Is it worth borrowing?

Paying for College
1

<p>Hi folks,</p>

<p>The title really says it all...I'm a student attending a private university on the east coast. I'll be returning for my sophomore year this August, continuing a five-year program in Computer Engineering and Physics (it's technically two separate degree programs fulfilled within 5 years, leading to a B.S. in the former and a B.A. in the latter). My GPA as of the end of my first year was a 3.67 overall, and I've done my best to be active on campus (including, this coming semester: a work-study job, a leadership position in a major campus group, and another leadership position in a program that runs themed housing for first-year students). I very much enjoy this school (minus its party atmosphere at times), and I'm looking forward to returning and continuing in these majors, but I have a major dilemma that I'm looking for some help with.</p>

<p>As much as I love my school (which will remain anonymous for the time being), I'm being trapped between a rock and a hard place for tuition. Yearly tuition is approximately $56,000, making it one of the pricier schools on the east coast. When I applied here senior year, I tried to take the price tag as seriously as a giddy senior could, but I reckoned that with a 99 average (I graduated valedictorian of my class of 123) and a number of high school leadership positions, I stood a decent chance of receiving a good financial aid package; as a result, I applied ED I to this school (and was accepted).</p>

<p>I say all of this not to brag, but just to put this next part in perspective: I'm currently faced with the decision of whether or not to borrow approximately $25,000 for each of the next four years (again, I'm in a five-year program) to complete my education. My parents were kind and took out a PLUS loan this past year for around $20,000, but my family does not have the means to pay this out of pocket, nor can my parents afford to do this every year. That leaves me with private loans, and facing nearly $100,000 in debt come graduation in four years (not even mentioning grad school, which I would very much like to attend), I'm wondering - is it worth borrowing that much? My current financial aid package includes about $18,000 in need-based aid, $10,000 in merit-based aid (which is the second-highest amount awarded), $2,000 as a National Merit Scholar, and around $6,000 in federal Stafford loans. I'm curious - what do you, the CC public, recommend I should do? Should I borrow the $25,000, or should I start looking elsewhere for college?</p>

<p>On a final note, I really only have enough savings to pay for books from now till I graduate, and I'm willing to take on work-study (I didn't this past year as I acclimated to college life, which I think was the right choice), and I plan on being an RA in the next few years (they get full room - this year, as part of the program I mentioned above for first-years, I have half of my room being paid). That said, while these will put dents in the overall bill, they still leave a lot of ground to cover.</p>

<p>Thank you in advance for your help!!!</p>

2

<p>It’s not worth borrowing that much, regardless of the school. Find another school now.</p>

3

<p>What Erin’s Dad said!</p>

<p>What you need to understand is that your private loans will continue accruing interest while you are in school, so it will be much more than 100K loan, probably 110K or 120K by the time you graduate. Run the calculator and see how much the payment is going to be per month - probably around 1K per month for the next 20 years after you graduate.
This is not sustainable.</p>

<p>You should see if you can transfer to a cheap commutable instate school and get BS in either physics or Computer Science with minor in another subject in the next 3 years. Your problem is that as a transfer you will not get a good merit package and therefore you have to minimize costs.</p>

4

<p>Hi Tony. You’re in a program that I consider to offer decent future employment prospects and salary - which is not to say it’s WORTH borrowing, but has you in slightly better shape than students without the benefit of a career-type/professional degree (assuming you’re going for the bsc eng).
However, I’m not even certain that you COULD qualify for $100,000 in private loans. You are also studying a field where there are several MEET NEED schools in the top tier, and several state flagships that offer top programs.</p>

<p>And, the real bonus is that you’re a highly desirable student who <em>should</em> garner competitive scholarships, even though those are usually rare for transfer students.</p>

<p>So why not “enjoy” the fruits of your labors and look for a school that will only mean low or no debt for a student of your caliber?</p>

<p>The fed guidelines for fed loan accumulation undergrad is I believe about $30,000 now. That means a 10-year payback of about $350 a month – so a “good” car payment; a solid half to quarter of a mortgage, depending on the city, etc. That level of debt is not fatal, but those are the things you’re giving up (good car, half to quarter mtge value for 10 years, etc.) to offset that debt in your loan ratio capability when you graduate and are employed.</p>

