<p>Last couple of days and my DD is in a dilemma. We have anguished through how to fund Stanford for 4 years of undergrad and have come up with a way: D will be responsible for $40,000 of it over 4 years, which equates to working a few hours per week while at Stanford, working over the summers with a set target -all in all she will have to work for $20K and take loans for the other $20K. Dad takes on more work, mom takes on more work and at the end of 4 years she will have a debt to work off. The alternative is a public university which has offered her their 500 member honors college out of a 11,000 plus population and their top scholarship which covers her tuition (including a guarantee of covering tuition as costs increase) and a $7500 stipend. She could live at the dorms or at home the first year (this is local) and save the rest. She could live off campus and have the experience of being away from family on a daily basis and we would finance a car. At the end of 4 years she could have $20-30K for grad school or med school- science being her direction. The path to med school is certainly not unusual from the state university, where you put together your stats for med school isn't the deciding factor for med schools so technically Stanford is not an advantage. What I wonder is- is it worth putting the stress of HAVING to
spend each summer and some time during the school year working to meet her financial responsibilities to pay for a Stanford education or is she better off with a financially stress free undergrad and using the money/freedom to create experiences both academically and personally? It is the toughest decision my husband and I have come across yet in raising our two daughters- this is the oldest. One more item- we told D, that if Stanford is the choice then we can do our parts for her undergrad financially and then she is on her own for grad/med school. If she goes with the public university then we can help her with the grad/med school (our other daughter will then be starting undergrad). Wisdom?</p>
<p>I think that $40,000 in loans is high. Your D sounds like a student whom many colleges including top ones would be eager ot have and to give merit aid to.</p>
<p>Has she considered taking a gap year, doing something productive such as working in a hospital or doing community servive with a nonprofit in the health field? Then, she could reapply to colleges, focusing on colleges where she'd have an excellent chance of getting merit aid.</p>
<p>This suggestion is based on my assumption that the college that is offering her $ is not that good. However, what exactly is the college where she has that great offer? It may be worth it for her to take that offer, do well there and then go to a place like Stanford for med school.</p>
<p>Rio,</p>
<p>Keep in mind that starting on July 1, 2007, Stafford Loans allow dependent undergraduates to borrow up to $3,500 their freshman year (up from $2,625), $4,500 their sophomore year (up from $3,500) and $5,500 for each remaining year . There is also a cumulative limit of $23,000 that your D will be able to borrow as Stafford loans . </p>
<p>while you have stated that she is responsible for 40,000 worth of debt, you will ulimately be responsible for the other $17,000 as a cosigner for her to get private (citiassist). loans (40,000- 23,000 = 17,000). This does not take into consideration tuition increases that may happen over the next few years.</p>
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D will be responsible for $40,000 of it over 4 years, which equates to working a few hours per week while at Stanford, working over the summers with a set target.</p>
<p>Dad takes on more work, mom takes on more work and at the end of 4 years she will have a debt to work off.
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<p>Right now, the only flaw in this thinking is that you are going to be like a hampster on a wheel going round in a vicious circle. </p>
<p>As she makes more money (Any money earned by the student over 2600 (not counting work study) will be assessed at the rate of 25% when calculating thier EFC in the next year), her EFC will go up.</p>
<p>As you and H make more money your parent EFC will go up which will equate to even less need being met and bigger loans to have to take out.</p>
<p>I think that you may also have to keep in back of your mind is what is going to happen in 4 years when your younger D goes to college and is faced with the same dilemna? If you help fund one "dream school" she will be looking for the same system of equity in you helping ro finance her "dream school' or at least cutting her the same type of deal. All the while you are H are getting older and closer to retirement age (and are now going have to postpone retirement because you will be paying of undergrad education for your kids).</p>
<p>I know in my house, I did tell D, that she has to be an active participant in the financing of her education, which means working on campus, and using that money to purchase things out side of tuition/ room and board (she pays for her own, books, social life , etc). I have done pretty much the same thing that you are doing, in that I will help her graduate with the least amount of student debt, but any graduate school, she is on her own. She knows she wants to go to law school and will cast a wide net for her financially feasible choice.</p>
<p>Is this 40,000 the maximum amount of debt, or is this just "her debt" and you/ H will also be borrowing money to pay off Stanford?</p>
<p>Hi- The state university is in the Rockies, I can say that it has a solid reputation and has a faculty which is also solid. People come here for the quality of life versus the money. If medical school is her choice then there is a very good program through this university that would give her an excellent opportunity to go and at a great price. She is still eligible to apply that route if she goes to school elsewhere and financially it would be to her advantage. It would be 20K in loans not 40, because the other twenty is what we have conservatively figured she could earn with summer work and less than 6-7 hours per week of working during school.</p>
<p>I don't think I would count her earning 20,000 in lieu of taking out additional money in loans as Stanford has most likely accounted for money she earns durning the school year and summers.</p>
<p>Keep in mind that:</p>
<p>Her work hours during the school year will probably already allocated to work study (self help ) portion of her financial aid package. So I would not calculate this into the equation.</p>
<p>what ever she earns during the summer will end up going toward the student's portion of the EFC (as there is a summer work earning expectation)</p>
<p>Sybbie- We are not looking to borrow our part, we are looking to earn it with increased work on our parts. The D is looking to work 20K of it through summers and during school. We had been saving and can finance half a Stanford education assuming it to be a total $200,000 4 year undergrad cost-that is with still saving as we are now during the time she is in Stanford and upping our working to cover the other $60,000. If I understand correctly, if Stanford is the better choice then she would be better off spending what she has saved on her own already at the beginning to put her more at a starting point of zero in regards to her EFC. </p>
