Should you incur substantial debt for dream school or even pay the "dream" tuition?

Parents Forum
81

<p>"Me personally, took the position with my kids that I would take care of paying 100% to the State "U" schools. They could apply to other schools if they wanted; and if they got accepted and wanted it, they would take care of the difference. I personally think that is the FAIREST METHOD of all."</p>

<p>that's what my dad did!...but my state U (University of Florida)'s tuition is FREE + money for books + scholarships, etc.</p>

<p>so basically, it was go to UF or pay for school all by yourself. lol. Nevertheless, I <3 UF and couldn't be happier. Plus, since my dad didn't have to pay anything for my undergrad, he has agreed to help me pay for law school...and I've already saved quite a bit of money for law school by working during undergrad.</p>

<p>I don't see the point in going into debt for undergrad when all employers look at is your grad school. </p>

<p>undergrad = cheapest you can get into
law school = best you can get into</p>

<p>p.s. GO GATORS!!! :)</p>

82

<p>
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I just said that graduates from the most selective colleges are disproportionately represented in those business schools, which is a fact.

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</p>

<p>That's more of a result of top candidates going to top undergrad schools than top undergrad schools preparing them for top graduate business schools. </p>

<p>I certainly agree that a top undergrad will increase your chances of earning good work experience. However, it is generally not necessary. Not every great job is on wall street. They are all over the country, and often times the state schools within a particular state will give candidates more opportunities in that state than the top schools (ie wharton, harvard, etc).</p>

<p>I know way too many people that went to subpar undergrads (myself included) who were able to get valuable work experience and get into top business schools.</p>

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Are you willing to take on loans now in order to land a higher-ranked starting job, which leads to faster promotion, and higher income?

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</p>

<p>All you are doing is increasing the probability of landing that job. However, the vast majority of high paying jobs do not require a degree from a "top school". For instance, my brother finished at the bottom of his Texas A&M class with a 2.0 GPA and had made a 6 figure income every year since he graduated. My friend graduated from Texas Tech (where are they ranked?!?) and made 6 figures within 3 years of graduation. My cousin attended U. of Texas but did not have good enough grades to get into McCombs so he had to major in economics and is now a VP of a fortune 500 company (high 6 figure income). </p>

<p>
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Most people are saying that there is no empirical data that supports going to a top-ranked school...that is preposterous, to say the least.

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<p>Where is this data then?</p>

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If going to a top-ranked school gave you only the same opportunities that you had at a public school, no one would go to a private school.

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</p>

<p>If everyone had perfect information...which is obviously not the case.</p>

83

<p>Parents who send their children to an elite university or LAC are not fools. They are generally sophisticated buyers in the education market. They often themselves took advantage of the opportunity. And if they did not, they very willingly took it for their children. To presume that they are ill-informed or that the market is inefficient is simplistic. The economic data shows the reverse (see the above quoted study). Those who view an education strictly through its short term ROI are those that give up the most in the long run. </p>

<p>
[quote]
That's more of a result of top candidates going to top undergrad schools than top undergrad schools preparing them for top graduate business schools.

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That may be true and just increases the difficulty for those seeking to board the train later. If the best talent is already at the elite colleges (and LACs), the presumption will be largely in their favor when it is time to apply for a job, grad school or professional school. Some organizations take it as far as deciding they will not even look elsewhere. </p>

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For instance, my brother finished at the bottom of his Texas A&M class with a 2.0 GPA and had made a 6 figure income every year since he graduated.

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Anecdotal evidence of outliers does not prove a point. Some people never went to college and made millions. The fact is that the AVERAGE starting salary at Texas A&M is well below that of MIT or Stanford. Many top companies won't even recruit at Texas A&M. </p>

<p>You can always fight the odds and win the lottery. That does not make it likely.</p>

84

<p>Let me add one addition rinkle that I should have added in my original post.</p>

<p>Let's assume that you can afford to pay for that private school tuition without incurring any debt vs being able to send your kid to your in -state university for no tuition. The savings would at least equal 100,000+ over the four years and probably be closer to $120,000.</p>

<p>If you were to take these amount and invest them for 36 years in an average performing mutual fund, you would have:</p>

