I was recently admitted to NYU Stern, which has been my dream school (as well as my parents’ top choice) for awhile. I’ll be majoring in finance.
My annual family income is 65k. My FAFSA EFC is 8k. I was given a 45k scholarship and the remaining direct cost will be 25k a year. My parents are more than willing to pay the 25k. However, I know it’s a HUGE sacrifice for them considering our low income and savings. I want to reduce the burden on them as much as possible so I plan to take out 5k in direct loans every year so my parents will only have to pay 20k a year.
They are discouraging me from taking out the loans. They say that “there is no logic in taking out loans” when they can just pay the whole 25k now and not have to deal with interest. I am thinking that I will just take out 5k in direct loans each year without telling them.
I have already accepted the admissions offer so I’m not asking whether it’s worth it to go to NYU. I’m asking whether taking on 20k in debt without letting my parents know will be manageable. (Again, my only motive is that I want to lessen the burden on them and take the responsibility for 20k of the cost myself).
You won’t be able to do it without them knowing if your parents actually read the bill. The school will apply the loan to tuition and fees first (if you take the loan before the semester starts) , and your parent will pay the remainder. The only way to keep it secret would be to wait, every semester, until the bill is paid and then apply for the loan. The loan 3ould be processed and you’d get the overpayment refunded to you.
Why don’t you and your parents agree to your only taking the subsidized loan, banking it, and then using it if you have to? If you qualify for the full amount to be subsidized ($3500, $4500, $5500, $5500) each year, if won’t cost you much, juse the origination fee…
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My annual family income is 65k. My FAFSA EFC is 8k. I was given a 45k scholarship and the remaining direct cost will be 25k a year. My parents are more than willing to pay the 25k.
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do your parents own a business?
How would they pay the $25k on that income?
Yes, you probably could take the 5k loan w/o them knowing, but you might need to have the loan info sent to another address if they are known to open your mail.
No, both of my parents are unskilled laborers and don’t own any businesses. My parents have paid off everything they owed on our home. I’m also an only child. They intend for the 25k per year to come from their yearly income (65k) only.
If they won’t agree to loans, then you can insist that you pay them back at least $5k per year when you get out. By the time you finish Stern, you’ll be able to do the loan amortization to calculate the pmts, and you’ll make enough to pay them!
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No, both of my parents are unskilled laborers and don’t own any businesses. My parents have paid off everything they owed on our home. I’m also an only child. They intend for the 25k per year to come from their yearly income (65k) only.
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You do realize that your parents do not “get” $65k per year unless they are paid under the table and pay no taxes.
if they have to pay state and federal income taxes, FICA, health insurance, etc, then their “take home” pay is a LOT less than $65k.
Are they contributing money to retirement accounts??
Even without a house payment, if they had to live on what’s left after paying $25k per year, that seems like it would be tough. They’d still have property taxes, car insurance, food, utilities, etc.
while it sounds like they’re good with money if they’ve paid off the mortgage on their home, it just seems unlikely they could pay that much each year for college. That’s over $2k per month. Are they now saving $2k per month.
More importantly…how much do they have saved for retirement?
Yes, I realize that we don’t get to keep all of the 65k. And yes we do pay taxes. We’re an Asian family that’s frugal about everything except for education basically. “Eating out” means spending $10 for all three of us not $25 per person, we have never gone on any vacations, and they don’t have cars. So besides utilities (we live in a small one-bedroom apartment so the expenses are not very high), we don’t spend much nor do we feel the need to.
“How much do they have saved for retirement?” They have 40k saved. They’re in their earlier 50s. I have every intention of helping to support them after they are retired.
In addition, since it’s NYC I believe I can find a part-time job/paid internship by sophomore year and contribute all of my earnings toward the 25k annual cost.
“Do you have any cheaper options for college?” My financial safety Binghamton University would be 22k per year. Boston University would be 20k, and Northeastern University would be 17k. I’ve already commited to NYU. Because Stern is so much stronger in finance, we believed the extra money would be worth it if it results in better employment prospects after graduation.
Your parents are in their 50’s and over decades they’ve saved only 40k for retirement? That alone tells you that coughing up 25k per year is totally unrealistic. Your family’s calculated EFC of 8k is telling you something…
Also, your parents depending on you as their retirement plan is very risky. No one anticipates that they could be hit by a bus tomorrow.
This is what I foresee happening. Your family will struggle to cover the 1st year alone to afford NYU, Then faced with harsh economic reality, you will drop out of NYU and transfer to a cheaper school.
My opinion–Don’t take out the loans. You can never get rid of them. Even if you were to lose everything you have and go bankrupt, the loans can’t be discharged-you would still owe them. That contrasts with the same amount of money that you might have spent foolishly and charged to a credit card. That would disappear if you went bankrupt. But as others have said, you can pay your parents back as if it were a loan.
http://www.tax-rates.org/income-tax-calculator/ estimates that a married couple with $65,000 income, New York resident, with 1 kid (in college so claiming the American Opportunity Tax Credit) will have about $54,517 after income and payroll taxes.
If they pay $25,000 per year for your college costs, can they live on $29,517 per year? If they pay $17,000 per year for your cheapest option, can they live on $37,517 per year?
Your other option to lessen the burden on your parents is to contribute earnings from jobs in the summer and part time during the school year, although a reasonable expectation of that is only a few thousand dollars per year. If you live in NYC, another way to contribute (but only at NYU, since it may be close enough) is to live at home and commute instead of living on campus. Living at home and commuting is not free, but usually costs significantly less than living on campus.