<p>Now triple that! Yikes! I’d have a hard time rationalizing that kind of indebtedness. If you look to transfer now, you can optimize your financial outlay.</p>

<p>What state are you originally from?</p>

5

<p>Oh my…where were the adults when applications and decisions were being made??? Very sad because as a NMF, he could have gotten some great scholarships elsewhere.</p>

<p>What state are you in?</p>

<p>How much can your parents PAY each year? </p>

<p>even as an engineer, this is waaaaayyyyy tooooo much debt.</p>

<p>“And, the real bonus is that you’re a highly desirable student who <em>should</em> garner competitive scholarships, even though those are usually rare for transfer students.”</p>

<p>hmmmm…probably not. Even with super stats, he’s not likely going to get merit scholarships as a transfer student at many schools…at least not enough to make them cheaper than his current school. (he gets $28k in aid from his current school.) A token $5-10k transfer merit isn’t going to make a school affordable. </p>

<p>As a transfer student, you’re going to have a hard time finding need-based aid and merit scholarships…even with great stats. </p>

<p>Try Miss State and U New Mexico.</p>

6

<p>I’m from Upstate New York - the reason I didn’t look quite so close to home initially is that I was hoping to be able to exercise some independence at school while still being close enough to home that I could return at a moment’s notice in case of a family emergency. The school I’m currently attending is located in Pennsylvania, for the record.</p>

<p>Also, I returned to the number crunching, and it turns out my loans would likely be closer to the $75- to $80,000 range – definitely not a huge relief, but (pre-interest) it is a tiny bit better.</p>

<p>I called my school’s financial aid office, and what I was basically told was that they were meeting 100% of my demonstrated need; apparently, my family’s EFC is $25,000, which is far, far greater than we could ever hope of affording. So I understand that my best bet at this point is to look elsewhere, but the problem I’m anticipating is that most other schools do not offer the same level of aid to transfer students. I’m still looking through the programs at SUNY Buffalo and SUNY Binghamton (I considered Syracuse University as it is easily within driving distance, so I could commute, but I’m still wary about price), but I don’t want to end up paying the exact same amount elsewhere. Do you have any suggestions on how to get around this?</p>

<p>Edit: My parents can honestly only afford a few thousand a year max, if that…while their credit score is amazing, and my dad makes around the six-figure mark (our home is paid for b/c we got it from living with my handicapped grandparents for 6 years), we’re still strapped for cash.</p>

<p>As for where were the adults: it was my guidance counselor who pushed this school, and I got caught up in the clouds, and my parents initially thought it would be more manageable…let’s say it was a cornucopia of problems, each compounding the next, and it’s time to put them behind us for the time and focus on how to make the best out of it. That’s all I can hope for.</p>

7

<p>Can you commute to any of the SUNY? If yes, then you will have a very affordable option. </p>

<p>Also, can you reduce COA at your current college by living of campus? I am not familiar with that area’s rents, but maybe there are some cheap rooms for rent around campus and you can avoid getting meal plan at the dorms and cook yourself on a cheap (or eat lots of ramen noodles)? Basically, if you can reduce COA by 10K through this and work study, then you can borrow 6.5K through federal direct loan and your parents borrow the 3.5K through direct plus (if they agree), then it becomes doable.</p>

8

<p>KMCmom has great advice there. I agree with her. First of all, where are you getting the option to borrow that kind of money? You need $25K, you say this year? In ADDITION to the $6K in Stafford loans, plus probably the $5500 in Staffords that you tokk last year? And your parents took out $20K last year to meet the gap? As you can see, the gap grows each year. Not only do costs go up at colleges, but most colleges expect the student to come up with more of the money himself each year, generally though the increase in Stafford loan limits or working more hours and contributing more to the cost.</p>

<p>Your parents are facing a payment of close to $300 per month already, on what they have borrowed. On the Staffords alone, you’ll be looking at about $350 or more in monthly payments. Even if you could get the loans, that’s getting into a lot of money even for someone who has a good paying job future lined up. THe only way I can think of where you can get these loans is by having your parents cosign with you, and that really is worse in most cases than for them to take out the PLUS loans. With PLUS there is more flexibility, and both you and they are not on the hook, as you likely will be with private loans. If you or they should die, the loan lives on for the survivor to pay in most cases. Also, they go on your parents AND your credit reports even if your parents are “just” cosigning. I don’t see where a college student could get loans of any size without the cosigner, so these loans are not doing you any favor. It might as well be your parents taking them out with you cosigning, the way it works. </p>

