The Loan Reality

Paying for College
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<p>NPC is an estimate only. The only thing that counts is the actual contribution each school has attributed. You can and should call Duke and explain to them that you don’t understand this discrepancy between their own NPC and the award and ask them to please go over it with you so that you do understand. If there is a flag in there, or mistake, you can then correct it. A lot of these most generous schools start right out with a student contribution of $2-6K right there, and at loan free schools, a lot of the kids just cover that with their DIrect Loan of $5500 that they can take out. I have a lot to say about this process, and it’s not good, but I’ll restrain myself and stick to the point. </p>

<p>If the property was gifted, it could have been added to income as well as assets. Some schools do that. Your parents were “gifted” assets worth $X, they have $X added to their income that year as untaxed, unearned income. They then get the double whammy of getting hit again since that property is sitting there as assets. The conditions and particulars do not matter. Just the numbers.</p>

<p>So find out what the deal is with Duke and see if something can’t be worked out. If your parents can swing a loan until all of these transfers and joint ownerships are settled, and are willing to do so, you are set.</p>

<p>The reason I am so anti loan, I’ve told you in detail. A lot of kids who in their great wisdom and financial savvy at the age of 18 years old manage to wheedle and talk their parents into borrowing more than the parents should, because their parents love them so and want to give them this great gift of college where ever the heart desires. Many of such parents are already in financial difficulties that they don’t want to tell the kid, many are bad with such decisions. So they sign, they owe, kid happily goes to the great school, maybe a great program that is practically sure to reap some job offers at a wage that can repay all of these loans, and all intentions are good. Then all kinds of things can happen. Like parents can’t get loans in future years—these school costs are for four years you know, and in your case if your parents make moves with properties and assets your expected contribution can go up again. You all have little to no idea what you are doing here and I see this happen all of the time. It’s already happened to you. Yes, you can end up with a 99999 EFC and Duke can say because of some thing your parents did with family, grandparent that you have to pay it ALL. It happens. Also, those sure jobs can evaporate in 4 years with developments in the economy and the industries. I’ve seen it happen time and again, these days things happen even faster than ever. Makes my head spin. Change is rampant these days. YOu can also find that you are not suited to a program or not do as well as you were determined to do.</p>

<p>So children taking those kinds of chances with parents’ money and borrowing can wreak havoc on them. There is a reason why YOU can’t get big time loans. Your parents are expected to be more savvy. That they don’t know a lot of the ramifications of these financial and family dealings should be a flag to you that they may be in over their heads, and you really aren’t capable of advice in this area. </p>

<p>As some others have touched upon, if your grandparent needs long term care, the federal government will require an audit in back years to make sure, family members did not pull a “King Lear” . You think FAFSA and college fin aid is tough, those nursing and assisted care , medicaid type audits are even more thorough and less forgiving. They really should have an attorney specializing in this sort of thing in the picture, or they can get really reamed.</p>

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<p>The general advice I’ve seen on cc is to avoid taking on more debt than the family can afford. We live in Downstate NY with an income less than half of what your parents make, but are discussing the possibility of paying $13k/year for the first 3 years of a 3+2 program at a private college for our son. The 3 year cost (after grants) is less than a 4-year program at our state school, but more than a 2+2 cc and state school. For us, $13k/year would be doable if I went back to work part-time, but I work in the industry my son is interested in and I know he could get a decent intro level job with a diploma from our state college. I’d rather work and bank the extra money to help him buy a house. But maybe the decision is easier for us because my son doesn’t think in terms of “highly rated” or “dream school.” He’s very practical. If a degree from school x will get him a job in the field he wants, why pay more to go to school y? He’s weighed the ROI for each school he’s been accepted to and doesn’t believe the extra money is worth it. </p>

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<p>On reading tons of threads on CC , I always find people telling it is not worth taking around $100k-$150k loan after undergraduate studies …even though how prestigious the college might be.</p>

<p>I am very confused here. I am an International Student so I will be taking in my home country for about $150k. It will amount upto $200k after 4 years.</p>

<p>The thing is I am an Computer Science/Applied Math major and I hope to get a job of around 60k after undergraduate.</p>

<p>By that amount Can’t I easily repay the loans in 5-6 years even if I take 30k living expenses during job period per year.</p>

<p>Please someone help me with this confusion. I am an international student so I am having an hard time on how things go in the States.</p>

<p>Where else will costs come up that I will be in huge debt after 4 years??? People who have self-experience on this please also share your advice.</p>

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<p>I am an Applied Math Major hoping to get a job around 55K or starting. </p>

<p>I took out about 15 K for two years of education and my parents took out about 25K. 25K was to cover just living expenses for those two years. I don’t get any scholarships or financial aid other than the loans. If housing didn’t cost so much, I wouldn’t be in much debt at all. I go to a state school.</p>