Additionally parents can take a Parent loan too. If OP secures a decent employment after graduation and lives frugally at home for 2-3 years he can pay all these money back.
OP, make sure you take the Student loans and bank them if parents do not ask you to contribute - NYU cost will increase every year but you scholarship may not.
You probably couldn’t take out a loan without them knowing. A better alternative would be to get a job and pay them some of the money back, or do work-study.
Do you have a close adult relative who could talk to your parents about their finances? I’m sure they CAN afford to pay this tuition if they live as simply as you say (people do live on this kind of money), but SHOULD they? Their retirement prospects are dismal. Are they citizens? Will they qualify for social security?
It sounds like they are gambling that you will succeed. It also sounds like you are committed to succeeding for them, and I honor you for that.
As a Stern student, you will have access to very, very high paying internships on Wall Street, year round even. These could put a nice dent in the bills. BUT these opportunities don’t fall from the sky just because you are in Stern. They go to the best, most hardworking, well-networked students (usually upperclassmen too). And, they can be grueling, with class and tests and homework to manage. But since you are committed to NYU, you really need to make this college pay you back by getting great grades and landing these types of internships.
I think that for a hard working student, Stern is a gamble likely to pay off, BUT you’d need to work over the summer and try to keep a job during the year, too - and contribute nearly all of that to your costs in order to lessen your parents’ burden.
You could get well-paid internships right off using the school’s connections but be aware that the best ones must be applied to in October-November so you’ll have to hit the ground running right away (like, connect with the Career Center now, etc). Some of the upper-level internships are paid anywhere from 3K to 6K a month during the summer (not freshman year though). If you add some CS skill to that, even more.
Can parents live off 29K a year for 4 years? Likely, considering they live frugally, have not bought a car, own a 1-bedroom (family of 3, guys, that’s an indication the family’s not into remodeling the bathroom and installing marble countertops but, as OP said, spends every dime on education). But it’ll be very hard, so every dollar OP can give his parents to avoid them having to spend so much of their basics on him, will help.
In the meanwhile, email the person who signed your admission offer and ask if they could reassess your financial need considering the fact your parents are both in their 50s, have almost no retirement savings, and are both unskilled laborers. At worst they’ll say no, but what’s there to lose?
I agree that with Stern opportunities and internships, the gamble is less.
If this student has a personal commitment and ability to work hard and SHINE, then the risk is lowered. Others can chime in with advice as to how to better position himself…not just great grades, but how to best network and “present” himself. I’m guessing that a certain grooming/image is expected.
However, there are at least two concerns that the OP needs to first consider and settle…
The student may not be able to support his parents during their retirement years. As mentioned above, something could happen to the OP which might prevent that: Serious illness, never really “making it,” death, etc. The student may be from an ethnic culture that believes in supporting elderly parents. However, the student may marry someone from a culture that either won’t agree to that level of support…or may have his/her own set of parents to also support. In other words, this “promise to support parents” could get messy or become impossible.
The parents should NOT only have $40k in retirement savings. They have only been able to save that much because they don’t earn much, which exposes the problem that it’s unlikely that they can pay $25k per year… If they can pay $25k per year for Stern, then it would seem that they would have been saving good amounts each year already… If they had saved $25k for the past 8 years, they’d have $200k saved. I’m also concerned that with their laborer jobs, if one parent were to become seriously sick, their income would be cut in half.
If you go ahead with this, then do so with the full intention to get those internships/co-ops that will eliminate or lessen. those loans.
OP, I think your parents work ethic and savings, and only one child. Good luck with school, with the jobs you can obtain along the way - for pay, for work experience, etc. I think your parents are afraid of debt and want you to avoid it at all costs - and they haven’t steered you wrong so far. Wishing the best for you.
Are @mom2collegekids and I the only two here who see the HUGE disconnect of parents in their 50’s having been capable of accumulating only 40k in retirement savings over the course of DECADES, now pledging to have 25k per year available?
GMT^lus7: they won’t “have” 25K per year. They’ll go from frugal middle class to barely-above-poverty-level living. That means lowering the heat, limiting everything non-essential, making souplast and eating less meat and fresh vegetables and no desserts and buying a maximum of things when they’re on the discount shelf, even going to the food bank from time to time.
They’ll do that over 4 years so that their son can join the stable middle class most people on this website take for granted, in the hope their son will do his best to contribute with internship money and that he’ll succeed, so that the sacrifice is first, bearable, and ultimately worthwhile.
OP sounds like a reasonable young man who’ll do his utmos to honor his parents’ sacrifice.
If it becomes too tight, OP will take on his federal loans (It sounds like he should take those on even for he first year but the parents won’t budge - perhaps they will after a while and he can take this first year loans until April of next year; also, he should be able to pay those back.)
@GMTplus7 - one thing to consider here is that part of the 25K difference was previously going towards living expenses of their son, the OP. That is now covered by college expenses - that could be a considerable amount, depending on where they were spending.
People can live off less than CC parents and members seem to think. My parents live off much less than OP’s, though they don’t deal with NYC rent - still, a 1BR is affordable for two to split and live a happy life, though still frugal. It’s concerning that his parents are willing to do this, hence the OP who is trying to help.
There are too many things that have to go right for the OP’s family to maintain this level of funding. Nothing in the house can break. The laborer parents cannot get sick. Etc. etc. There’s no margin for contingencies.
Then, on top of cost issue, the family is expecting an NYU diploma to be a Holy Grail.