I always told our son I would not "hock" the house for his undergrad eduation. We have done everything possible to allow him to attend college debt free. We had lots of luck and hard work on everyone's part. Son worked full time this summer, previous summers he worked but it was always volunteer. Most nights I woke up when he got home. He would be all sweaty and exhausted. Sometimes I felt bad and wondered if it was worth his working a full day for basically what I could earn in an hour. I knew it was worth it for so many reasons. Son demonstrated the great work ethic I knew he had. We don't require he work during the school year because he appreciates our help and we want him to fully participate in the college life. Son has several friends who have 2 or 3 jobs and go to his school full time. I am glad son had more options than I did as a college student</p>

159

<p>For families above a certain income level, in the absence of cash savings, "hocking" the house is a great way to pay for college education, as it provides deductible interest at good rates under the home equity provisions. This is a separate question from whether the parents or the child should untimately bear the cost of undergraduate education.</p>

<p>In a previous generation of my family, everyone was so poor that some combination of SS survivor benefits, scholarships, low-interest loans, summer jobs, etc. was necessary, as parents' efc was about zero. The next generation takes the approach that the parents will bear the cost of undergraduate education (through prior savings, paying off subsidized loans, home equity loans, life-style cut backs, whatever), but that any graduate or professional education is ultimately on the child, even if assisted on a cash-flow basis by the parents.</p>

<p>All this is simpler when there is only one child. With multiple children, further questions may arise if one attends an expensive undergraduate school and one doesn't, or gets need or merit scholarships.</p>

160

<p>I agree with amazon that every student who is bright and motivated should have an opportunity to get a wonderful education without going into debt or requiring their parents to do so. Our system is very private-enterprise oriented, like the rest of our country, so merit alone does not always guarantee equal access, and that is a shame.</p>

<p>I also feel for every parent who is aghast at the cost of a private school while also wanting their student to attend the first-choice college. I had my own inner wrestling match about the attraction of hefty merit aid versus S's first choice college (previously posted on CC). </p>

<p>The family situation matters a great deal - some posters have said they have a very good income but have low retirement savings. Some posters have several children and need to be financially fair to them all. Some posters may know that they will be the financial backstop for elderly parents who do not have their own resouces. Any of these circumstances would give pause to the desire to "damn the torpedoes, full speed ahead" or to "risk it on one turn of pitch-and-toss" and "the devil take the hindmost."</p>

<p>Then there are differing parental priorities and beliefs. At one end of the spectrum, some loving and dedicated parents truly believe that it is best for the child to earn everything themselves (for other parents, I would submit, this same assertion would be a 'convenient' belief (read: selfish, insufficiently dedicated to intrinsic and sacred parenting principles - love, provide, guide, and develop)). At the other extreme are the stories we hear about of parents who sacrificed their own retirement, their home, just about everything, to pay for a top college. Most of us ending up making our decisions from a perspective somewhere in between those two poles. And in that middle ground, the amount of money available, the TCA, and future projections and attitudes about the family's financial future (and beyond that, the economy, the global situation, etc.) are valid and must be weighed carefully. If you believed we are headed for an economic boom, college costs would be considered in a different light than if you believed economic doom is right around the corner. </p>

<p>The same with the individual student - their perspectives and values differ. My son is aware that his choice meant that although he will end up with a wonderful education and be debt-free or virtually debt-free for the first degree, he will be compelled to get a fellowship, TA, or RA for graduate school and can only expect health/car insurance and some monthly spending money from his family. Some students are willing to take the merit money, knowing that getting a good education is really up to them because it can be achieved almost anywhere, and saving their college accounts and other resources for further education. </p>

<p>Our resources for college are a family consortium - S is paying 33% of the TCA, from college accounts that I established, cash from an insurance policy my parents gave him at birth, and summer work. I am paying 31.5% of the cost from non-retirement savings and monthly income, my parents are providing 23.5% (bless them!) and his father is providing 12% (yes, his share should be higher!). We are convinced that his college is the perfect place for him - in fact, we can't even imagine a better situation for this particular individual - so we are willing to "do what's necessary." [Matty Walker, Body Heat - (she manipulated her boyfriend into murdering her husband, that's a little extreme, but you get the idea)]. Or from George Carlin, on the discriminator for sin - "Ya gotta wanna!"</p>

<p>Wrapping up this rambling post, I believe that parents should attempt to do their best for their child/children, while taking into account all of the important factors of the family situation. Sometimes this is a very clear and simple decision, sometimes it may require multiple spreadsheets and some nail-biting. Don't stint on the reflection and effort, and try to inform and involve the student as much as possible about the likely financial consequences of the various acceptance/financial packages well before the end of April.</p>