<p>How about you take on some jobs this summer and make some money, and see if your parents can save up some money rather than borrowing it? I see no present or past income stream into your costs, other than some mention of having enough for books till you graduate. I think that $5K or so could reduce the cost to $20K, and if you work like a fiend this summer and during the school year, you might be able to come up with $10k through present sweat equity towards the cost. WHy are you and your parents deferring all of the payment for this to the future? College costs are intended to be met with past, present and future income. Some savings (and you have that in your book cache), some current income (get a job NOW) and some loans (you are loaned up with the Staffords already). There is no mention of your parent’s financial situation other than they were sufficiently credit worthy to qualify in $20K in loans last year. Maybe a sitdown with them can result in them looking for $4K in savings they have somewhere that they can put towards the cost, and another $5K in cuts in their living expenses for the year. I’ve cut our vacation this year, and we are not going out at all this summer other than for small change stuff. I even made MOther’s Day dinner for all of us rather than go out, to save on the expense. I’m cutting back on driving anywhere, and cut my food budget even further. No new stuff. Zip. Dog gets his shots at the free clinic at Petco. I am bagging lunches for my kids in exchange for $s that will result in just a few hundred in savings for me, but also savings for them. They are working all the extra hours they can. I’ve declined several invitations to things that involve money. I will be doing a garage sale and hope to make a few hundred dollars. All told, my daily living cuts only come to about $1K, but that’s $1k I don’t have to borrow. The kids are being even more proactive. That’s what it takes to get through college these days, and it’s a joint effort for parents and kids.</p>

9

<p>Basically, what you are saying is that your parents cannot afford ANY money for your college? Were they expecting you to get a full ride? That is really unreasonable. Even to go away to a SUNY means coming up with some money. </p>

<p>You have a family EFC of $25K. Between you and your parents, you need to come up with that amount. I think that it is reasonable for them to borrow some of it through PLUS, maybe to match what you borrowed in the Staffords, and then scrape up the rest somehow as I discussed in my earlier post. And you have to work and earn some money too. It’s not easy getting through school financially for most people, believe me. Most of us do have to scrimp and pinch and save and borrow to get our kids through college. And the students have to do the same. My son expects to work while at college next year, now fully understanding the implications as he was not able to hold on to his job AND do his school stuff this past year when some thing happened. And things always happen. So he’s behind the 8 ball this summer for the coming year’s expenses. As are we. We’re all in the same place here. </p>

<p>My one son worked 3 jobs one summer in order to meet certain expenses. You’re young; it can be done. If you are maxed out on financial aid, then you won’t qualify for work study–my son did not. SO you have to find a job that is not work study around campus, and try to put some of it away for the tuition payment.</p>

<p>Yes, the year after or so, you can try to get a RA position or move off campus, but you may have to do that now. Start looking for cheap digs so that you don’t have to pay the university prices for housing if the market is less expensive. Get a job at an eatery to subsidize your food budget AND to get money to pay your rent. Room and board is usually a good $10K or more at a college, and you can make a nice dent on that. Find ways to get your books cheaper, like asking for them from the library. or finding someone personally who took the course and ask to “Rent” them from them. My son who graduated paid very little in books as he borrowed nearly all of them from friends. </p>

<p>You right to be wary about transferring. Unless there is a local SUNY, it’s not going to be easy get enough to pay the full tab. With room and board, it’s about $20+ for a SUNY. That’s below EFC, no way you’ll get financial aid. Merit for transfers is not likely. But you would get the same Stafford allotment which would bring your total cost down to about $14-15K instead of looking for $25K AFTER taking out the full Staffords. Splitting that amount with your parents would be a lot more palatable than what you are considering right now.</p>