<p>Anyone I know who is working towards their degree complains all the time about how they can never get classes that work with their schedule. Or they take a really long time to graduate. I know someone who is on their 9th year. That, in my opinion, is ridiculous. My school has an extremely low graduation rate. I think maybe 50% graduate within 6 years? My advisers were pretty surprised to hear that I am getting out on time but that’s at the cost of a lack of work experience.</p>

<p>I will probably incur some more debt but only if I have a full-time job while getting a master’s degree in Mechanical & Aerospace Engineering. It will probably end up adding on around 10K over three years, assuming I live with my girlfriend’s family and pay nothing for housing/meals. Hopefully my debt will be paid off quick enough.</p>

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<p>Sounds like salaries are stated differently in your home country. </p>

<p>When an employer tells you a salary here, that’s before taxes. Taxes are going to eat up in the realm of 1/3 of it, so for that to work you need to make 90K. This is plenty doable in CS, but make sure that you’re aiming for that, not 60K. </p>

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<p>First of all, 18 year olds change their minds. A LOT. Look at the first year return stats, and the 6 year graduation stats. Also, computer, engineering, all of the STEM majors have a huge attrition rate. So every year there are many kids who are all counting on those jobs, licking their chops as their parents rub their hands, …and they find the programs are not for them and switch out to something else</p>

<p>Also, the world changes rapidly and if the economy or any blip that affects that field of study hits, there may not be so many jobs in any given field. or the pay decreases. It’s all very good to expect to get those jobs, but there is an awful lot of counting them chickens before they are hatched. Lots of dud eggs in there, and you can’t tell which are. </p>

<p>If it can really hurt a family to take out that kind of loan, not a good idea. You really want an 18 year old’s ideas and commitments to run your future finances? Not smart. It’s beautiful and wonderful when it works. But it too often does not.</p>

<p>I’ve told the story about my friend who is really in a lot of trouble now as is her daughter for taking out $95 face amount in loans and she could not stand course of study, took an extra year to finish and can’t find a job to make ends meet much less even pay interest on those loans. Other than the subsidized ones, the interest starts accruing immediately and some those rates are real killers. Even parent loans through PLUS are about 7%, hardly a bargain. </p>

<p>Loans are great if the parents can afford them. They should not be counting on the aspirations of a barely adult child in taking out large amounts conditional on said kid’s accomplishments. Some of loans have to be paid back by the parent even if the kid dies, becomes disabled, have mental breakdowns, just drop out of course of study.</p>

<p>Go somewhere affordable for two years and take those entry level courses. If a student can ace them and be primed for the last two years, transfer into such a program. I’ll take a risk for someone who has done very well half way through, NOt some kid right out of highschool who has not shown his college mettle. Even so, it’s taking a chance. A chance on the parents’ financial future and old age. Could even cause financial ruin at those large amount cranking up the interest.</p>

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<p>I agree with the gap year option. Duke’s avg SAT on a 1600 scale is above a 1400 and if you fall above that number then you can receive extremely low tuition at competitive public universities.</p>

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<p>I started the process of talking to them about my EFC as soon add I got the email. My combined SAT is not over 1400 (thank God for the ACT, right?).</p>

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<p>I have also seen the posts suggesting that taking out loans is outrageous and suggesting community colleges. The fact of the matter is 4 year state and private schools, for the most part, are far more selective than community colleges. There has to be a reason for this, and in order to accommodate less academically inclined portion of the student population at community colleges some of the difficulty has to be reduced. There may be some very smart, motivated students at cc, and there are also students who couldn’t get in anywhere else - it’s hard to give a quality education to those who do deserve it under those circumstances. I opted for a state school but not community college. I am only using the pell grant, scholarships, and stafford subsidized and unsubsidized loans. It would be literally impossible for me to attend ANY school without these loans, and I want to make sure I get good value for this money I will have to pay off by getting a good education. I would not consider private loans, but some families can afford it in which case I think its fine.</p>

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<p>I’m interested in seeing these posts where people suggest that taking ANY loans is outrageous. </p>

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<p>I can’t remember where I’ve seen them. I will admit that most were probably talking about loans not included in aid packages, but I know I’ve seen a number advocating that no loans at all - no matter the sacrifice - should be the only option.</p>

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<p>I am all for loans when it is realistic that the parents can repay them without counting on the promises of their 18 year old and the hopes that that 18 year old gets a job that pays enough to take them over. The government/market has restricted what loans that 18-22 year old can take out on his/her name.</p>

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<p>The OP started this thread by arguing that loans were necessary, but then went on to argue that bigger loans are justified for ‘better’ schools, that she shouldn’t settle for a CSU if by just borrowing more, she can go to Duke or Bowdoin. I think that’s where the breakdown happened - that it is okay to borrow more and more to get what you want rather than what you need. </p>

