Shocked at EFC - Where to Start?

Paying for College
61

I don’t see it as scolding- I see it as educating.

You can listen to the salesperson trying to sell you a long term care policy and just sign on, or you can do your homework, run some numbers, and come up with an actual decision to buy or not based on facts. This is potentially a decision MUCH more expensive than college (in dollars and cents- I realize that if you’re looking at your 95 year old mom with dementia who needs 24/7 care that she can’t afford there’s more at stake than just the money).

You can listen to the real estate broker trying to get you to “stretch” (how many times did I hear that word when we were househunting- as if you can take a dollar and turn it into two bucks by stretching it) to buy the nicer house- and ignore the fact that the realtor makes more money selling you a more expensive house.

There’s no memo- there’s just financial education. Some people do it naturally (I have a neighbor who knows how you can shave $200 off the cost of LITERALLY anything, and got free cable for six months when he wrote the CEO a polite letter asking why they had dropped his favorite channel). Some people figure it out along the way. Some people never get it- there are lots of threads this time of year with parents contemplating CRAZY amounts of debt for colleges nobody has ever heard of, for a kid who barely woke up in time for HS and has shown zero motivation to go to college for an education, although the parties sound nice.

You don’t like what you read here? Don’t log on. But you can’t criticize people who try to explain the actual facts on the ground just because you don’t like the tone, or don’t like the reality that there might be hard decisions in the next few weeks.

Gudmom- I respect the fact that not everyone runs the NPC’s. Guess what- not everyone reads their home owners insurance policy, and they are shocked to learn that when their roof blows off in a natural disaster, some repairs are covered and some aren’t. And there’s no do-over. Not everyone reads their credit card statement, to realize that their birthday dinner, which they charged and are slowly paying off with the minimum payment, is going to take a LOT longer to pay for than it was worth. And that if they had known how much they are paying in interest, they’d have cooked at home. Some people buy extended warranties on stuff which cost more than it would to replace.

The oldtimers here can’t cure financial illiteracy for all these other things. But when posters ask “how do people afford their EFC’s” there are answers. You don’t like the answer? Apologies.

The financial aid fairy has left the building.

And yes, it’s painful, And yes, I feel the OP’s pain (and yours) but that doesn’t get your bills paid.

62

This is one of the hazards of people who have never met each other in real life communicating only in written form on a public internet forum. What one person intends as a simple recitation of facts, opinions and advice (which has often been solicited) can unfortunately be perceived as lecturing, moralizing and scolding.

63

Mea Culpa to anyone I’ve offended. I’m not scolding (that’s not my intention). But there are tremendous gaps out there in the real world about how money and finances work. If I can help- great. If not- ignore me.

One canard which gets repeated here every May when a grandparent steps forward with an offer to pay some of junior’s tuition is “but then we’ll have to pay gift taxes”. The recipient of a gift is NEVER liable for taxes. How this got embedded in the popular imagination is beyond me. (and for the donor- filing a gift tax return will take ten minutes, and in most cases, there is no tax liability whatsoever. Google it if you don’t believe me).

64

Start researching those schools that have your child’s desired major. It will be long. Then run the NPC for those schools. Cull out those you cannot afford. Then start visiting the schools. Preferably when they are in session. Have your child reach out to the local admissions rep for your area. Could be a small question, could be more in depth. Reach out to professor in dept she/he is interested in. Be involved, ask questions, show interest. Figure out what Scores/GPA are offered merit. Look at deadlines for applying to get best merit money. Make sure you understand if you need to apply EA for best money. Then start making a final list. My S did very little work and ended up with a full tuition scholarship (thank you Mom), D was a recruited athlete and did most of the research on her own. Although I would have preferred S did his own research, he did not but my research save us a ton of money.

65

Honestly, I’m still lost at a family with $60K yearly disposable income after mortgage etc that hasn’t invested more in some type of college fund. I’m going to assume then that much has been allocated to retirement and can now be directed towards college for a few years? Count me in as the family who doesn’t make $60K gross and still managed somehow to add to both my retirement and 529 (albeit small sums comparable I’m sure). And I’m also in a HCOL area, not NYC or SF but still.

66

Regarding the decisions already made, people can still make changes. A spouse can go to work, a family can cut back on vacations or services for their house or cable or phone plans or car purchases. Teenagers can get jobs. All of those things can happen in the last couple of years of HS and during college to free up cash.

67

@MEPatsGirl, great job in saving money at $60K both for retirement and your kids’ education. Most families not as disciplined as you are. Most are woefully unaware of how things work with financial and merit aid. I’ve been talking to my brother about his kids who are now entering highschool, and he was way off on his assumptions. The realities of what college can cost are beginning to sink in.

So, he lives in a high cost area, one of the highest. Lives modestly there, as he has a small rental that is priced well under market. However, some big hits recently–wife who generally is the main bread winner lost her job. Both care, very necessary are showing wear and need of repairs. Kids hitting their teens becoming very expensive in what they want. In laws getting health issues so visit to them ,and subsidies to them entering the picture. It’s going to be tough to get some savings going. They don’t have a lot put away at this point. Both bro and wife went to college free back in the day.

