<p>For those of you who chose to take out loans, was/is the school ultimately worth the debt in your eyes? Why or why not?</p>
<p>We had a similar thread a while back about whether choosing merit money over a "dream school" was worth it, and I'm interested in the other side of the coin, so to speak.</p>
<p>Most definitely.
At one point we had borrowed close to $80K-$90K, PLUS, 2002-2006. But amount of borrowing was because of then financial conditions, external and internal that do not exist today. About a third to half of borrowed amount had liquid backing. IOW, we leverage interest rates. Financial Death happened to those who did not know how to handle the situation. </p>
<p>We cannot believe that we would do such amount of indebtedness in today’s world. </p>
<p>One has to be a fair economist to do what we did then and a better economist to do what a family needs to do today</p>
<p>I am wondering the same thing. Looking at possibly borrowing $20K or more per year. I might be getting laid off but we do not have any other choice</p>
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<p>Don’t do it. You DO have a choice. The kiddo can go to a less expensive school. If you can’t afford a college…you can’t afford it. Remember, you have to QUALIFY for loans too…and in this day with the banking industry being the way it is…that isn’t always easy either. The banks are scrutinizing loan applications in a very thorough way…they cannot afford to give loans to folks who are overextended or may not be assured of being able to reply the debt.</p>
<p>Now…regarding the topic of this thread…We took out a total of $23000 worth of loans for TWO kids…about $12K each…not per year…total for four years. Yes…it was worth it. We have virtually no other consumer debt but our mortgage and even our house is almost paid for. If we had financial limitations, we would not have taken out these loans.</p>
<p>We also required our kids to take the Stafford loans all four years…in their names.</p>
<p>Thumper…</p>
<p>Good points about having to qualify…</p>
<p>Also, when taking out Plus Loans…Do you start paying those back immediately? I’m guessing that Plus Loans are not delayed until after graduation, right? So, if you borrow - say $20k for the first year, you’ll immediately have a payment of about $251 per month. And, then if you borrow that much again the following year, you’ll now owe about $500 per month…and so forth. </p>
<p>I could see where a parent could easily find that they wouldn’t qualify to borrow for years 3 and 4. Right? That strongly suggests going to an inexpensive CC for the first 2 years (and pay down current debt), so that you’re sure to have the borrowing power to complete the degree. Right?</p>
<p>I would not take $20k a year if you have other options. Also make sure you will actually be able to take that much every year. There was a poster a while back who was very determined to send their child to their OOS dream school despite parents here advising her not to take out the large loans that entailed (there were other cheaper options). A year or 2 years into school she was turned down for loans because her amount of existing loans was too high compared to her income. Not sure what she did in the end or if the child was able to continue at the school.</p>
<p>I think “worth it” is the wrong question to ask. Ask yourself how much you are willing to pay, on a monthly basis, continuing 10 years after your kid graduates – for his education. Don’t think about the returns – after all, you probably didn’t wonder if it was “worth it” every time you paid to sign your kid up for karate lessons or paid for a birthday party. You just chalked that up to the normal costs associated with childrearing and made decisions based on your family budget. Same with the family vacations you took.</p>
<p>The problem with the “worth it” analysis it puts you forever in a situation of second guessing your choices. I borrowed about $10K for my son’s first year at an elite private college – he dropped out after his 2nd year, with mediocre grades. He later graduated from an instate public, on his own dime. Was the debt “worth it”? Obviously not, since my son squandered the opportunity – but I don’t know that its the fault of the school - and despite the fact that my son didn’t finish, he may have learned something while he was there. But the point is – it’s money I spent for my kid that in the end didn’t work out so well – though I chose to look at it from an different angle. (Look how much I saved when I didn’t have to borrow money for years #3 and #4 at that school.)</p>
<p>So the question is… how much are you able and willing to pay for your kid’s college, over time – whatever the choice of school is? </p>
<p>For me the magic number for monthly debt carriage was around $500 – I figured that when both kids were done with college, I could live with the monthly payout of $500 - it wouldn’t make a significant dent on my lifestyle, especially given the fact that post-college, I no longer have to support the kid. For someone else who is debt-averse, even a $100 monthly payment might seem like too much. </p>
<p>I would note that whatever I have paid over the years for college loans for my 2 kids is probably a lot more “worth it” than the money I pay out to my health insurance company to NOT get services because I am fortunate enough to be so healthy that I rarely need any sort of medical care, other than routine preventive stuff. Sometimes the returns on the money we pay out aren’t obvious or immediate.</p>
<p>*I would not take $20k a year if you have other options. Also make sure you will actually be able to take that much every year. </p>
<p>There was a poster a while back who was very determined to send their child to their OOS dream school despite parents here advising her not to take out the large loans that entailed (there were other cheaper options). A year or 2 years into school she was turned down for loans because her amount of existing loans was too high compared to her income. Not sure what she did in the end or if the child was able to continue at the school.*</p>
<p>That’s why it’s so scary to hear that people are taking out big loans for years 1 and 2. Who know what they’ll qualify for when years 3 and 4 roll around. Can you imagine not having the money to graduate from the dream school because you paid too much for years 1 and 2 (which could have been done more cheaply at a CC or local state)?</p>
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First off: I agree entirely with your sentiment. But I think you may be taking the inverse a tad too far. The comparison is not unaffordable dream school vs. 2 years at CC + 2 years at dream school; the comparison is unaffordable dream school vs. 2 years at CC + 2 years at the local public, or perhaps a lower-tier private. Transfer admissions to the top schools is even harder than freshman admission.</p>
<p>So: mourn the opportunity, but don’t be stupid. Dreams can come crashing to an end.</p>
<p>We’ll be borrowing to cover part of EFC for the two years both kids are in school. We want to keep our savings liquid. We bought our house 11 years ago and have significant appreciation and equity even with the current RE market. We refinanced to 15 year fixed seven years ago, expecting we’d HELOC when college expenses arrived. Have been able to avoid loans so far, in large part because I went back to work PT after five years of medical leave. Once S2 graduates we’ll be throwing my paycheck at that debt instead of EFC. If HELOC rates go up, we can consolidate what will be left of our primary mortgage plus HELOC and make it a ten-year fixed. </p>
<p>Kids also have Staffords and jobs in this scenario. We always expected we’d do this and know that we can make it work.</p>
<p>We got 2 thru with no loans. The 3rd is transferring next year and one more to go. There is no way I would take out huge loans to get my children thru. We are not independently wealthy. All of our children have worked to help get themselves thru. First 2 went to CC and then transferred. No employer cares where they start college- just where they finish. 3rd one started at a $40000 a year school but had scholarships to cover most of it. She didn’t like it and came back and went to CC. Now will transfer next year and part of her decision will be based on scholarships offered. Hopefully we will get her thru with no/minimal loans. We told all of our kids we would get them thru but maybe not at the school of their dreams.</p>
<p>There is a lot to be said for starting at CC & then transferring. Our D did start at CC and had 3 semesters of credit transfer when she started her “dream” U. This was a HUGE help for us and kept all of us from worrying about whether we can afford all 4 years at dream U, especially since her brother is also at dream U (tho with generous merit scholarship).</p>
<p>I have read of kids who have had to transfer back to local Us and other places because parents really stretched for years 1 & 2 and just couldn’t stretch any more to do years 3 & 4! It is really important to think about reality and how much money there is for the entire family economic unit. We have always tried to be honest with our kids about what we can afford and what we can’t.</p>
<p>I worry when I read from those who are barely able to figure out how they will afford year 1–college is 4 or more years for most kids!</p>
<p>Just to clarify…we are lucky that S1 has merit $$ – between that and Stafford/work, he is paying 40% of his bill. We’re talking about borrowing on the order of one year’s COA (not times two kids). Basically, it’s the cost of a standard kitchen remodel in our middle-class neighborhood.</p>
<p>My daughter wants to dorm at the University where I work. We get full tuition as part of my benefit package. Tuition is 35000 a year. Room and board is 12000 a year. She has 2000 saved (which she was going to use towards a car as a commuter), she is eligible for 5500 in unsub federal loans but still needs about 5100 to cover the difference.</p>
<p>My husbands job is unstable right now. Mine is stable and has great benefits but isn’t high paying. We could cosign a loan for her if absolutely necessary. I prefer she commute to save money and come out of school debt free. Even if she can become a Resident Advisor next year, covering her room and board, she will still owe about 12000. </p>