10

<p>I’m currently trying to find a job, but trying is the key word. As for my parents, it’s not that they expected me to get a full ride - they knew that was unlikely, though it would have been nice - they had told me that they wouldn’t be able to make the EFC, and I would eventually have student loans of one type or another. Part of the problem is that my family has just recently - and by that I mean within the last five years - become financially solvent to any real degree; for the first thirteen years of my life, we lived month to month for the most part, as my dad started in a shift-based position at his company and then transferred to a salaried position (with a cut in his income). Saving for college was not huge- all told, I believe I have around $8,000 in a savings account and $10,000 in a 529 plan (which we are trying to ration out each year for the next four years under the current plan). (As a quick side note, I understand that this is $18,000 - that’s not insignificant, and I apologize for not mentioning it earlier…it’s not something I know all the details about - it’s primarily been my parents’ domain. That is obviously rapidly changing.)</p>

<p>What we didn’t anticipate was that there would be absolutely ZERO extra aid for my subsequent years - my guidance counselor in high school told us that if I had a good first year, we should be able to get extra help from the college. She obviously was out of touch, but we didn’t know that at the time. I’m also the first in my family to really go away for college - my father attended a number of SUNY schools, and my mom attended LeMoyne, but that was over 20 years ago, when tuition was far less.</p>

11

<p>Merit aid for transfers is tough, and what exists is mostly intended for students coming from CC or associate programs. There is often a requirement for ~2 years worth of credits under your belt.</p>

<p>This publication summarizes transfer scholarship opportunities for universities in New York:
<a href=“http://www.monroecc.edu/depts/careercenter/stuserv/documents/2009-03-25transferscholarships.pdf[/url]”>http://www.monroecc.edu/depts/careercenter/stuserv/documents/2009-03-25transferscholarships.pdf&lt;/a&gt;&lt;/p&gt;

<p>You can ignore anything that says “Phi Theta Kappa” - that’s the honor society for 2-year degree colleges.</p>

12

<p>What we didn’t anticipate was that there would be absolutely ZERO extra aid for my subsequent years - my guidance counselor in high school told us that if I had a good first year, we should be able to get extra help from the college.</p>

<p>Oh my…some GCs are just idiots. I hope that you politely inform her that she should NOT be giving out that misinformation anymore!</p>

<p>Actually as a NMF, you could have gotten some free rides, and near free rides. It just doesn’t sound like you were advised well. Alabama would have given him free tuition, free housing, a laptop, study abroad money, $1k per year…plus 2500 per year for engineering.<br>
If he had any remaining costs, a 2500 subsidized loan would have covered them. </p>

<p>If your parents can’t figure out a way (with their newish higher income) to pay at least $10k per year and maybe borrow about $5k per year, then this current school is not going to work out. </p>

<p>the biggest problem that you’re going to find looking for merit for transfers is that you’re not going to get more aid than you already have. What good is a $10k merit scholarship as a transfer if the school costs $50k.</p>

<p>I just don’t see how merit for being a transfer will work unless it’s a school like U New Mexico or Miss State which might give enough so that remaining costs are $15k or less …or U South Dakota that has OOS rates that are very low…may be the same as instate.</p>

<p>Since he has to pay $25k per year at his current school, any transfer school would have to cost a LOT less to make the transfer worthwhile. </p>

<p>Is there a SUNY with engineering that you can commute to???</p>

13

<p>OP, I’ve heard rumors that USC might still look with favor upon NMFs even as transfers. Dunno if that’s really true, but it would be worth a phone call.</p>

<p>The immediate issue is your plans for the coming year. You could take out additional loans for the coming year, with plans to transfer at the start of your junior year. You could find a school to transfer to that would be affordable without loans AND which has openings for next year, with the possibility of either staying there or transferring the following year. Or you could take a leave of absence for the coming year with the intention of applying as a sophomore transfer for the following academic year. With the latter plan, you could live at home, work, and save money (or pay down the existing loan). Each of these options have pros and cons. There might be other possibilities that other people could suggest.</p>

<p>You could also change to a four-year program, giving up one major which could maybe be changed to a minor. That would cut down your total debt and reduce the time when interest is building up.</p>

<p>Others will confirm this, but I’d also suggest spending down your college savings ASAP so that those funds don’t show up on PROFILE and FAFSA for future years. </p>

<p>Finally, talk to an advisor on campus to find out what kind of summer internships you could expect in the years to come. You might be able to earn more than the usual $3k a summer given your major(s).</p>

