Suzie Orman debunks need for $40 Kprivate school tuition

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<p>Afadad, it’s easy to condemn the undercurrents of entitlement that do exist. However, one of the tenets of colege financing and financial aid is that the primary responsibility of a college education remains with the PARENTS. Many discussions center about the willingness by students to borrow excessive amount of debts based on tjhe illusion of greater riches. </p>

<p>Going back to the “real” example presented at the Oprah show, one unanswered question remains about the lack of preparation of this family that would force to borrow 100% of the cost of their kids’ education. The dark side of many discussions is that parents who have been “blessed” by an apparently free K-12 education prefer to remain oblivious that such fantasies do not exist in tertiary education. That is why they have so many shows on TV that extol the value of OPM, or Other People’s Money!</p>

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I guess it depends on which “state school” you are referring and the difference in cost, xiggi… ;)</p>

<p>Absolutely true, UCB! And especially in states where there is no real tuition expenses but a set of fees – at least for in-state students.</p>

<p>That opinion is not held by everyone. Many people I know, and many I grew up with, believe that the parent’s “RESPONSIBILITIES” end when the child graduates high school and turns 18. I also believe similarly. Now, does that me I didn’t help my children through college? No, on the contrary. But I did it because I WANTED to and could AFFORD it, and NOT because they were ENTITLED to it or that I OWED it to them. I don’t OWE them a college education. And I SET THE PRICETAG on college. I said I will pay “X” amount for college. Why? Because it’s MY MONEY and that’s what I CHOSE. Now, they could take that money and go to State U where it would cover 100% of the cost. Or, they could use that money to go to HYP? where it covered 15% of the cost, and THEY CAN FIGURE OUT the difference. Scholarships, merit, grants, their own loans, etc… Not my problem. And personally, I think that was one of the BEST GIFTS I could give my children. They EARNED their way through college and are appreciated what THEY HAVE ACCOMPLISHED.</p>

<p>Does anyone know any “average” students at Wharton? The only ones who got in from my son’s high school were the tippy top amazing kids. So, IMO, if you’re talking Wharton, you’re automatically talking about top kids. </p>

<p>So if I had unlimited money, and I liked the Wharton atmosphere, and I had designs for a fancy business career, I would choose Wharton for sure. </p>

<p>Now, it become harder when you talk about choosing between a full ride at…let’s say…UNC…and full price at Wharton. Even if I had the 200K, I might want to save my dollars and use it for an MBA or Law school or for extensive travel internationally. I think it helps to look at this as a long term investment, and even if you CAN afford it, what does it mean for the future? Looking at what I could do with 200K - wow, I just might choose UNC. </p>

<p>So it’s more than looking at what kind of debt you’ll incur…</p>

<p>Sue - I’m all for Suze being paid big bucks for drilling the obvious, common sense stuff into the heads of the American public glued to their TV sets! There is not a whole lot of talking heads on TV doing that.</p>

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<p>I don’t have data but I very much doubt there’s much of a difference in earnings of Stanford engineering grads v. UC Berkeley engineering grads, so for the full-pay California resident UC Berkeley engineering is probably gonig to be a much better deal. For those lower down the income scale it may be a closer call and in many cases Stanford will come out ahead, depending on where the family falls in each school’s financial aid calculations. I just don’t think you can generalize here, but I do think it’s a huge mistake to assume the costlier private school will automatically lead to more lucrative employment. It depends on the school (public and private), the field of study, the student, and the job market. And engineering is a particularly bad example to choose for the “privates are always better” argument because so many of the nation’s elite engineering schools are public (including UC Berkeley, UIUC, and Michigan, to name three). Graduates of these schools go on to highly lucrative engineering careers working side-by-side with people from Stanford, MIT, and Caltech, and their career advancement and salary will depend far more on what they actually do as engineers rather than where they got their undergraduate education.</p>

<p>The reality is that if no one took out college loans the only students in many of the private colleges (some of which give little or no merit aid) would be the poor and the rich. The middle class students and even upper middle class students would not be able to attend these schools. Personally I would like to see more merit aid, but it’s not happening.</p>

<p>Listen, let Suze earn her living. it’s an honest one. She gave out a free pass code to her will and trust kit. I got it. She put her book up for download for free. I got it. She has a show on CNBC, I watch it. She personally has made 0 dollars from me (well CNBC gets money from my cable company)</p>

<p>I would pose the same question when it comes to buy a car or a house. Can I afford it. Suze has ‘approved’ people for some stuff to buy (she has a segment on her show - can I afford it) that she personally thought was a waste of money. but they could afford it. She has denied people things for a few hundred bucks, because they couldn’t (in her opinion) afford it. </p>

<p>She preaches against leasing cars. She says to always have an emergency fund (and alot of the newly out of work people were making enough to do this but didn’t). Yes, it is common sense, to you and me, but there are ALOT of idiots out there.</p>

<p>after about 2 million threads on CC on “debt” or “is it worth it”, I thougt we have this topic all figured out. LOL. What is so hard about “if you don’t have the money, don’t do it”. </p>

<p>Re #49, I would not call all of them idiots. There are situations where people just do not know the concept. Our DD was the first one in our family to attend a 4 year US college. There were so many things we had not clue during her application process. </p>

<p>I personally dislike Suze. Living under her principle is so boring. Yes, you could save some money but you don’t have any fun.</p>

<p>Changing gear here. I finished my under without one penny from my parents other than some clothes and shoes, all meals, tuitions and books were covered. Nor did I spend one penny of my parents’ money for my graduate school. However, I am more than glad to pay for our children’s education within our means to give them a solid fundation. If everything goes as planned, we will pay a huge sum of money (about $30K) for our DD’s 4 years of college. It is a heavy burden on our financial sitaution and we are struggling to pay it at times. However, we will do it again in a heart beat.</p>