<p>Present value $100,000 $120,000
36 years</p>

<p>Future value at 8%
end of 36 years
a WHOPPING: $1,596,817 and $ 1,916,180</p>

<p>Moreover, this analysis is based on only one child!</p>

<p>My question is very simple: Would your kid earn more than these amount by attending a "dream lac" or "expensive named school" over attending your state university almost tuition free?</p>

<p>Based on studies done by several Princeton professors, they would NOT earn enough of a difference to justify this. In fact, studies seem to show that there will be no difference! Moreover, you have to evaluate with for each child. Thus, if you have three very sharp children, this can cost you upwards of 4.5 million that you could have left them had they attended a cheaper alternative. Just something to think about.</p>

<p>Also,let me put one point to rest. Several have wondered if attending a top undergrad school gives a performance boost to a top law school. From what I have seen , it makes NO DIFFERENCE. Law schools tend to be GPA and LSAT oriented....period.</p>

<p>Yes, you will see a large number of kids who attended ivy schools also going to ivy law and ivy medical schools;however, based on my discussion with admission's officers, this is NOT because they attened an ivy school. Kids that tend to do very well on SAT also tend to do well on graduate and professional entrance exams. There is a strong corelation, especially since many of the questions, such as reading comprehension and math, are similar.</p>

85

<p>Taxguy, what about ~3% inflation and ~45% tax when you withdraw your 1.6 million 36 year later?</p>

<p>PS, I think the topic has been discussed Nth time from all different angle already. At the end of the end of the day, different individual with different value and economic situation will think differently.</p>

86

<p>Taxguy; excellent observation. I didn't even want to get into what you could do with the savings. I'm glad you brought it up. There are plenty of ways to handle many of the taxes that will incur. It just depends where you put the money.</p>

<p>My final opinion on this topic however is that if the kid is hell bent on going to the ivy/west coast ivy type schools, then fine. Let them finance the difference. They can get grants, scholarships, loans, etc... They will have a much longer time to pay off such a debt and recoup earning potential, than the average 45-50 year old parent. The parent shouldn't have to work until they are 70 to pay off their kid's college loans plus their mortgage and still have a comfortable life. I had kids to "Compliment" my life. For the nurturing, love, sharing, passing on of knowledge, and many of the other things that are innate to humans. While many children are "accidents"; albeit very much loved and cherished; we planned our kids. But we didn't plan that our whole life and then our financial future after they are gone should be obligated to them. Whereas the joys of life and fruits of our hard work aren't allowed to be enjoyed. </p>

<p>If you have the money, and you only have 1 kid that's wanting to go to one of the mega expensive schools, then it's not a big deal. But that's NOT what the original poster asked. They are asking whether to go into debt; substantial debt; for this dream school. The answer is NO!!! Again, if going into debt is not a problem, then such input isn't relevant to the question. If there is going to be "substantial debt", then that should be burdened by the student. They have a much longer time to recoup the debt than the parent. And it isn't the parent's purpose in life to go into debt for their kids. Kid nowadays have a much better chance of affording college. </p>

<p>Some claim that college is so much more expensive now than 30 years ago. That isn't actually correct. Today, there are many more scholarships and financial aid options than 30 years ago. 30 years ago, those who went to ivy league schools got there because their family was uber wealthy; they got scholarships (Yes there are plenty of private scholarships; even for the ivy's); or the assumed the debt themselves. There's nothing wrong with still doing that. There is absolutely no reason to put parents into that much financial debt. There is no rational reason whatsoever. Now, if as a parent you think it's your responsibility and purpose in life to sweat and bleed to get your kid through all the best colleges; and pay for it for many years to come; then obviously there is no way we can discuss this. I believe you are wasting a great portion of your life. The kid could graduate from grad school by age 25 and have most of the debt paid off in 5 years. A parent will require about 15 years. (Parents still have many more expenses and bills to pay that the kid doesn't). Anyway, based on the original question; the answer is NO!!! If you have the money and such, then your position and opinion isn't in line with the question.</p>

87

<p>Yes, those numbers are very appealing, but remember, 36 years later your kids will be 21+36=57 years old and you will probably have made your way to the next station as well.</p>

88

<p>Yes, it is incredibly expensive... But seeing your kids graduating after 4 exhilarating year at the elite schools, and see all the doors opening before them truly is priceless (even if you never get your money back);).</p>

89

<p>
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As far as pre-college schools; moving to districts for the purpose of schools; paying for private schools; etc... Unless money isn't an issue for you or you are in an area where there are some well known "TERRIBLE SCHOOLS"; e.g. academically, crime, safety, etc... then that is indeed a silly waste of money. If you want to live in a particular neighborhood and they happen to have a great school, that's one thing. To move there for the sole reason that you think that particular private school is "Better" is definitely a waste of money and other recourses. Most colleges/universities don't care what high school you went to. They care about your GPA/CR/SAT/ACT/EC/etc...

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<p>Simply not true.</p>

<p>And where do you think those kids come from with the highest stats? The well funded public and suburban school districts and private schools. Who leads the way statistically? Independent schools, which for the most part are private. Independent schools make up about 12% of the schools but have about 1/3 of collegebound students,IIRC. Higher avg SAT's, language, math, and ec's. Kids from better school have less remedial rates in college as well too. More likely to graduate. If the school doesn't matter, why submit a school profile? Because it does matter. Human capital is much more likely to be fully realized in an environment where there is more social, political, and economic capital available to enhance it. Would you agree? </p>

<p>This isn't elitism, this is realism. Those that are savvy, rich, or fortunate enough realize these things and persue them. Sure, there is some marketing and hyperbole that feed the elite school frenzy, but there is a tangible substance underneath the sizzle. The question is, how much is it worth to you?</p>

90

<p>There are definitely extreme bad schools in which getting your child out of it is definitely needed. I already acknowledged that. However, just because you have some fancy private school nearby that charges uber amounts of money for tuition, doesn't make that a good move. Many times it's a financially silly move.</p>

<p>When I moved back to the USA, I looked for a private school for my daughter and son. They had been going to one of the "American Schools" in Spain. Being these were my first and only 2 kids, I wanted the "Best" for them. I spoke with my parents about prestigious private schools back here in the states. My parents asked the perfect question. "WHAT'S WRONG WITH THE PUBLIC SCHOOLS AND NORMAL PRIVATE SCHOOLS (Religious/church affiliated)? I said; "I don't know. I guess private is just better". Having been born, raised, and brought up in the New York City / New Jersey area, we've definitely got our share of private schools. The truth is; just because it's public doesn't make it bad and just because it's private doesn't make it good. Money doesn't tell you anything. Just like going to HYPS/etc... doesn't automatically mean a better education. </p>

<p>I can show you plenty of 3.8-4.0gpa students coming out of public. Kids who are taking AP/IB Classes/programs. Kids who are getting 2100+ on their SAT and 30+ on their ACT. I can show you this in every public school in the country. And I'm not talking about 1 kid in the school. I've seen it in big public schools in New York, Denver, Austin, and Miami. I've seen it in little towns like Santa Fe, Cheyenne, Billings, and Sidney.</p>

<p>I've admitted that depending on your area/neighborhood/etc... that there are reasons and times to move your kid to a different school. There's usually enough schools that packing up and moving to a different school district just for the schools is a bit extreme.</p>

<p>Then again; there are a lot of people who base success on status. To them a Lexus is BETTER than a Corolla. Private schools are BETTER than public schools. etc... There are so many people who live THROUGH THEIR CHILDREN. Their goal in life is to be able to say; "MY KID IS GOING TO HARVARD". "MY KID WENT TO CHERRY HILL ACADEMY.". That's the parent's insecurity. The more expensive the school' to the extent of a Boarding school; the less responsibility the parent has to have in ensuring their child succeeds. The attitude is; they're paying enough, the school needs to ensure the student does well. The truth is; they aren't necessarily better. It depends on what you are going there for. If you've got good, safe, and challenging public schools in your neighborhood, then it is a waste of money to send your kids to a private school. Unless there's something at the private school that the public doesn't offer; E.g. Religious teachings, IB Program, International studies, etc... The amount of money you would save in 13 years could pay for their entire college education.</p>

<p>The best argument is when a person admits to wanting to be a veterinarian, research scientist, agriculture, Pre-Med, etc... The BEST school for veterinarians is Colorado State University in Fort Collins Colorado. If you went to some Ivy or High priced school, your peers would automatically wonder WHY??? Especially to spend so much money. One of the best research/r&d schools in the country is Michigan State University. Most of the TOP 10 Ag schools in the country begin with the name; UNIVERSITY OF ____. Top Pre-Med schools in the country of UCLA, Berkley, UT Austin, U of Michigan, etc... MCAT and GPA matter more than anything.</p>

<p>Yes, there are some private elementary/high schools that are better than the public school. But it's usually because of social issues such as inner city crime, safety, etc... Or it's because of certain programs that the other local schools don't offer. I.e. The IB program is only offered by under 500 schools in the entire country. </p>

<p>If a particular school has something to offer that the less expensive private or public doesn't, then that is a great reason to look into it. To automatically believe that money relates directly to success and automatically means better, is a huge mistake. Both academically and financially. HYPS/etc... Is NOT ALWAYS the best school to go to. All the private schools in your neighborhood/county/state are NOT ALWAYS the best school for you young kid to go to,.</p>

91

<p>
[quote]
But seeing your kids graduating after 4 exhilarating year at the elite schools, and see all the doors opening before them truly is priceless (even if you never get your money back).

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</p>

<p>If you simply remove the word "elite" from that sentence, it describes pretty much every single student who knows how to take advantage of opportunities at their schools. In fact, I'd argue that more doors open for you when you're NOT in crippling debt. You can choose what to do after college based on passion, not on how much money you can make to repay your debts. Assuming the student is taking some responsibility for their own education, of course.</p>

92

<p>Although I can certainly understand why folks would make sacrificing for their kids, I don't,however, believe it being stupid. </p>

<p>Here are some very sobering statistics: Over 55% of people age 57 and under have an investible networth, not counting their home of under $10,000. In addition, less tha 3% of those who retire at age 65 can lead the same standard of living that t hey had before retirement. Many of these are forced to cut back significantly, or depend on charity or on their kids. I can't tell you how many articles I have seen of people forced to live on cat food and/or dog food because they can't afford their retirements.</p>

<p>Before you all lovingly and gladly make these sacrifices, maybe some consideration should be given to "whether you can afford it."</p>

<p>Cellardweller notes,"Parents who send their children to an elite university or LAC are not fools. They are generally sophisticated buyers in the education market"</p>

<p>Response: Frankly, I am not sure about that. I have found that PT Barnum was wrong with his famous statement, "there is a sucker born every minute." It is more akin to ,"There is a sucker born every second." I honestly think that most poeple are suckers. I see this all the time at these big commercial seminars published on TV where people will line to to pay thousands for a product that they never even checked out and have no knowledge as to whether the product works as advertised. </p>

<p>I see some of ther worst books, in my opinion, sold in the world making best sellers because of the marketing hype behind them...(caugh...the secret, Rich Dad series...caugh..).</p>

<p>When I was at IRS, I saw vastly too many people falling for scams that you never would think even the dumbest idiot would fall far. No, Cellardweller, I don't agree at all.</p>

93

<p>
[quote]
Should you incur substantial debt for dream school

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NO, NO, NO!
[quote]
or even pay the "dream" tuition?

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If you can afford to, and you want to, YES!<br>
Man, that was easy! ;)</p>

94

<p>What I find frustrating is that I am willing to pay for a good product, but it's almost impossible to tell what makes a good product in a college. Is it good teaching, the student body, or the reputation? There are advantages offered by all three. What if your child is accepted to three schools; one is known for it's great teaching, but has a poor reputation and a weak student body (i.e. low test scores); one has a great reputation, poor teaching, and a so so student body; one has a good reputation, so so teaching, and a great student body. Which would you recommend? It can be even more confusing if the prices are different on all three. One asks how a school can have a great reputation with a so so student body. Consider a school like UCSD. The SAT scores of students there don't match many of the top LACs, but they have a stellar reputation in many fields. At first glance, one would like one's child to have great teaching, but it might limit his/her choices in grad school acceptances to come from a poorly ranked school, and teaching might be great, but is the curriculum as intense?</p>