14

<p>Here is the problem: YOU personally as a student cannot borrow more than the Stafford maximums each year and that is already in your financial aid package. Your college is giving you need up to your EFC, but is including those loans as part of the package. If you take out any private loans, you will need a parent to cosign which really means it’s even more constricting than PLUS. Your parents might as well take out PLUS and you make a contract with them to pay it back, unless you find a private loan with better terms. For those amounts, unless it a home equity type loan or against a pension, plan, I don’t think it’s going to happen.</p>

<p>So the big question is whether you and your parents together can come up with the $25K each year for the next 4 years. If you cannot find a job that pays a lot of money this summer, and you don’t think you can find a job on campus that pays about $5K over the year, so that with your part of your savings you can pay about half of that $25K and then let you parents come up with the other half through scraping,scrimping and borrowing in about equal portions, then my opinion is that you need to take a gap year, work and find a local school with a similar program Maybe not identical, but in the same field. You are a smart person so you willl make it anywhere, I am confident of that. The problem is the cost of making it at your current school, for you and your parents may be too much. If you truly can’t figure out how to come up with more of the money and the same for your parents, the simple truth is that you can’t afford the s school. If your parents can’t afford it now, they won’t be likely to be able to afford it later, and we are talking about for the next 14 years when we are looking at those loans. </p>

<p>You’ll have a decent paying job in the field, but beiieve me, owing that kind of money is too much. Way too much. Because other issues come up and need to be met as well and you will be behind the proverbial 8 ball from day one on the job. Don’t do it. You can get a degree in a similar field for far less. Look at UBuffalo. Even with no financial aid, the cost there for you would be about $14K after you take out the Staffod loan. Living off campus, finding a job in future years will cut that cost down even lower. You can do it for less than half the debt there. If you find a local SUNY and commute, it’s even less.</p>

<p>You do need to find a job. That’s a thing I push on my kids even in the worst times. Even my 15 year old is earning his keep this summer.</p>

15

<p>I agree that the student needs to cut down to one major to graduate within 4 years.</p>

<p>OP, I’ve heard rumors that USC might still look with favor upon NMFs even as transfers. Dunno if that’s really true, but it would be worth a phone call.</p>

<p>Look into this, but it could still result in the USC NMF scholarship only going towards “need”, while the problem really is that the family can’t pay its EFC. The USC NMF scholarship is half tuition…about $20k…which leaves $40k for the rest of COA. </p>

<p>Miss State might also do the same thing, and if it does, the award would be nearly a full ride. </p>

<p>It’s just sad because the student was so poorly advised.</p>

16

<p>I’ve been paying close attention to everything everyone has been saying, and I talked it over with my parents last night. This is the basic game plan we came up with, and I’d like your opinions on it if you could (thank you so much for all of the advice thus far):</p>

<p>I’m going to stay at my current school for one more year. In order to do that, I’m going to use almost all of my savings to avoid student loans for one more year. The basic premise is that at this point, transferring will be very difficult, so I can avoid taking out any more loans (other than the federal ones) and begin saving for next year as well with a job or two on campus, a job this summer, and so on. Also, we figure that spending the money now or later is going to inevitably be a wash - I’ll end up paying just as much then as I will now, and I stand a chance to lower my EFC slightly if I wipe out my savings. It’s a risky move, but I managed to put myself in a pretty crappy situation in the first place…so nothing ventured, nothing gained.</p>

<p>Here’s what I’m wondering: while I’m looking at other schools, I’m still going to keep asking around my school. The financial aid office already said they aren’t offering anything else, and they don’t offer merit-based aid beyond a $10,000 scholarship I already have ($20,000 is the max, but they are far more limited, and though I was lucky enough to apply I didn’t get it…old news now). But what about the academic departments? Would it be a bad idea to go to my adviser (or one of my mentors, the profs I’ve become close to) and explain my situation and ask politely if they know anywhere else I can look (i.e., obscure funding, scholarships outside of school, etc.)? Or should I skip this altogether and assume I’ll be leaving after this year?</p>

<p>Thank you again for all of your help - I have two siblings (both younger) who will definitely be benefiting from all of this information as they start searching for colleges (especially given that one of them currently has the same counselor…we won’t make the same mistakes twice). So again, thank you very much!</p>

