re-entry student, high personal income, debt

Paying for College
1

<p>As the day nears for me to greatly reduce my work hours or leave my job to start the last two years of my BA degree, I am stressing about what to do with my current debt.</p>

<p>I am an independent student in my 30s. I attended community college part time while working full time. I paid for CC and books in cash. I have been admitted to UC Berkeley and will be starting there this year. I'm a resident of California, so will luckily be paying in-state fees, but the cost of living in the Bay Area is very high (I know, I've been living here for almost 10 years). I almost chose to go back to Utah for school, which would have been slightly cheaper even with out-of-state tuition, but I really wanted to attend Cal instead. I also turned down a much more expensive private LAC, which had given me a large, but not large enough, scholarship. Because of my high personal EFC, UC Berkeley offered only unsubsidized loans and a very small undergrad scholarship/grant (part of which was reduced by a couple of private scholarships I won).</p>

<p>When I start school at UCB, I will not be working full time, and therefore, will hardly be making enough money to pay rent, let alone credit card debt. I do not consider myself to be in over my head in debt and always pay more than the minimum, at least double, on all of my cards. I don't consider myself to be above average in debt, either, but I don't know...(I have had friends with more than $25k in credit card debt alone, which I've never hit). I don't own a car, don't have a mortgage. If I pay just the minimum credit card payments, I will be paying about $400/month. I know, I haven't been that smart about credit cards, but... I am kind of freaking out about how to pay this each month and still live/eat/enjoy life a bit while at school, let alone pay rent and utilities and pay for school. I am very frugal, usually, in that I hardly have any other bills and hardly ever buy new clothes or new anything. I hardly ever go out. I can't see any way to reduce my cost of living much more, except to cut out traveling, which I already plan to do (haha traveling to Europe too much is how I earned my debt).</p>

<p>At this point, the only thing I can see to do is to cash out my 401k, which would give me just enough to pay off my credit cards and possibly pay rent for a few months. But I know that is the wrong thing to do, so everyone says, or is it? Other than possibly affecting my bottom line for my FA in 2009-2010, and other than having to completely start my retirement fund over, in this day of negative "gains" (ie lots of mutual fund losses), is it really that bad to cash out the 401k?</p>

<p>I've toyed with the idea of re-applying to the Univ of Utah for 2009, going back to SLC now and working while not being in school so that I can save some money, pay off more debt, and gain residency, BUT, I really want to attend Berkeley and just finish the BA in 2 years. I really think I would regret giving up the chance to attend a terrific school such as Berkeley. (Can anyone tell me that the U of U would be just as good?)</p>

2

<p>I know older students who graduated magna while working as many as 30 hours a week while taking a full load and doing ECs related ot their major. Difficult, yes, but it is possible.</p>

<p>You also could consider going to Berkeley parttime while working fulltime. </p>

<p>You can't do everything, so you need to figure out what your priorities are. The travel could be put off until later, for instance.</p>

<p>Where do you plan to live after graduation? If you don't plan to live in Calif., Utah would probably serve your purposes just as well.</p>

3

<p>Yes, I know, I could work more hours and still do well in school, or go to Berkeley part time. It has already taken me 7 years of part time school to get here, though! I think I'll have to get a different job, one that allows working on the weekends and/or nights. </p>

<p>I was planning to move to Italy to be with my long-time boyfriend, but he broke things off recently, so now I can live just about anywhere after college. Could be a blessing in disguise.</p>

<p>Thanks Northstarmom.</p>

4

<p>IF you reduce your work hours such that you would have a reduced EFC under a new FAFSA, you may be able to have that applied to the first year of schooling finaid, too.</p>

<p>Can you find living arrangements with a roommate and work an extra job with the intent of putting every dime you can all summer and maybe fall to pay off the CC debt?</p>

<p>Do not take money from your 401k, not only would you lose that retirement money, but you would incur penalities and taxes on the money making that a double hit!</p>

5

<p>Some suggestions that worked for me as a re-entry student:</p>

<p>1) Cut up your credit cards. Put every extra penny into paying them off. Limit your entertainment options to free events at Berkeley. Eat at home (ramen noodles cost 20 cents a pack, and a banana is about 20 cents as well. It CAN be done.) No travel until after you graduate and get good-paying job and earn vacation time. Try to leave your 401k alone.</p>

<p>2) "Stack" your schedule onto two or three days. (I did this while in college, so I know it can be done.) You can get a full load of classes on just Tuesdays and Thursdays if you are willing to start at 8AM and go through 10PM. Then you can work Mon, Wed, Fri, Sat and Sun. When you have all the classes that are available on that schedule, switch to your M-W-F classes and work Tues, Thurs, Sat and Sun. You can get 32-40 hours a week this way.</p>

<p>3) Re-apply for financial aid next year. You income this year with likely be less, and you may qualify.</p>

<p>4) It sounds exhausting, but you will be surprised how quickly two years go by - especially considering how busy you will be. You will get an incredible sense of accomplishment from working your way through. It feels good!</p>

<p>Good luck!</p>

6

<p>Many colleges offer to reconsider a student's financial aid for unusual circumstances (loss/change of jobs, high expenses, etc). They will not guarantee that it will result in extra aid, but they'll willing to consider it. All it takes is to sent in the official form with income estimates and letter of explanation.</p>

7

<p>You are going down a tough path. You cannot expect Berkeley to even match your EFC and are lucky to get any grant at all for them. They are not a particularly generous school to most. As an independent student, half of your earnings will be earmarked for your college costs. So the more you make, the more you have to pay. If you tap into your 401K, the problem there is that it counts as income-so your EFC will go up by about half of the disbursement, in addition to the penalties you have to pay. It's not that it is so horrible to go into a 401K, it's just that the proceeds are counted as income for aid purposes and then there is the tax and penalities. Perhaps your 401-K has loan provisions, and you can go that route instead, and does it permit disbursement without penalty for college (can't remember if that can be done) As a loan, you do not have to include the proceeds as income for financial aid purposes, and you can have consider them a disbursement when you know longer have to worry about college financial aid.</p>

<p>I suggest you forego your traveling. Every penny counts at this point in time. You are going to have to scrimp big time. You should look and see what the job possibilities at Berkeley are and if tuition payment comes with such positions. Many universities do offer this perk to employees. Look for roomshares for living situations as they offer the cheapest way to go in high rent areas. I too wish you good luck.</p>

8

<p>I would suggest that you go part-time for twelve months. During that time you should pay off your credit cards COMPLETELY and put some money aside into an emergency fund. Do Not, I repeat DO NOT consider going to school full-time until you are rid of that credit card debt. It doesn't matter how many of your friends have more credit card debt than you do, and how their huge debts make your debt look puny. The fact remains that you have it, which means that even though you haven't been leading an extravagant lifestyle, you still haven't managed to learn to live within your budget. You need to learn to truly live within your budget, and that includes being able to create savings outside of your 401 (k), before you can start studying full-time.</p>

<p>If you study part-time, you can do at least one semester of credits in twelve months - you know this, you've done it before. Then next September, you can move onto a full-time schedule and finish in only about three semesters but without ancient credit card debt hanging over your head and with your 401(k) intact.</p>

9

<p>Thanks everyone! Some of the suggestions work for me, others do not, but all suggestions are very welcome. </p>

<p>I already decided to forego traveling. I stopped using the credit cards 2 years ago. I suppose living like a hermit and starving (I hate bananas and ramen) for the next two years, and not really enjoying the student life, is in the cards, but hey, it is only two years. Then again, if I can't enjoy the student life, what is the point in going to Berkeley? Oh right, for the academics, crazy professors, free (at least this year) football games, and name recognition. </p>

<p>Does anyone think it would be economically wise to buy a standard, off-campus student meal plan? It would guarantee at least one good meal a day. If my grandma bought it for me, would I have to report the gift as "income"?</p>

10

<p>Haha! How about apples and elbow macaroni???</p>

<p>Honestly, part of enjoying student life is figuring out how to live on the cheap. You won't regret it. (And you will enjoy it if you keep the positive attitude you already have.) A degree from Berkeley would be a big accomplishment and a great investment. Go for it.</p>

11

<p>The problem is making myself live on the cheap...again. Hahaha. I know I won't regret it, which is why I'm moving ahead with my plans. Hey, if I attend Berkeley part time for the first year, I can extend my time there and enjoy being on that beautiful campus even longer. </p>

<p>Thanks again.</p>

12

<p>I would really evaluate the meal plan, my DD attends Berkeley, she does not buy the meal plans, has not since she moved out of the dorm. She also in the dorms had the lowest dorm plan and had to use all her extra points at the end of each term buying coffee beans at Peet's and treating hungry guy friends to lunch in order to not simply lose them. Evaluate that one carefully, the off campus plan may be smaller.</p>

<p>If you are looking at the possibility of using a gift for it, it may also be that the same person would buy another more useful item for a gift??</p>

13

<p>I see several advantages to the off-campus meal plan:</p>

<p>1) One decent meal five days a week. This is really important! Will you bother to cook for yourself at least once a day?</p>

<p>2) Being forced to get to campus whether you have a class or not in order to eat that pre-paid meal which means you will be there and so will be more likely to go to the lab/library/etc. and get some study time in.</p>

<p>3) Being in a very-easy-to-socialize-if-only-for-this-one-lunchtime situation. I was on the meal plan for my first semester of grad school and lunch with random strangers every day and met really interesting people. Most of them I never saw again, but I never had to eat alone.</p>

14

<p>Re Post #9 and "grandma" footing the food or any bill: ANYONE "CAN" pay for any or all of your education--there is no prohibition on this!! Shoot, you can busk on the street for the money,and dump the hat on the bursar's desk--though I suggest more respect for the finance people, you need them to be your friends! But if you are applying for finan. aid with FAFSA (I don't know about PROFILE as well but I would presume the question is somewhere) the NEXT year, you need to report how much she, or anyone, paid for your meal plan on Worksheet B, last question, which goes onto Question 40 of the FAFSA. It's something like "any other monies paid by others for or on the student's behalf." (This also includes room and board provided by relatives, often the case in urban inner city contexts, and others. I have seen college ask for it.) I suppose if there were cash and therefore no paper trail.....</p>

15

<p>PS on paper trail: if anyone is paying large amounts of money on your behalf, it may have TAX implications for them, or you, unless they pay it DIRECTLY to the institution--then they are just someone paying a bill that needs to be paid. This is better TAXWISE, than them giving YOU the money and YOU pay it--then there can be gift tax over certain amounts (someone clarify or correct if I am wrong). BUT if they pay it directly to the institution, there are FINANCIAL AID implications (even if not TAX implications), as there should be--UCB could give that $$ to someone who does NOT have a grandma who can pay for their food, if yours can give you that wonderful gift. Thank goodness for wonderful grandparents--we are blessed with such!</p>