<p>Is it worth it to be paying 150 a month for the next ten years to live in a 10 x 10 room with a person you may/may not even like? Is the “on campus” experience worth it?</p>
<p>I have borrowed for my kids but I didn’t view it as a “worth it” question. Rather, I looked at what I saw was a reasonable commitment on my part for my kid’s college education - and borrowing was my means of meeting my obligation. So while it may have been cheaper if my kids chose a less expensive school (as my son did for the final 2 years of his education) – I just saw it as:</p>
<p>mom’s obligation = $X</p>
<p>In my case, $X = roughly $20-$25K per year. That would cover full COA at our state flagship, obviously not a private education – but of course my kids were also eligible for need based aid. </p>
<p>I also looked at my own finances, specifically net worth, along these lines:</p>
<p>home equity + value of retirement savings = $A
total amount of parent loans = $D</p>
<p>$A > $D (Assets are substantially higher than debt)</p>
<p>So for me, the worst case scenario in the future would be – I suffer loss of income, I sell home, pay off parent loan from proceeds of sale.</p>
<p>Obviously I could have opted for a home equity loan rather than a parent loan, but I felt that for long-term planning I wanted to pay off my home. I’d note that payments on a PLUS loan can be reduced or deferred in the event of disability or unemployment – so I’m fairly comfortable with that kind of debt.</p>
<p>^^IMO the residential experience, at least for the first year, is indeed worth it–doubly so for a “local” school. But only your DAUGHTER can answer that question. Show her the numbers.</p>
<p>I live very close to a college town and I know a lot of students there, because it’s the state flagship and the only tier 1 school in the state. Those who choose to commute tend to feel detached from the social scene; the university seems to recognize this, as it requires all freshman to live on-campus (guaranteed housing) with an exception by petition for commuters.</p>
<p>Can you help at all with college costs, since tuition is free? Even a few thousand a year would make a difference.</p>
<p>ellenj—</p>
<p>Does that univ where you work have a special setup for commuting students?</p>
<p>At the school I attended I knew a bunch of kids who were living at home and commuting. The school had two old houses (horrors really) one for girls and one for boys, that were ostensibly to be used only for “crashing” when studying for test or if the weather was foul. Plenty of kids stayed in those houses a lot more than supposed! And they had a ball, too. </p>
<p>I’m not advocating that, quite, but a lot of schools do have some special lounges or other things for commuters, that would help with the isolation aspect. </p>
<p>It’s a difficult ques to answer – but if a job is unstable maybe D should room at home. At least for now.</p>
<p>If the job was not an issue, I wd suggest she room there her freshman year to get the benefit of making friends – that first year in a freshman dorm is really important—and perhaps “come home” — though I know she won’t like it!—for the remainder. Or use the RA job to help. </p>
<p>Another part of the question is whether the school has a decent # of commuters, or is it entirely on-campus residents? She’d really be left out if nearly everyone lives in a dorm.</p>
<p>I agree that much depends on the particular campus involved. Some campuses have virtullay NO COLLEGE LIFE for folks who don’t live on (or very near) campus. Unfortunately our flagship & CC fall into that category. For those schools, living on campus, especially freshman year, is really important for the student to get fully involved with the campus.</p>
<p>As has been posted, after the 1st year, your student can get a RA position to subsidize costs or move back home. Congrats on your child getting such a generous tuition benefit at your school–that’s tremendous!</p>
<p>I have such mixed feelings about the whole thing. I have no problem with her leaving home. She is so responsible she could have lived her on own her since she was 12. </p>
<p>I know that we can’t take on the debt but we can probably give her about $2500. She will still need a loan for about $3000. </p>
<p>Are there any loans she can take out in her own name only that I do not have to cosign for? She is already taking the 5500 unsub stafford loan.</p>
<p>Parents plus loans start repayment immediately correct?</p>
<p>I think the longevity of repayment is important to keep in mind, ten years is a long time. And it doesn’t matter if your child is unemployed or in a low paying job, or if he/she transfers, you still need to pay that loan.</p>
<p>My husband tells this story of a neighbor where he grew up whose daughter wanted to get married in one of the most expensive places possible and the dad wanted to oblige given that it was his only daughter. He was planning on retiring, buying a small boat, and spending his time fishing, but rearranged everything to accommodate her. It was a beautiful wedding, well worth the money. Unfortunately, 6 months later the groom walked in on the bride with another man. Divorce. The dad still had to postpone retirement and pay for the wedding for years after.</p>
<p>I’m not saying kids are bad; just they, and life, are unpredictable.</p>