<p>The other idea we had is for her to go here and keep open the option of transferring after the first year or second. The scholarship offered is a one time shot- if she turns it down now then that opportunity goes away. Should she go to Stanford for a year and decide that the financial burdens are not worth it then she would not have the sweet deal waiting for her. You can't tell with this stuff- I see opportunities for growth in both selections. There is the responsibility of working your way through college-albeit with major parental support. Or she could be responsible for making her local university experience exceptional by her efforts and taking advantage of the financial freedom to seek out internships etc which will enhance her experience. I know that the local option cannot equate to Stanford. But a Stanford experience will not come without sacrifice. The price tag at Standford will be a part of her experience as well. The chances of taking advantage of their overseas quarters would be close to nil and I told her she should make the decision assuming that she couldn't.</p>
<p>She was not awarded work study. We are going with jobs available outside of work study -which we understand are available. The only "aid" she was offered was Stafford.</p>
<p>The other D is a concern. We have discussed what this means for the next child. We are looking at retiring the year proceeding the college graduation of second child.</p>
<p>Thanks for the clarification.</p>
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If I understand correctly, if Stanford is the better choice then she would be better off spending what she has saved on her own already at the beginning to put her more at a starting point of zero in regards to her EFC.
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<p>you are right since any money that is in her name is assessed at 35% as opposed to 5 to 6% in your & H's names, you are better off spending down "her money" this fall toward the Stanford/ her computer/ school supplies, etc. This way in the future, her EFC will only be about 2000 to 3,000 -what ever the school deems her EFC from summer earnings to be.</p>
<p>Is borrowing the money through your home equity an option. This way, atleast you will be writing off part of the euity loan (as interest especially in the begining of the loan period) on your taxes. I think this may be worth looking into.</p>
<p>I think as long as you and your family are comfortable with the decision (going in with your eyes wide open concerning the debt and how much it would cost to pay it off) and it is a buy in for all of you.</p>
<p>Sybbie-Do you know how the 529 plans are looked at? We have those set up for both daughters. Should that be included in the spending down in a first year. Does the school expect that you spend that at 25% per year and if it was drained down significantly in the first year would that cause some eyebrow raising?</p>
<p>Our high school counselor said just about the same as Northstarmom...If wanted to go to grad school it might be best to save $ for that, especially with other scholarships for undergrad at another school (state school). Our kid is debating the same thing....go to Stanford, no $ for grad left. If a kid turns down Stanford for some reason they will probably keep doing the excellent work they have been doing that got them accepted into Stanford in the first place and be able to go to great grad school, possibly even Stanford. As a new poster, thanks to everyone for the great info on CC!</p>
<p>I think scottaa, or sblake would be in a better position to answer that question for you on this forum. I would pose it to the parents as some did have 529 plans (they maybe able to give you some better insight).</p>
<p>I found this on howstuffworks.com</p>
<p><a href="http://money.howstuffworks.com/5299.htm%5B/url%5D">http://money.howstuffworks.com/5299.htm</a></p>
<p>If your child applies for financial aid, the 529 account may affect eligibility. According to FinancialAidOfficer.com: </p>
<p>...the 529 account is treated as an asset of the parent or other account owner in determining eligibility for federal financial aid. This means that your expected contribution towards your child's college costs will include 5.6 percent, or less, of the value of your 529 account for each academic year. This is actually much better than the 35 percent assessment against money that is in your child's name or in a custodial account.
The only real drawback comes in when calculating eligibility the second year. At this point, 50 percent of the money that was withdrawn from the 529 account the first year shows up on your child's tax return. This decreases your child's eligibility for the next year by 50 percent of that amount. For example, if you withdraw $10,000 from the account to pay for college expenses the first year, then $5,000 (50 percent of the total) will show up as the child's taxable income. That will decrease your child's eligibility the following year by $2,500, because there is a 50 percent eligibility assessment on the child's tax return from the prior year. (Remember -- we're talking about tax laws -- all of this can change.) </p>
<p>If the student owns the 529 account, which is what happens when a custodial account has been transferred to a 529 account, then the amount of the account will greatly affect his or her eligibility for financial aid. Because the student owns the account and it is one of the student's assets, a 35 percent assessment against those assets kicks in. </p>
<p>One thing to watch out for is that the new tax laws regarding 529 plans will "sunset" in 2011. This means that lawmakers will have to make the tax change permanent before then or else the plans will revert to their original tax-deferred status (see sidebar in previous section). This possible reversal could affect you if your children will be going to college after 2011. </p>
<p>The money in your 529 plan can't be used as collateral for a loan. </p>
<p>You don't control the investments (more about how the money is invested in the next section). Your only option for changing the investments made with your money is to roll the account over to another state's plan. You can do this once a year with no penalty. </p>
<p>If you have to withdraw the money for some reason other than to pay for qualified higher education, then you pay tax (at your rate) and a 10 percent penalty. </p>
<p>You can only make cash contributions to the account; stocks can't be rolled over into it. </p>
<p>Although you are the account owner, 529 accounts are considered gifts and are, therefore, not calculated as part of your own estate assets. </p>
<p>Each beneficiary must have his/her own account. Siblings or cousins can't share an account. You can, however, roll any remaining portion of an account over to another child once the account's beneficiary has completed college.