68

The shock parents feel is the result of the fact that tuition has risen far faster than inflation. Most people were not obsessively checking on college costs as their kids were growing up, even if they were putting away money in 529 accounts. So, the reality is a shock. I remember going through this with D1. I made it work and she ended up in a private with enough merit aid to make it competitive with the in state public. We were insanely lucky that she didn’t accidentally get her heart set on a college that was not affordable.

With D2, I was clear from the start that finances would be part of the decision. We hunted merit and heavily considered the in state publics. She will be going to a program that is considerably more than the public, but far less than full pay. In this case, its worth it to stretch fort his program because of what it offers that she absolutely can’t get at the public.

The real heart break for kids is when their parents don’t figure out the finances until after acceptances come in. Its awful to tell a kid they can’t go to their dream school because its not affordable when you haven’t warned them of that in advance. Luckily for your family this will not be the case and you are far ahead of many other families at this stage.

Just be careful not to let your high stat kid get hooked on the idea that he needs to go to a high prestige school. It isn’t necessary and it may not be affordable.

69

I was surprised 4 years ago for sure. Fortunately, my DS was reasonable in his expectations and enrolled in a school he loves and we can afford.

Now that I am looking at schools with DS20 in mind, I can say I’m surprised by how much the cost of OOS publics has increased. His stats are lower and he wants to continue his sport in college, so I am looking far and wide to the point I’ve created a detailed spreadsheet. I have found quite a few promising schools and programs that come in under or at budget.

70

We are finding that out now with our daughter. My how times have changed when it was realistic to be able to afford college.

71

Another issue is what does “best school” even mean when people say “the best school you can get in to”?

Of course, the lazy way is to simply use the USNews rankings or rank by admit rate (if they they don’t want me, they must be good!)

The better way is the tougher way that requires research and figuring out which schools would actually be best fit for a specific kid.

72

@PurpleTitan Nailed it with “what does “best school” even mean.” It’s something different to everyone.

It’s time to trot out that old three-legged-stool of academic rigor, fit, and finances. All legs don’t need to be perfectly even, but if one is bad, it topples the entire thing. And as finances is the leg you can’t control, start with that and make the other legs match.

73

Anyone know when the college cost curve took such a spike upwards? I know that I was surprised when my oldest, nearly 20 years ago started the process. At that time, I was sure it had to slow down and level off a bit. Instead it’s just gone haywire and just spiraled up higher. I figured $40-$50K was going to be a break point.

74

The 2008 crois really increased the price growth.

75

@cptofthehouse and @MYOS1634:

No real spike along the private tuition list price time series. It’s just been increasing at several points above inflation every year for the past few decades (instead of leveling off).

You don’t need a spike. Just simple compounding to see a major growth in prices/investments/anything.
Something that costs X in year 1, if it grows by 5% a year, will cost 2.65X by the end of year 20.

Total cost will be half a million for 4 years at a private if you are full-pay in 15 years.

76

^True - I was thinking of public universities instate when I mentionned the 2008 crisis, not privates. (They were hit too, but it impacted their financial aid or investments).
Another issue is that in many parts of the North and Midwest, there are fewer young people and those that do remain are less likely to be full pay.

77

I just about choked when I just looked at NYU’s website for COA for Tisch for next year. That the cost is well over a quarter million these days for many private schools for the four years is mind boggling. I wonder at what income/asset level (for one child) marks full cost territory at most of these top cost schools.

We are considered well able to pay full freight for college. But none of our kids went all four years at a top cost private college. It was still difficult coming up with the cost, and it took savings, budgeting, and loans to do so. That’s with each of our kids also contributing every bit of their non direct costs through work, and getting some form of cost break during their years at college.

78

That means that no matter how talented your kid is, if you’re an average family that makes ~63k a year, your kid is not going to NYU. And if your state flagship doesn’t offer merit aid and/or your state doesn’t offer state grants and/or your flagship is not well funded and/or there’s no good school in your state for the arts, your talented child is left hang out to dry. Many families simply can’t find an affordable university. And of course NYU continues to live off the dream of “NYC/NYU” that many kids have carried since, err, Felicity times. Not so long ago, NYC was a crime-ridden, dirty city and NYU was a commuter school.
BTW I loved the novel When you reach me which takes place in NYC 1979 (kid’s novel). The way kids were raised and the way the city was.

79

@MYOS1634: “Another issue is that in many parts of the North and Midwest, there are fewer young people and those that do remain are less likely to be full pay.”

That leads to heavier discounting by colleges (and publics going out to recruit full-pay OOS students). It doesn’t lead to a higher list price than you should expect.

80

Well, in some cases, it leads to a higher price tag to make it look like the students are getting a bigger scholarship to entice them to attend (it’s surprisingly effective). And so for students who don’t qualify, it raises costs. In addition, because colleges in an area want to be competitive with peers, it means many colleges will in turn raise their prices. :frowning: