Is any college out there worth the price of full tuition ? I know the easy answer is yes, if money is of no concern, but I am talking about the kids who need grants or loans to foot the bill. I guess my question is, do the tip top schools deliver a return on investment through their prestige, vast alumni networks, research opportunities, etc to justify the risk of taking on significant debt ?
It really depends on how much impact the higher cost would have on the student and family. Huge loans, or the parents being unable to fund their other financial goals like retirement or other kids’ college costs, would be a bad idea, for example.
Ideally, the parental price limit should have been discussed before the student made the application list, with the understanding that admission with a net price that is too expensive is equivalent to a rejection.
The Net Price Calculators were either spot on or way, way off the actual FA. It would have hard to predict which schools would be affordable because they came out with FA all over the map. He chose schools that were known to be generous with FA.
The tippy top schools can be very generous with little or no debt to the truly impoverished.
The people making the decision to take on too much debt tend to be:
- Middle stats kids who cannot get into super generous schools or get big scholarships
- Families with higher EFCs than they can afford to pay due to unrealistic financial aid formulas and/or failure to save for college
- Kids of all financial levels who don't have a frank money discussion with parents, don't learn how the need and merit aid systems work, build financially risky college lists, and end up with no affordable choice come March and April.
Yes, there are schools worth sacrificing a bit to send your kid to, but no I don’t think it’s based on rankings so much as being a perfect fit. And “a bit” does not mean jeopardizing home, retirement, etc.
It is best if the child sticks to the basic federal loans only, which max out at 5500 for freshman year. Parents should take little or no loans for freshman year (aside from the school’s monthly payment plan which gets paid off each school year), but small loans in junior and senior year to pay for tuition increases or a special opportunity like study abroad are OK in my book. By then, you know for sure the kid is doing well in school, likely to graduate, etc.
Too many variables without specifics. No general rule.
But by spending/borrowing now, you are giving up optionality. Certain spending/borrowing for uncertain gain.
BTW, in terms of ROI, your major and what you learn would be of greater importance.
Personal choice. I wouldn’t go into debt, hock my house or go without eating and basic needs to finance my child’s education. But have I chosen to drive an older car, put off much needed home upgrades (new carpets, painting, upgrade kitchen, roof repairs) and forgo fancy vacations to pay our family contribution. My choice, my money. I do not have a negative opinion of those who choose not to go this route. I only caution folk to have the conversation with your kid about what your commitment is before they apply to schools. We knew that Yale would be expensive for us, even with a FA package. And no, we don’t look at Yale as a ticket to a high powered job. I worked in public service for 30 years and my D wants to go into either academia or non-profit work. Some would say we are crazy to pay what we do for that. Oh well.
It is so dependent on the kid, the school, and how unaffordable the top choice is. Also depends on where you would get the money, your age, your career and the likelihood of continued employment, your retirement plans, the kids plan for post-college etc.
Many kids cannot go to their “dream” school due to finances.
I don’t think it is “middle stats” kids that are not able to get into to tippy top elite schools or obtain high levels of merit money at schools they want to attend. Plenty of kids with very good stats get into to great colleges that are unaffordable because the school’s EFC is unaffordable if the parents want to retire, fund their other children’s education, or are worried about their health or job security. Plenty of parents have saved for college, but were not thinking it would cost $70K per year 18 years ago.
@mom2and
Completely agree. In our case we are older parents, close to retirement. Of course we have more assets than 40 year old parents, and greater than average home equity because we live in California. Our incomes on the other hand are solidly middle class and we only have a few earning years remaining. We are penalized for financial aid by our age, geography and to some extent by our frugality.
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Regardless of your financial decisions…PLEASE convey any budget considerations to your kids before they apply. If you have a dollar limit, please let them know that. If your intention is that they will ONLY consider the lowest net cost of their acceptances…let them know that.
Let them know before applications are sent.
Nothing more heartbreaking to me than hearing that parents said “we will make anything work” when in fact it was not possible to do so, or they wanted the lowest net cost anyway…and they tell the kids this after the acceptances come in.
At that point, it’s too late to apply to other schools.
@Merlin2020 I am assuming this is about a high school sr needing to make a decision?
Our family’s budget is nowhere close to being able to afford our expected parental contribution. We refuse to take out loans or cosign. (Though, honestly, our kids would never even ask us to.) Our kids do attend schools that fit our budget. They don’t apply to meets-need only schools b/c we know ahead of time that none of them will be affordable. They apply to schools where they know they are contenders for competitive merit scholarships or where they will receive guaranteed scholarships that will make the school affordable.
Our current 12th grader just made the decision to attend a lower ranked school with essentially a full-ride vs. a much higher ranked school with a full-tuition scholarship. (She had multiple scholarship schools to choose amg, but it really narrowed down to those 2.)
ROI? With our older children, what they have managed to achieve during UG has mattered far more than the fact that they have a lower tier school name on their diploma. They are the type of kids who go out and forge a path for themselves. They seek out every opportunity they can find and jump right in. Our oldest is a chemE from a pretty much unknown tech university and he has a fabulous career and is significantly beyond career level expectations. Our current college student attends Bama as a physics and math double major (though physics is where his heart is, and he is significantly advanced in physics and finished his UG physics courses as a sophomore.) He had multiple REU offers last summer and has had multiple again this summer. He is a top student and being at Bama has not held him back at all.
FWIW, that is our experience as a family where budget does impact the final decision. Even when all of the schools fit our pre-defined budget, our kids are still very self-conscious about cost. They really weigh the extra cost to see if they really think it is necessary.
"I guess my question is, do the tip top schools deliver a return on investment through their prestige, vast alumni networks, research opportunities, etc to justify the risk of taking on significant debt ? "
Just my opinion:
$20,000 in total debt: Maybe, maybe not, depending upon what the alternative is and depending upon the students interests and ability and the parents financial circumstances.
$100,000 in total debt: IMHO no university is worth that for undergraduate if you can avoid it. If you can get a Doctor of Medicine degree from Harvard or Stanford with $100,000 in total debt and that is what you want to do, then yes, go for it.
Remember that in most cases a Bachelor’s degree is not the same thing as “done with education and in a good career”.
Is there a car worth $70,000 per year? It all depends on the individual situation. If there would be significant financial hardship and/or loans involved, I’d say lean toward a more affordable option.