Money is an Issue

Paying for College
1

<p>I am currently a senior in high school and I have been accepted into USC, UC Davis, UC Santa Barbara and Babson. I am also on waitlist for NYU and U of Mich (Ann Arbor). This post is a little hurried since my SIR is due in a few days (May 1st!) and I am pretty hare-brained about what to do.</p>

<p>Currently my best choice is USC because I will be pursuing a Business major and USC is ranked as 10th in the nation while I am not even sure if UC Davis or UC Santa Barbara really have Business majors (UCSB does not, but they have Economics and Finance/etc and I'm admitted to UCD as Academics Options Program—basically undeclared).</p>

<p>If I get admitted into NYU (Stern is ranked 5th as a business school) or U of Mich (Ross is ranked 4th), my choices may be swayed especially because I would love to attend NYU.</p>

<p>But, to remain true to my title, money is an issue. FAFSA calculated that my parents' EIC should be $30k while USC demands $45k! Another problem is that $30k is already too much and a grossly inflated number since although my parents may be considered as high income earners (~$150k a year [both parents totaled income]), we are also in debt due to our recent purchase of our first house (valued at ~$700k).</p>

<p>Most of the topics that I've come upon have suggested taking the cheaper route such as the UCs (about ~$30k a year) versus the more expensive private colleges (USC = $58k/year, NYU/U of Mich about $50k-$60k/year). But unfortunately, the UC programs that have accepted me don't really appeal to me as I don't see them as strong competitors against USC or NYU/U of Mich. To add more information, USC has given me a measly $12k/year in loans + grants and Babson has given me $18.7k in loans + grants/year (out of $55k cost of attendance).</p>

<p>I've also sent several appeals to USC for financial aid explaining our debt. I'm not very educated on how loaning works and I was hoping for some helpful advice. I am also considering double majoring as I don't believe a bachelor's degree in Business will really snag me a job. I am considering maybe double majoring in a more science related field such as Computer Programming/Computer Science or Engineering.</p>

<p>Also I have some hopes for USC as it has the potential for being generous with money. My parents will probably only finance me for my freshman and sophomore years in college and after that, I will shoulder the financial burden.</p>

<p>I've read in one post that a decision on college should not be based on emotions but rather on money, but I can't help but have wishful thinking toward NYU. So, any advice is really welcome.</p>

2

<p>If you’re going to have to pay full freight for two years of college, there’s no way you should go anywhere but the UCs. You will not even be able to borrow that much money without your parents agreeing to co-sign the loans.</p>

<p>You will likely receive no need-based aid because your family is quite wealthy. Borrowing six figures to cover your college costs is not a good idea.</p>

3

<p>I am not quite clear on how much $$ your parents can pay for the first two years. Find out. This will help your decision.</p>

<p>UC Davis has economics and this major: [UC</a> Davis :: Academics](<a href=“Majors”>Majors)</p>

<p>It doesn’t sound as though Michigan, USC, and NYU are affordable options. </p>

<p>And yes, DO let money guide your choice. It happens everyday.</p>

4

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<p>You will need to find an affordable school in your options. Your parents’ debt load, and their decision to buy a $700,000 house are just that…their decisions. Their income of $150,000 IS high and that USC calculates that their family contribution is $15,000 higher than the FAFSA indicates either significant assets, significant EQUITY in that house, not allowed business expenses if they are self employed or some other significant asset amount.</p>

<p>If the FAFSA EFC is $30,000 and your parents can’t pay THAT amount…you need to find a school that is within the price range they CAN pay. Schools do not provide need based financial aid to fund the family contribution.</p>

<p>Also…those FAFSA only schools (and NYU is one of them) could very well require your family to pay a lot MORE than $30,000 per year as they do not guarantee to meet full need of accepted students.</p>

<p>I know this is not what you wanted to hear. Please look at your affordable options and discuss this with your parents. You will have to work within their budget.</p>

5

<p>If your parents spent $700,000 on a house instead of paying for your college education, there’s a problem. You might have to have a serious talk with them about financial responsibility.</p>

6

<p>Money is an issue with colleges. It is really one of the first issues that should come into play when putting together a college list. You did cover the affordability option and that’s what it has come down to. You have appealed to USC for money, and if they come up with enough that you can afford to go there, good for you. Otherwise, unless your parents come up with the money, you can’t afford to go. They are the only ones that can borrow that much, so either they borrow or you get them to co sign a loan for you. I think the rates, terms and acceptance are better for PLUS than for a co sign.<br>
Debts are not taken into account by financial aid other than possibly for medical costs, so how much money they are in debt makes absolutely no difference. The way the colleges look at this, they can sell their house to pay your way–why should they own a house worth X when there are candidates for aid who don’t have that asset and are in the same category, otherwise? Actually FAFSA doesn’t take into account the value of the house at all which is a bonus for folks like your parents.</p>

<p>NYU and Michigan are highly unlikely to come up with much money, particularly for waitlisted folks. They don’t meet full need for most of their first choice candidates. </p>

<p>So talk to your parents, because that is where the money is, for you.</p>

7

<p>Your biggest problem isn’t even how your parents are going to pay 30K-45K a year for the first two years. Your biggest problem is that your junior year, if you parents stop paying, that you will not qualify for any loans for that kind of money on your own, and maybe not even with a co-signer. There is a reason the federal subsidized student government loans max out at a total (for all four years) at about 28K. And no private bank is going to want top loan a 20-something year old an additional 60K+ in unsecured debt. Try walking into a dealership today and ask for even just a 30K loan to buy a nice car and see how fast you get denied, and that is a loan that technically has collateral (the car) vs. a degree which has no securing collateral.</p>

<p>This is an easy one decision-wise, though not necessarily easy on the emotional side. NYU and USC are out of your budget range until or unless your parents decide to contribute the needed monies all four years. (And I would recommend against that as I have a feeling that your parents don’t have 120K - 200K in cash to throw around.) Truth be told, it sounds like even UC Davis might be a huge financial burden. Depending how the numbers crunch, you may want to go the CCC and then transfer to a UC route. It isn’t glamorous, but a lot of families are making that more affordable choice these days. It works and at the end of the four years, your degree still says “UC Davis” on it. Or, you could do the CCC and try transferring to a private college–not a guarantee in terms of transfer, but it would certainly cut 2 years of cost right off the top. And again, at the end of the four years, your degree would still say “USC” or “NYU” etc.</p>

8

<p>$30K is not grossly inflated…it’s your parents’ choice to buy a house. Most people who send their kids to college also own houses and are paying mortgages, so you are not unique in that sense. Your appeals to USC likely will not work because of that reason.</p>

<p>Just like anything else in life…if you cannot afford it, you can’t buy it. Universities are businesses much like other businesses, and education is a special type of consumer product. You have to work hard to get it, but you still have to pay. Even if the UC programs don’t appeal to you as much…how are you going to pay for USC? Either your parents have to come out of pocket quite a lot - which given their expensive new house, they probably can’t afford to - or you have to go into serious six-figure debt, which is a bad idea.</p>

<p>If you are a CA resident, both Michigan and NYU are unlikely to give you any better offers (especially coming off the waitlist). Babson will leave you in debt almost $75,000, so I don’t think that’s a really viable option either, unless neither of the UCs gave you any aid and you’d have to finance the entire thing with loans.</p>

<p>IMO, your two choices are really betweem UC-Davis and UCSB, and like annikasorrenson says, even those may be unaffordable if you have to finance the entire $30K CoA with loans. What kind of financial aid did Davis and UCSB give you?</p>

9

<p>By the way, I live in the silicon valley where cost of living is incredibly high. $700,000 is actually a lower valued house in which the average value for a two bed room house may be around 1 million. Basically an income of $150,000 is not very much in comparison to the price levels here.</p>

<p>Does this affect anything?</p>

10

<p>My parents have also told me that with the breakdown of their income, they can probably finance me about ~$2k a month for college. So about $24k a year. Thanks for all the advice so far!</p>

11

<p>$24,000 from your parents plus $5,500 from you in the form of a Stafford Loan brings you up to $29,500. With that and whatever it is you can bring in with a summer job and working during the school year, you should be OK for UCSB and UCD. </p>

<p>If you really feel like you can’t go through life without a USC degree, follow annikasorrensen’s advice, and start out at your closest CCC. Have your parents slap that $2,000 each month into some kind of savings vehicle, so that when it comes time to transfer, you have a big chunk of money stashed away for USC or wherever it is that you decide to transfer.</p>

<p>To help you better understand what your various aid packages mean, run the numbers here: [FinAid</a> | Calculators | Award Letter Comparison Tool](<a href=“Your Guide for College Financial Aid - Finaid”>Award Letter Requirements - Finaid) </p>

<p>Wishing you all the best!</p>

12

<p>I grew up in the Bay Area, and the average value of a two-bedroom house there is not anywhere close to $1 million, particularly after the housing crash. Those values are in line with the area’s wealthiest communities such as Los Altos Hills.</p>

<p>So no, that house value will not be taken into account in any way other than as a signal that your parents have plenty of wealth to pay for college. Your family does not need, and hence will not receive, financial aid based on financial need.</p>

<p>An income of $150,000 is in the 90th percentile of all American households, and to be quite honest is “not very much” only in the mind of someone who doesn’t know how the other 90 percent live.</p>

<p>You have some great options for college. Take advantage of them.</p>

13

<p>Again, YOU cannot borrow the amount needed for junior and senior year…nor should you. You will not be able to pay that much back.</p>

<p>Go to a UC and graduate debt free or with low debt.</p>

<p>If USC has calculated your contribution to be that high, your parents either …own a business, have lots of equity, or have lots of savings/investments.</p>

14

<p>Cost of living is not taken into account. You’re down to the wire, so unless you USC is willing to come up with money NOW, your choices are between the two UCs. Not a bad thing. The UCs are very highly regarded. And truly, you are to be congratulated for having financially affordable schools on your list. A lot of kids out there who did not.</p>

15

<p>The OP didn’t say his parents plunked down $700K to buy a house, he just said they purchased a $700K house. That’s close to the current limit between a conforming and a jumbo loan so it’s a sweet spot for those looking to buy right now. Shocking as this seems to the rest of the country, $700K will at best purchase a modest 50+ year old house in some areas of Silicon Valley/San Jose. </p>

<p>polarscribe calls out Los Altos Hills as having homes in the range of $700K. Have you been there lately? Nothing in Los Altos Hills is on the market for under $1.5 million, while the average list price for houses there last month was $4,273,000. There aren’t many 2-bedroom houses in Los Altos Hills although 2 are on the market for an average of $2 million. Probably teardowns where the value is in the land.</p>

<p>So while the OP’s family’s choice of purchasing a $700K house on $150K income might seem unfathomable to some in more reasonable areas of the country, it’s not out of line for Silicon Valley. It might have even been a wise move if they did the math and compared the cost of buying vs renting or commuting from the Central Valley. Who knows? But automatically assuming the parents were irresponsible isn’t necessarily correct.</p>

<p>Having said all of that, it really does seem like the OP needs to find the cheapest solution possible. Community college is a good option. Finding ways to economize on room & board, books and transportation is another good option. Living on campus at UCs is very expensive. The UCSB COA figures include $13K for room and board which is very high - there are ways to save thousands of dollars by living off campus.</p>

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<p>No this will not really have an affect. Regardless of the situation, you have to find a school where your parents can pay the remaining bills (after any financial aid you get…if any). You need to work within THEIR budget. That is what ALL students need to do.</p>

17

<p>I don’t dispute that housing is expensive in the Silicon valley area. My brother lives in the area, and he would love to buy a house, but can’t afford it. He’s renting. There are a lot of people in that area who earn a lot less than $150K. There are a lot who make more too, but believe me, there are folks earning small amounts too, and they have families too.</p>

18

<p>So while the OP’s family’s choice of purchasing a $700K house on $150K income might seem unfathomable to some in more reasonable areas of the country, it’s not out of line for Silicon Valley.</p>

<p>Yes, it makes sense to take advantage of the housing market. But, it has to be carefully considered when you have a kid coming up for college. It’s hard to read posts from kids caught in their parents’ decisions. </p>

<p>It’s often claimed that the cost of living in some areas should be considered. Your family’s income and assets are simply greater than most. The schools might choose to put their assets into the kid from the 50k family or 90k family first. Can your parents contribute $24k for four years- or is it still only for two? If it’s for 4, you take the student loans, get the jobs and you’re nearly at the cost of the UCs. And, they are great options. Good luck.</p>

19

<p>Still $700k seems like a lot for a first home. For an income of $150k, a family would still have to plunk a good amount down in order to have a reasonable payment on that income. It’s unlikely that they put down 10% and have a $600k mortgage…the payments and property tax payments would be too much. Just the property tax alone would be at least $10k per year.</p>

<p>I’m wondering if the family has savings/equity or a business.</p>

20

<p>I’m not criticizing the purchase of the house. It was probably the right thing to do in terms of quality of life for the family. Certainly more important than paying for college for one family member who has excellent affordable options. But you can’t have it all in life when the finances have limits and what you want costs money. A family has to make its choices.</p>

<p>I know families who are squeezed in tiny apartments, living in dangerous neighborhoods, because of college costs. At the school where my sons attended, an expensive independent prep school, families often sacrificed living quarters so their kids could go to private high school. I, for one, do not think it’s a good thing necessarily. I would not have wanted my parents to be living sub par so I could go to a private college. The value of an entire family living in the best possible home for a lifetime overrides the 4 year preference of one of the kids to go to an expensive private college. I am not deriding the decision of the OP’s parents in buying the house. But in this case, it means not enough money for college of the OP’s choice. Why should anyone be subsidizing this personal financial decision to upgrade housing?</p>