<p>Audiophile, I've said the same thing about my profession.
Achermom, our D has also mentioned graduate school.
Edad, your question about the worth of seeing one's child "on fire" probably describes the feelings of just about the entire CC parent crowd.</p>
<p>With everything that parents do for their kids, including paying for college, if the parents run into monetary trouble in retirement doesn't it seem right for the now grown job holding students to help them out?</p>
<p>Thanks, Marite for an intriguing article. Here's a link: <a href="http://www.nytimes.com/2005/09/24/business/24save.ready.html%5B/url%5D">http://www.nytimes.com/2005/09/24/business/24save.ready.html</a></p>
<p>Id agree with jmmom that the writer/advisor is not especially attuned to selective college admissions. Or to quote McDuff, He has no children. 529 plans and 401k's are fine but as they say "restrictions apply." Your kid's dream school may not accept the 529 plan and there are limitations to amount that you can sock into a 401k. </p>
<p>There are three groups of families today: Those who qualify for a ton of need based aid, those who have so much money that it just doesnt matter and everyone else. Since this article was aimed at the last category, the one size fits all philosophy is grossly generalized. </p>
<p>Many kids do manage to choose and get accepted by colleges that offer substantial merit aid. There are plenty of success stories out there; however, there are just as many disappointing scenarios in which the child gets accepted to his/her dream school and the money just can't be rustled up. For a financial advisor to suggest that a teenager could or should raise $160,000 in loans or part-time-job income is just plain irresponsible.</p>
<p>For some middle class families the option of savings plus sacrifice with or without merit money is realistic. For others, no amount of eating peanut butter and vacationing in the backyard is going to make enough difference. </p>
<p>We're one of those families who chose to allow our son to attend his first choice even though it meant paying full freight. Graduate school tuition is the next Mt. Everest looming on the horizon. Most likely (and godwilling) we will work a few more years than we might have done had he been interested in a school that offered merit aid. </p>
<p>In retrospect, knowing the value of the education that my son is receiving, I'd do it again in a heartbeat, but this is a personal decision that only the individual family can make. </p>
<p>Or as edad so nicely put it, "It is often possible for a well-qualified student to drop down a few notches and get substantial merit aid (discounts). Whether or not that is worth it, is not a decision a financial advisor can make."</p>
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With everything that parents do for their kids, including paying for college, if the parents run into monetary trouble in retirement doesn't it seem right for the now grown job holding students to help them out?
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<p>You will be starting your own family, buying a house, saving for your own kids college, etc. Unless our kids are phenomenally successful (like being in on the ground floor of Google), I doubt any of the sacrificing parents here expect to be paid back. What we do expect, however, is that you take your education seriously, are reasonably appreciative and pay it forward to your own children.</p>
<p>I would agree that it is not reasonable to expect a children to support their parents in old age. It is reasonable to expect them to handle part of the expenses of college. It might even be possible to expect them to pay back a certain portion of the costs since a home equity loan makes more sense than personal loans. This should be agreed on in advance and needs to be a manageable amount. My D also knows that she will be on her own for graduate school and if she wants a traditional wedding that will also be her expense. We have noticed that she has gotten a lot more frugal than when she expected the parents to handle all the expenses.</p>
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We're one of those families who chose to allow our son to attend his first choice even though it meant paying full freight. Graduate school tuition is the next Mt. Everest looming on the horizon. Most likely (and godwilling) we will work a few more years than we might have done had he been interested in a school that offered merit aid.
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<p>Same here, for two kids. S2 just dropped by yesterday. It was wonderful to see how excited he is by his experience so far, from suitemates to classes and profs and to the Ecs he's tried out.</p>
<p>"Your kid's dream school may not accept the 529 plan "</p>
<p>I think you may be thinking of the independent529 plan where colleges agree to accept your contributions as a prepayment of tuition - in which case the advantage if your child goes to a nonparticipating college is much less. But a regular 529 just lets you save money, that grows tax deferred, earmarked for college - the specific college doesn't really matter - in fact the definition of "eligible post-secondary school" is fairly broad and even covers vocational schools. Not sure exactly how they define eligible - but most college would be included.</p>
<p>I think that the author's point that you should max out the 401K, the Roth IRA, and the other retirement options BEFORE saving for college is a point well-taken. The more money you have for retirement the better, and 1/4 of working adults are forced into early retirement by health issues. You may want to work, but not be able to. Your child, OTOH, should not have an difficulty paying back that $10K/year loan over a period of 10 to 15 years. I don't think it's unreasonable to expect them to share sacrifices made.</p>
<p>Note that I am NOT saying you shouldn't pay the whole ticket, if possible, merely pointing out that it may be appropriate to put some of the burden on the child.</p>
<p>I agree with you, DMD. Another way to look at the school loans is that they are borrowing for investment in the student's future by increasing the student's human capital potential. You borrow to buy a home and pay it back over 15 to 30 years; why not, if need be, borrow to buy an education now and pay back over a period of years based on the increased earning potential from having a college education? Of course, like all long-term borrowing there are risks to accepting college loans, namely whether you will have the income or appreciation to keep up the payments. But on average it's a pretty good investment, and the interest rates are low.</p>
<p>For emphasis, just in case it escaped notice:
[quote]
however, there are just as many disappointing scenarios in which the child gets accepted to his/her dream school and the money just can't be rustled up. For a financial advisor to suggest that a teenager could or should raise $160,000 in loans or part-time-job income is just plain irresponsible.
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<p>Unbelievably, my son's first choice school (to which he was accepted) had a FA officer who suggested that graduating with $70K in loans was both common and a fine way to attend. I can imagine how this amount of debt would impact a young adult just starting out in life.</p>
<p>That would be an excessive amount for most students, IMO. But I don't think students should be averse to borrowing a significant amount if they can cover more than half of their costs from savings or other subsidies or pay-as-you-go arrangements (work, family contribution, need-based or merit aid etc.).</p>
<p>Several thoughts: Borrowing for professional school seems reasonable, med, law, MBA, as the future income stream is somewhat predictable. It is an investment in future earning potential. Borrowing for PhD in something like classics does not seem so reasonable (and I do love classicists, I do, it's just the painful truth).</p>
<p>I cannot help myself, I know it's "mean-spirited" and so forth, but I resent being punished for living the prudent and responsible lifestyle that now puts us in the so-called no-need category. It just galls me whenever a multiple-thousand-dollar tuition increase is explained away in the next sentence "but we're going to increase the financial aid so no one currently attending has to sacrifice." Oh really?</p>
<p>wyogal,</p>
<p>If it's any consolation, my wife feels the same way you do. She can't even fathom the concept of need based scholarships.</p>
<p>Borrowing for any PhD program is questionable, from my POV. If you are any good, and if you are attending a good program that will give you decent prospects for a future university/college career, you will have access to substantial funding usually tantamount to full funding as a TA, Research Assistant, or from fellowships.</p>
<p>If you can't get funding for your PhD studies, don't attend -- you probably aren't going to be competitive after you graduate. And the drop out rate from PhD programs is very high, especially for students who start out unfunded.</p>
<p>For some fields with a glut on the market, it makes little sense to invest 5-8 years in a PhD program even if they pay your full costs. Of course, you may be among the minority of entrants to such programs who make it -- schools do still hire tenure stream faculty in glutted fields. But I wouldn't recommend it, personally.</p>
<p>The story is different for professional schools such as law, business, and medicine.</p>
<p>Exactly, mackinaw. Any worthwhile Ph.d program is normally funded by the school. Professional school means massive loans, but presumably the career opportunities to pay them off. We funded undergrad fully, but our kids know that they're basically on their own for grad school. They are very fortunate to be able to start that with no undergrad debts.</p>
<p>Wyogal: I have never felt resentment for being frugal and putting ourselves out of the running for aid. I'm just thankful to be in that position. It gives us more choices. Our kids have learned to separate what's really important for them from what they might want because others have it. This is a lesson which will in turn help them make good choices in the future. It's win/win, to me.</p>
<p>wishing a college didn't offer need based aid worries me- not just because it would mean that our daughter wouldn't have had her choice of colleges- but also that others in more financially challenged circumstances would be unable to send their children to college at all.
I would hate to see our colleges and universities closed to anyone who could not afford to pay full price. We need to improve access to higher education, not limit it.</p>
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I cannot help myself, I know it's "mean-spirited" and so forth, but I resent being punished for living the prudent and responsible lifestyle that now puts us in the so-called no-need category.
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<p>I agree with you wyogal...we're right there with you.</p>
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If it's any consolation, my wife feels the same way you do. She can't even fathom the concept of need based scholarships.
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<p>I can't either, Mrs. audiophile...it's an oxymoron.</p>
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She can't even fathom the concept of need based scholarships.
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<p>I have a different take. Two roommates. One comes from a community where the median home price is 418k and supposedly has more 1million+ homes per capita than any other city. The other comes from a small town where the median home price is 45k, and is 90% minority. I have no regret whatsoever paying full freight. I devoutly hope that S's roommate is getting a full ride. He is a very talented young man whose family could not possibly afford to send him to an elite college otherwise. The median income in his community is 24k, well below the 40k that Larry Summers used as the guideline for his financial inititiative.</p>
<p>IMO, then, the roommate's funding is need based. To me, scholarship should be based on scholarliness, or ability/merit/etc. (thus SCHOLARship).</p>
<p>Many students are applying for scholarships who are deserving based on merit, but won't get them because they go to a needier student (who may well deserve merit based aid also.) I'm not saying that there is anything wrong with this method of handing out the goodies, but I just think that scholarship committees should make it clear if "need" is the first hurdle and "merit" is considered secondarily. Many school and private "scholarships" are like this.</p>
<p>Regarding the second quote which says that retirement funds are invisible to FA officers: both the FAFSA and CSS-Profile forms require you to tell how much you have in and will contribute to tax-deferred pension plans and savings and deductible IRA/Keough plans. The FA officer at my son's school said that parents are allowed a certain amount for retirement funds but if the payments to the funds are voluntary and are above the allowance, it is expected that you should decrease the amount you put into retirement to apply toward school costs. Does anyone have more information on this ?</p>