<p>Today on Oprah (not sure if it was a repeat) a family of four asked Suze if the father should take out loans to cover $40 K in annual tuition or $160K. Father for it, mother against, 2 HS age kids, annual income under $100. Suzie reminded the Dad that it would be 2 X $160 (2 kids, what you do for one....) = $320K</p>
<p>I don't have the math exactly but I think basically she said it would bea Student loan at 8.5% for 30 years. Which would equal $1,275 a month per student for 30 years is $300,000in interest per child!</p>
<p>Suze went on to say, she grew up in a single family household and got her bachelors from a state school in Illinois. She has many friends who went to expensive private colleges and she is the one who is making a ton of money (not the private educated).</p>
<p>It was a good plug for a cheap education. I bet the private LACs Presidents & Deans will be groaning when this gets back to them.</p>
<p>It shocks me that anyone would even CONSIDER doing this. If you can’t afford to pay the 40K, why would you think you could afford to borrow it (times 4) or times 8 if you consider 2 kids. </p>
<p>Suze was roommates with John Belushi (she uses this line in one of her promos for her show)</p>
<p>edit: Was she dissing a more expensive school, or was she was just saying it makes no sense to BORROW that much money. She would probably say it’s okay to pay this IF you can Afford it (my fav segment of her show)</p>
<p>Yawn. Had this discussion before. Of course he shouldn’t borrow 40,000 a year - but he should be able to contribute 12K and kid, 4k, and he should pick a school with decent FA which should have kicked in about 20K… etc. etc. Lots of should haves. Definitely should not borrow 40K per year.</p>
<p>They didn’t mention the names of the colleges. She only talked about the financials. It was a great presentation that should be required viewing for all parents.</p>
<p>I know CC has discussed this a million times but today’s message was told to mainstream America. Like shopping at Targe’t, Marshaals, TJ Saks became chic over 10 years ago so will StateU.</p>
<p>I think Suze is cool w/ spending it (160K+) if you have it ( as long as you have 8 months in savings for emergencies ).</p>
<p>The parents only had about $300k saved for retirement, $7500 in college savings, were in their 50’s and the father wanted to put saving for retirement on hold indefinitely. She didn’t mention anything about financial aid, scholarships, etc. It was just straight parents paying full price for a $40k/yr school. </p>
<p>I don’t think she was really knocking private schools, just with the situation this family presented.</p>
<p>There is no sense borrowing $40k per year for college. But it need not be public vs. private.</p>
<p>If the family had $100k annual income, the student–provided s/he was admitted–would receive a huge financial aid package from Harvard. It might actually make it cheaper than attending UMass-Amherst where the fees keep on rising to make up for budget shortfall.</p>
<p>True, but there are Harvard competitors offering the same deal as well as excellent non-Ivies that offer full or near full rides based on merit and/or need. Curmudgeon’s D at Rhodes or evil robot at Vanderbilt are cases in point.</p>
<p>One point made on the program was that the first daughter off to college, while unsure of her exact major, thinks she wants to go into education or the ministry. She would likely make 35,000 to 40,000.00 a year out of college (once she finished up the necessary post-undergraduate credential and student teaching time). Potential earning power should also be figured into the equation when making a decision to borrow in the mid six figures for an education.</p>
<p>I’ve never been a big fan of Suze Orman, but I did catch this episode of Oprah and I thought she made an excellent point. Father was in complete denial but luckily the girls and the mother understood. Suze in no way was putting down private schools. She was just saying that borrowing 160K per child was ridiculous. And it is.</p>
<p>Suze had no problem with the other family borrwing 84K to remodel their kitchen. The family with no debt, including cars and savings in the bank and money left over at the end of every month.</p>
<p>This is really for every family to decide. A lot of families get no need based financial aid and some of the more competitive colleges award little (or no) merit aid. That said if a family has retirement savings in place and little to no debt, it is their decision. Some families in this situation (mine) would not even consider going 84K in debt for a kitchen remodel, but feel it is worth it for our child’s education. Perhaps my background contributes to my feelings on this, my parents sacrificed a lot so that my 3 siblings and I could get our education. They didn’t qualify for financial aid (not rich, but house was paid for).</p>
<p>Yes, my child is attending an expensive school next year. If I am not asking you to pay for it (I’m not), it’s not your business how I pay for it.</p>
<p>I was discussing this last night with a friend whose dd is a senior. Excellent segment. On the website there is a short “after the show” clip where she talks again to the family:</p>
<p>I agree with Suze (how could anyone disagree really?).
In any case, I think many folks do with college education they did with house purchases over the past few years…go WAY over their head, and rationalize it as a good investment. And, now YES, we ARE paying for these folks so it has become our business Will we bailing out kids with 200K loans at some point? Could you imagine graduating with that kind of debt? Wow, it’s like graduating with a full mortgage! Folks get stars in their eyes when they see the shiny brands and lose their heads.<br>
All that said, if you can pay for it, that’s fine. Go for it.</p>
<p>I saw the segment and certainly can’t argue with the recommendation not to take out loans of this size for a college education for 2 kids. </p>
<p>The problem I had with the segment, however, was that it put paying for a college education on the same plane as remodeling a kitchen or paying for a wedding. And I do think the long range implications of these types of financial decisions are different. The long range implications of an education are significantly different than the long range implications of a new kitchen for the recipients. One is building a mind- the other is pure consumer comfort. Likewise, saving for college is a different goal than saving for a kitchen. </p>
<p>Although she approved the kitchen remodel, I saw nothing in the family’s financials that indicated they were saving for college for their young kiddos- why did she not point that out? After the kitchen remodel, these folks might be back in a few years wondering how to pay for their kid’s colleges as well. She did not recommend that they start building up a college fund. Nor did she take the opportunity to tell the college family and the audience that saving for college is a very long term project.</p>
<p>I also wish all kids contemplating taking on huge student loans would read about the couple on the show who wanted to pursue their hobbies. They make a great living, but because of massive student loans they are unable to pursue their interests or save for their own 3 kids’ educations.<br>
[Do</a> You Have Money for College, a Wedding or Divorce? - Oprah.com](<a href=“Oprah.com”>http://www.oprah.com/slideshow/oprahshow/20081022_tows_suze/1)</p>
<p>Excerpt:<br> Michaela says Chris didn’t grow up with much and now wants to enjoy some of his success. But Chris and Michaela aren’t debt-free. Together, they owe $130,000 in student loans. “It often makes me wonder if we will ever get them paid off. If we’ll ever get to the point where we can start thinking about our kids’ college and the future so they don’t have the loans that we have,” she says.</p>
<p>Like Orman, or not, she was speaking with regard to money, not the educational value of a private education. I didn’t like that she used herself as an example --being successful and being a product of a public education, as if the only way to measure success is one’s salary… She is in no position to speak to the value of a private education and that really wasn’t her point. I agree that she should include saving for kid’s college along with retirement, emergency funds, etc. Her perspective was from a balance sheet–they had no assets, no (or very little) money saved. </p>
<p>$160,000 X 2 kids is a ton of money and they clearly shouldn’t borrow that sum with only a dozen or so years left prior to retiring. Financial aid, etc. was not discussed because she was focused on the question of borrowing the money.</p>
<p>She wasn’t making any judgments on whether new cabinets were important or a big, fancy wedding (or any wedding at all!) was important. Her decision was based solely on whether the family, based on monthly income and debt load, could afford the thing they were asking for.</p>
<p>I wasn’t saying she was making any judgements at all- in fact, she was very non-judgemental. Working strictly off the existing balance sheet info. On one level I have no problem with that. And, I have no problem with the advice she gave each family. </p>
<p>My point was that the show overall put these various financial expenditures on the same plane. And made no distinction about the needs for advance preparation. And that might be a problematic message for some American people to be receiving.</p>
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