95

<p>Here are some numbers to back up what madville had to say. These numbers are for the year 2000 involving cities in the same metropolitan area.</p>

<pre><code> ACT score Income Home Value

</code></pre>

<p>City 1 18 $27, 000 $62,000
City 2 25 $100,500 $336,000
City 3 23 $62,000 $179,000</p>

<p>I'm sure I could find similar statistics for other areas as well. Many young families move out of City 1 to other communities (not just City 2 or 3) once their children reach school age, or decide to go to private schools.</p>

<p>It would definitely be worth it for someone to move out of City 1 for school reasons. But would it be worth it to move from City 3 to City 2, which would probably mean a much larger mortgage?</p>

96

<p>
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If you simply remove the word "elite" from that sentence, it describes pretty much every single student who knows how to take advantage of opportunities at their schools.

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It is probably true for the most aggressive (in a good sense) students. Our son is extremely smart and capable, but is not that type. He sort of waits for things to happen for him. (And no, it's not a result of "parenting error" - it is just his personality.) Because he graduated at the top of his class from an elite university, he had several lucrative job options waiting for him long before he even graduated. I am generally very opposed to going after the "prestige factor", but in his particular case I have no doubt that being one of the top graduates from the top school played a major role.</p>

97

<p>
[quote]
What I find frustrating is that I am willing to pay for a good product, but it's almost impossible to tell what makes a good product in a college. Is it good teaching, the student body, or the reputation?

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Those 3 are usually inter-connected</p>

98

<p>
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Parents who send their children to an elite university or LAC are not fools.

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</p>

<p>FAIL.</p>

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If the best talent is already at the elite colleges (and LACs),

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<p>The percentage of top talent will be higher at elite colleges, but many of the top talent will go to their state's flagship public university.</p>

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Anecdotal evidence of outliers does not prove a point.

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</p>

<p>He wasn't that much of an outlier though. Most of his buddies were also making 6 figures (chem E). </p>

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The fact is that the AVERAGE starting salary at Texas A&M is well below that of MIT or Stanford.

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</p>

<p>Which should be the case considering the incredibly low cost of living in Texas.</p>

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Many top companies won't even recruit at Texas A&M.

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</p>

<p>I hate everything aggsy, but if you want to get a job in Texas, you are better off going to A&M than Harvard. FACT.</p>

99

<p>
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It would definitely be worth it for someone to move out of City 1 for school reasons. But would it be worth it to move from City 3 to City 2, which would probably mean a much larger mortgage?

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</p>

<p>Would it be? Based on what? ACT scores? I guess that would be the case if the reason these kids receive low ACT scores is based on the school they go to..although, my guess is that the greatest effect on these scores involves the family and the values that family instills in the student.</p>

<p>BTW, I'm not completely against moving away from "problem" schools but I personally wouldn't use ACT scores as a determining factor.</p>

<p>BTW, parents that move their kids to a better school in Texas are actually putting their children at a disadvantage in receiving admissions to The University of Texas because of the 10% rule (public HS students in the top 10% of their HS class receive automatic admission).</p>

100

<p>
[quote]
I can show you plenty of 3.8-4.0gpa students coming out of public. Kids who are taking AP/IB Classes/programs. Kids who are getting 2100+ on their SAT and 30+ on their ACT. I can show you this in every public school in the country. And I'm not talking about 1 kid in the school. I've seen it in big public schools in New York, Denver, Austin, and Miami. I've seen it in little towns like Santa Fe, Cheyenne, Billings, and Sidney.

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</p>

<p>Of course you can in most high school top 10-20% populations. How about the performances of the bottom 30%? The bottom 20%? The bottom 10%? Where are they matriculating? Are they matriculating? That's where you really see the differences. The top colleges have excellent grad rates especially within 4 years. This is especailly true for minorities. Few publics can match. I'm not saying that just because it's expensive makes it better, but in general on the secondary school level, the pecking order as it pertains to academic performance is generally, independent, parochial, suburban, magnet type public, rural and urban.
No one is talking absolutes as if it is ALWAYS better to spend exhorbitant amounts of money for a quality education, but more often than not you can get a good return on your educational investment if you do your homework.</p>