<p>See; I also believe that you can’t actually live completely debt free. You can, but it would be a boring life and not worth living. But debt is such a non-tangible thing. In theory; do I have enough cash to pay for a house in cash? No. Do I have enough cash to pay for my kid’s college education? No. However; if I cashed in all my 401k, IRA, etc… could I pay for the house in cash? Yes! But doing such a thing may not be the best financial move either. So, things like houses and cars I do have debt. To an extent, education (If I chose). But if I do choose debt; e.g. house, car, education, etc… It will be an amount that I can live with the monthly payments; and a rate of return that is reasonable. e.g. 5-6 years for a car, education, etc… A house can go longer, because a house generally appreciates in value. Contrary to popular belief, your college degree has an initial payoff with your first employment. After your first job, your job experience carries more clout and value than your education does. So, paying off a college loan over a 10-20 year period is a terrible waste of money.</p>

<p>"Now you want to tell me that a Wharton degree is equivalent to a BBA from Arizona State? There are intangible benefits that private schools provide that public schools can’t. "</p>

<p>Maybe not ASU but there are a good selection of publics that can do about the same for one as Wharton–UVa, Mich, UCB to name a few. If your goal is not Wall Street, or what’s left of it, you have many more choices–even ASU if you plan to live in Arizona as most state schools place just fine in their home state.</p>

<p>It felt like to me that dad was compensating for something. They seemed to be stable financially up to that point - so why was he so willing to make such a bad financial decision now?</p>

<p>We do this… We agree to pay for Room and Board at a college for 4 years and possibly a 5th. Our child has to pay all fees (lab, computers, gym, etc.), books, and spending money while at college. Our child has to pay his/her first semester of school, we reimburse the amount they paid for that credit hour 100% for an A in the class, 80% for a B in the class, nothing for less. (We make sure they know that a C will probably happen in college so be prepared for it.) We put the cost decision factor on our kids. So, they worked and saved for college. When they look at schools, they always looked at how much it would cost them. Then, they were looking at scholarship opportunities to offset their costs. Ended up – they made really good choices – choosing to do well in high school so that they could get scholarships, trying to do well in AP classes so that they wouldn’t have as many courses to take. We got this from some friends of ours who had a roommate’s parent who did this. Boy did it make them appreciate their classes more when they had a stake in the monetary aspect of going to college. A “free lunch” is not appreciated… BUT - with the new market - we have had to give a heads up to our next child who will be going to college (now a freshman)… We just may not be able to afford the payback semesters if she picks one of those $40K schools (which she is preparing for and has saved for). Just communicating now, she’s fine… Now, she knows to start looking at other options just in case.</p>

<p>Orman’s an idiot but this is the hypothetical we’re supposed to use to correct that? And this describes how many children per year?</p>

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<p>While I agree that a wedding, remodel and college are different, I am curious what expectations the parents have here that are defending taking even half or a third of that debt on the parents part? Do your children expect to fund your retirment account or partially support you in your old age? Because that is the issue. </p>

<p>This family was making, I believe, approx. $100 more a month than they spent. They had 300K in a retirement account and the plan was to stop contributing to it to pay off the kid’s student loans. Someone said the parents “should” be able to come up with 12K per year. Perhaps they should, but they cannot. </p>

<p>This is how people get into financial trouble and perhaps that trouble is not felt until they retire but it’s coming. It does not matter how lofty, or even true, the arguements are for funding an education, if a family cannot afford to it without also meeting their other obligations (retirment), then they cannot do it. </p>

<p>Unless the culture of the family is such that the child understands that that Wharton MBA is not just going to be funding their future but their parents as well. Then it is workable in the real world.</p>

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<p>Because he bought into the idea that this is what good parents do. It’s considered crass to “put a price” on your child’s education. Don’t these parents value education? Don’t they want their child to be competitive? This isn’t a kitchen/bathroom remodel, you know. And on and on.</p>

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<p>In 2008, that would have been 4,017 with 2,464 at Stanford and 1,553 at MIT. </p>

<p>However, that number could have easily been 36,000, with 24,000 at Stanford and 12,000 at MIT … all students who believed to be extremely well qualified and have the chance to be admitted. </p>

<p>This said, the absolute number of possible families is not relevant to the validity of the example.</p>

<p>As the OP on this subject I think I was more interested in this topic and Suze’s recommendation (and taxman & afadad’s) going out to mainstream American. </p>

<p>2009 US Trends:
IN-- Cheap college education</p>

<p>Out-- Private School big Debt</p>

<p>Taxman – you need to market your sound advice with a little more sex appeal than on the CC board. ;)</p>

<p>OP, private school does not always = big debt.</p>

<p>I can vouch for private school not equaling big debt (at least for us lower middle class parents that seem to be a minority on CC).</p>

<p>livesinnewjersey notes,“Taxman – you need to market your sound advice with a little more sex appeal than on the CC board.”</p>

<p>Response: I am in the process of researching and then writing a comprehensive book on fiancial planning for baby boomers and generation Xers. I haven’t gottten a title yet but was thinking of something like " What Your CPA Should have told you about Financial Planning" or " An Accounatant’s Guide to Building Your Financial Fortress" etc. One of the items on my agenda will be to rail against the CC mentality of “Education at any cost” unless folks REALLY can afford it without any compromise in their retirement. I will probably take material from the post that I made on CC about this. My book will have a very different slant since I don’t sell products and should be able to give some independent, unbiased advice.</p>