Next</p>
<p>If the net loan amount to the student is 20 K...go for it. In our case, son is takin son is taking 10 K/yr PS Loan (PSL = parent subsidized loan) His summer earnings+work on campus are subtracted from the 10 K amount. I project that he will owe me about 20-25 K after graduation.</p>
<p>For science (say chemistry) top grad schools are very research intensive. Stanford is a top school both grad and undergrad where D would get lots of research. Now it the other school a research school or an LAC? $20K is a decent car, not an over the top amount for a school like Stanford which might make the difference in getting into a top 10 grad school. </p>
<p>Grad school for sciences don't cost anything normally... you get free tuition and around 27-30K living allowance stipend.</p>
<p>FOO- I have been trying to figure out what the financial picture is for graduate schools and can't seem to find any definitive information. What is the foundation for stating that grad schools for science are such good deals? We live in a small population state and I wouldn't want to dis the university which is why I don't state the name. It is a public state university, one of the two main public universities in our state. I would say that they have done an excellent job in research and a solid job in the hard sciences. A student can with the education provided and their own efforts make a claim to a medical school spot. My husbands puts the dilemma in these terms- she can be a poor college student and get an excellent education or be a college student without financial worries and get a good education. She has done a good deal of research in high school through our local university which has, I think, helped put her where she is. That said, since she is familiar with the professors and researchers at our local university she is intrigued by what Stanford can offer her for inspiration and opportunities. She would not have the freedom to do unpaid work/internships if she went to Stanford undergrad and she would if the bills were all prepaid here. It is a tough one. We have presented all this to her and she is left with the decision. We all buy in to supporting her financially at Stanford if that is the decision.</p>
<p>For med school the undergrad school isn't that important. Your goal then is to get high GPA, do well on MCATs and get good recommendations from professors. Then you could get into a good med school.</p>
<p>But for going on to grad (PHD) school for a sciense (like chemistry) you don't say which major though. Then undergrad will play a more important role.</p>
<p>Just go to Harvard or MIT grad school web sites for whichever major and you'll see them discuss the financial situation. Just google for them.</p>
<p>BTW: I'm in same dilema with my D, down to WPI and St Johns (NY) cost difference is 75K over 4 yrs assuming 6.5% increases per year. WPI is a tier 1 chem dept, St John's is tier 3. Choice needs to be made by tommorrow so having a tough time.</p>
<p>Rio,</p>
<p>If she is going to graduate school, her best bet would be to apply directly to PhD programs (that is where the money is that Foo refers to) as she would get tuition remission in exchange for being a TA/GA or Research assistant, in addition to a living stipend allowance. Masters programs give very little FA.</p>
<p>do a search for mollibatmit . She will be graduating this year and doing a PhD, I think at Harvard, with a nice piece of change. Optimizerdad's D is doing a PhD/MD program at Northwestern.</p>
<p>He also says A word of caution about those MD/PhD programs - they are really, really, REALLY tough to get into. Take it from the father of D1, who's now in the first year of the MD/PhD program at Northwestern. This is a kid who had near-perfect SAT I and II scores, National Merit Scholar + winner of other merit scholarships at Dartmouth, good MCAT score - yet she was rejected by 50% of the MD/PhD programs she applied to.</p>
<p>I don't know which science she will major in. Her research experience in high school has leaned towards genetics, molecular biology and chemistry. That said, she had didn't have total freedom to choose the research project, it was a function of being invited by the primary researcher to take part in an aspect of the research they were doing, breaking off a chunk of what they were looking at or by her involvement allow them to have an additional researcher look at an angle of the work that they would not have had the time or personnel to do. She published, was invited to speak at both the professional and student sections of our state science assembly. I can get the feeling she may have been a little frustrated with (in her mind) the limited research experiences she had because she was in high school and there were undergrad and grad students involved in various aspects of the lab's research whose needs and requirements came ahead of hers. So, a few months ago she was sold on the MD/PhD route and now she is wondering if a research lab is where she can envision herself.</p>
<p>Stanford offers a lot of what she is seeking -except the money. But the money aspect can't be ignored. There is a genuine pressure that would exist there that wouldn't be there in taking the full ride. Part of me says she will be fine, rise to the occassion and be the better for it-then I look at that sentence and realize it could apply to either decision! I think she is going to have to reach deep in either case and see what she is made of.</p>
<p>Rio, what was the decision?</p>