17

<p>It certainly does not hurt to ask in Physics and Comp Sci departments about scholarships. I know where I went to school some departments had small scholarships available. </p>

<p>The professors might even know of off-campus part time jobs that pay decently. In my last year at undergraduate school, my adviser recommended me for a part time job that paid quite a lot. If you do get that kind of job, it might put a nice dent in your tuition bill next year (but might increase your EFC).</p>

<p>I feel bad that you were put in this situation, so I really hope you will find a solution.</p>

18

<p>Paulo Coehlo is my inspiration right now…he’s the author of The Alchemist, where he said something along these lines: “When you want something with all your heart, the whole universe conspires to help you achieve your Personal Legend [your goals].” I’m not naive enough to think that the universe - or anyone - owes me a damn thing (thanking Randy Pausch for that lesson haha), but I know I’ll somehow muddle through…always have, always will. Thanks for the support :)</p>

19

<p>Tony, I would take out the student loans and use them and keep the money you have. Maybe pay your parents for room and board over the summer so they can put it in an account for you under their names so it doesn’t get the 20% hit that student assets get from FAFSA and PROFILE. I don’t like loans, but the thing is, you are only entitled to the Staffords in your name. Anything else requires a qualified co signer. If you transfer to another school, you will be subject to the Stafford maximums and your cache will be gone. In order to keep the interest as low as possible , apply for that Stafford in the spring of your second semester, and just take the money if you have paid for the term already. You then have some wiggle room and are not flat broke at the start of your third year. </p>

<p>Yes, departmental awards are possible. Start looking this year. Look into being a residential advisor too. But you had better look at what your school’s policies are in terms of scholarships over the Family EFC. You might end up with such awards, reducing the aid you already have and still be at the exact same spot as you are now. It’s frustrating that the system has made it so it’s so difficult to get ahead, but that is the way it works. </p>

<p>My son did get a departmental award for his last two years of college. It was unusual for a sophomore to have won it, however, and he did not know until right at the end of his sophomore year, and he had to resubmit for another grant the subsequent year. It was not something renewable, not guaranteed, and not awarded till the last minute. It was for $5K. He also had to change his major to be eligible for the award. So you need to cast a broad net, looking for these things. The competition was fierce even at his small school for the grant, From what he told me, most of the departmental awards and grants are in the hundreds of dollars, not thousands, and the work in applying for them was about the same as it was for the one he got. It does not come easy at all. Also, he worked as a “tutor” and help at the college counseling center for those who needed academic support in his disciplines and that job paid well. It was not work study.</p>

<p>Where you are lacking is in earning money for school. You do need to find some jobs to pay for college. Your parents also probably have to tighten the belt and put aside something for college, especially with two more to go this way. At their income levels, they are expected to pay for their children’s college. THey are the front line. And you and your siblings, given your family’s financial situations need to be proactive in finding WORK to earn some money for college. You should have had a job flipping burgers, making shakes, serving coffee, bussing tables, working the cafeteria line, something at college, given that your family was borrowing more than they wanted. It is expected by most all colleges that the student pay more each year towards the cost of education, so the demand on you is only going to go up. </p>

<p>Absolutely stay in close contact with financial aid and those in your department and let them know that the college is too expensive for your family, and you need some financial help. Make sure they know your needs and your face. If something does come up, you want to be first in line for consideration. </p>

<p>I’m sorry that it’s so difficult. I hurt for my kids too. I wish I could just tell them to go where ever to school with no regard to cost and that they could have the summers off and have all the time they want to study and socialize during college, like so many of their peers can. They have to work. Two of them want to do something at the end of the summer that requires a cache of money. Great opportunity at a bargain price, but it still costs a lot to travel. So they are working crazy hours two get enough. Plus one got a bit behind in his plans when he changed his major and had some issues with a course. SO he quit his school job since the hours did not work out and he is taking a summer course here. Those decisions have cost a lot of money. I wish I could just pay it for him.</p>

20

<p>One thing I remembered that may be of interest:</p>

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<p>[Rose-Hulman</a> Scholarships](<a href=“404 | Rose-Hulman”>404 | Rose-Hulman)</p>