Student loans were at 3.75% last year and will be lower this year. So where can you get that rate? From the United States of American.
And of course currently interest is suspended on loans so they are at 0%.
I guess I didnât realize those were the rates as mine are over 7%. Of course zero right now but after the pause they go right back up. Also from the United States of American.
Everyone qualifies for some financial aid unless you are incredibly wealthy.
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Since the term âfinancial aidâ encompasses merit aid and unsubsidized federal direct loans, even the incredibly wealthy qualify.
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You are guaranteed to have to pay the 4.25%. If you have a risk-free opportunity to earn 10% then yes, this would make sense.
The current long-term risk-free rate is about 2.1%
10% risk-free returns often involve a Nigerian Prince.
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I am playing with numbers bc everyone makes loans sound like itâs the end of the world but if the market does what the market does than a 4.25% fixed loan over 15 years is no different than a $150,000 mortgage. Unless I am totally not getting it.
A mortgage is a secured loan and for most people, the mortgage payment is in lieu of rent. In contrast, a student loan is on top of living expenses, and of course is unsecured (canât sell the collateral).
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@evergreen5 ok. Collateral makes sense now!!! Thank you!!!
I think COVID-19 changed decision making for a lot of kids. My DS20, NM finalist and state flagship scholar with full tuition scholarship offer, chose to spend her college fund at the OOS school that she loved and could afford without loans. Yes, she is very close to full pay OOS after a small merit scholarship but she is getting a great education without the added stress of a higher cost, keeping a certain GPA required by a big scholarship, or going to a larger school than she wanted ever, let alone during the pandemic. Because we had saved in a 529 that choice was available to her. Studying in the geographic area where she may want to remain after graduation was important to her and we have been supportive of that choice. The pandemic both created clarity as to what she wanted most and emphasized how quickly the world can change. Paying full sticker price is not necessarily a bad thing but the size of that sticker should be evaluated very closely for cost vs benefit.
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Interesting thread. We are full pay and did not apply for any Financial Aid because we would have to have triplets to qualify; but when we were undergrads, we both had grants and loans(that parents paid) and extensive FA and we only paid off our med school debt x 2 less than 10 yrs ago. So, yes, we are paying sticker priceâonly one in-state school is on the list, and only one OOS that offers(already offered!)merit aid which makes it similar to the state school, so the other 7 options (if accepted ) will be 77-80k per yr, and are all in the range of T30+/top LAC or whatever that have >50% full payers like us, no âdiscountâ merit etc. So, we will pay. We planned for it as much as possible, and will do what we need to do to make it work without loans. We will not freely give for grad school or first house and we never have had that planâeven if we couldâbecause we paid those things ourselves and it taught us many important lessons. Now a grandkidâs start to a college fundâI donât know, but we might do a little for that. That is different and depends on the kidsâ careers and salaries.
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I think this is a fair consideration, for those who can afford the choice. I have long wanted S21 to go to a particular public university he favored, but seeing some of the faculty/departmental cuts they made due to the pandemic gave us pause. He decided instead to apply ED to a private university with a large endowment that (to our knowledge) has not eliminated academic departments. Weâll be paying more (he received merit $ at the public), but Iâm okay with this in the present situation, when the extent of the financial fallout is still unclear.
Students at the public universityâincluding many of his friendsâwill still receive an excellent education despite the cuts. Itâs a wonderful school. If the difference in cost had been greater, perhaps my son would have made a different choice. But as an OOS student at the public, even with the largest merit scholarship the price difference did not outweigh our concerns about the pandemicâs impact at the public.
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In terms of the market doing what the market does, see 1929, the entire decade of the 1970s, 1987, 2001, 2008, early 2020, etc.
Investments should always be evaluated in terms of their risk profile.
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I think the question is difficult to answer as asked. What is the sticker price? A person might be required to pay sticker price at their state school based on EFC etc. but be given a significant need based scholarship at a private school. (It could still end up being more expensive) Some of the wealthiest schools have quite high income standards for determining need. You can make a pretty significant income and still receive need based aid at Harvard but be full price at another equally expensive school. I still think the most important step is to determine what you as parents will contribute. I think you should have a good idea what is the minimum you will need to contribute to assure your student has options. It does no good to say Iâll contribute $1000 per year and then no school is affordable unless a miracle occurs. Then based on grants and scholarships your child receives make their college list and then choose from those that are affordable. You may not control the cost of the school but you can control to a degree what you will pay.
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Itâs a very simple matter find the âsticker priceâ of any college. Every college on its website will list the the schoolâs Cost of Attendance. This is the âsticker price.â
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You are right. I really wasnât addressing the question asked. I was addressing why people might be paying full sticker.
In a few months we will have paid full price for a BS and an MS at Stanford (our S). In another year our D will begin college and we assume that we will also be paying full price. Why?
- We knew early on that we would not quality for needs based support.
- We started and invested in 529âs from birth for each kid and the investments have paid off.
- Our deal with our kids has always been work hard, get in to the best college you can and we will pay for 5 years.
Iâve come across many in CC with the same experience.
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Variation on your theme @Rivet2000
We agreed to pay the full costs for undergrad schoolâŠexcluding discretionary spending and books. Our kids had jobs.
We also said we would help with living expenses for graduate programs, and we did. Tuition and any other expenses related to grad schools were on our kids.
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Same for us. We had the exact same philosophy and strategy. We added one additional stipulation. We live in Michigan so we told the kids that we would only pay for a college other than Michigan only if it was âbetterâ in some clear manner. I think this really motivated them to work hard.
Similar here. We started saving very modestly when each of our kids were born. Until 2 years ago, I was still paying off law school loans as mine were so old they could until about 5 years ago be re-financed a 2nd time, and I got stuck with a 7.25% rate from the first consolidation. Crazy.
Anyway, I beefed up both accounts when I paid off my loans and from proceeds after my mother died. Could we have saved some more? Yes, probably, but we were also told that money saved would count against FA. I think itâs unfair to penalize savers or those that have a rainy day fund â just base on AGI and be done with it. Iâm self-employed, so I will just not pay myself during FAFSA/CSS filing time from now on, I guess.
Anyway, I thought we might qualify for something, but last FA package that came back put our EFC at a little more than half our AGI and well over the cost of the school. thankfully, S21 has received merit at the 6 he has currently been admitted to, so we can afford all of them, but the 4 TBD schools are not going to be that way.
But if you could save and still receive money just based on AGI then you would have an advantage over people who actually live paycheck to paycheck.
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