<p>The government has capped loans at around $30,000 in 4 years. It’s arbitrary, as that’s the same amount whether your chosen school costs $20k a year or $65k, whether you are majoring in pre-historic art or nursing or engineering, whether you are spending your loan money on tuition or spring break travel. </p>

<p>I’m one who thinks loans should be taken only when every other resource has been exhausted. Savings, working, applying for every scholarship known to man, picking a cheaper school. I think everyone accepts the loans as part of the package too readily and that the 5 minute ‘pre-loan counseling’ doesn’t inform the average 18 year old of the burden on 10+ years of debt. </p>

<p>People get a financial aid package and if total cost is $60k and $40k is covered, they think “Oh, I only have to pay $20k for a $60k education. Two-thirds for free.” Except it is not free if $10-20k in that package is loans. That is not cheaper than the $20k for the state school, where of course the loans are also available.</p>

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<p>@twoinanddone‌ - I agree. So even you are not 100% against loans, they should just be the last resort, essentially. Perhaps I could dream up scenarios where it might not be so absolute as that, but that wouldn’t be useful. I think your point, used with common sense, is quite sound.</p>

<p>@caitiamm - Even if you find a few that think that debt is something to never take on, that doesn’t advance any argument or serve any purpose. The vast majority, as you can tell, are saying that a judicious amount of debt can be a healthy thing if it allows you to attend a demonstrably better school and especially, as is true in many cases, to go to college at all. But the word judiciously obviously includes the quality of judgement, which requires assessing the risk being taken. It really is fairly simple. To come out of college with $20,000 in debt and an engineering degree is one thing. To come out with $100,000 or more, or even $50,000 or more and a humanities degree is another. I have nothing against humanities degrees, I am simply acknowledging the reality that starting salaries for people with these degrees are lower, on average, than people with STEM degrees typically get. So while no one can predict the future, or as @cptofthehouse‌ says because we can’t, elevating one’s risk to those levels is an extremely unwise way to start out ones professional life. A simple rule of thumb is to keep your total debt down to under $30K, as many have said. Most will be able to handle that payment burden, but more than that is asking for trouble.</p>

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<p>“There is essentially no way I can get a high quality education without them, so yes, I am going to take out loans.”</p>

<p>To be a bit snobby: if you are really that smart, so smart that a top flight education is a must, then you would be offered substantial merit aid at some very quality institutions. If that isn’t the case, please re-visit the idea that a “high quality” (read: prestigious) education is appropriate for you. It is appropriate for students who are either so very smart that the school pays for it, or so very wealthy that their parents can pay sticker. </p>

<p>Harsh? Snobby? Perhaps. But it’s also reality.</p>

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<p>^^ ouch!</p>

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That is an oversimplification. In fact, the OP represents an exception that is widespread. Schools like Harvard, Yale, etc. don’t offer merit scholarships, and Duke (one of her schools) has only a few. I am pretty sure Bowdoin is the same way. in fact, at all the schools that are considered to be in the top tier, all the students that are accepted are “deserving” of an education at their school, but none of them offer enough full scholarships to cover all the students that cannot pay sticker price. The families that earn $100,000-$150,000, which just to repeat are a very large group within this set of high achieving students, often cannot afford full price. I would even say they usually cannot.</p>

<p>You are overstating what you are calling “reality”.</p>

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<p>Enough has been said to flesh out the pro’s and con’s of her dilemma. Let’s roll up her options so she’s got a clear path forward. </p>

<p>Here is my understanding of the OP’s reality: her parents are able to cash-flow $12K/year. She is a high achieving student who’s EFC is around $26K. She lives in a high cost area. She’s secured admissions to top universities including Duke and a UC. The NPC results identify a major financial gap which can be covered by loans. </p>

<p>Options:

  1. Take a gap year: parents save the $12K and the OP saves her earnings. These funds are applied the following year at one of her top choice universities.
  2. Take a gap year: apply to additional colleges - those offering free tuition/full rides for students with her credentials
  3. Select a CSU (one with an honors program maybe) or local CC and transfer to the UC as a junior
  4. Go with one of her current universities and cover the financial difference in loans
  5. Ask the financial aid officers at her current universities to reassess the financial aid package based on extenuating circumstances</p>

<p>If I’ve missed anything then please add to the list and best of luck to the OP! </p>

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<p>The reality is that there is a group of students who are cannot go to what is widely acknowledged as the best schools in the country, HPYMS et al. Duke, Bowdoin, the little Ivies, are some in that group. Go down the list of the top LACS, top National Universities and you can catch most of them by just drawing a line half way down the first part of the list and looking at those schools above it.</p>

<p>This schools brag that money is not an object; that they meet full need of any student, no student need shy from applying due to money and that they get the best of the best Nope. Not hardly. Every year there are kids who get accepted, who by those schools’ own definition are kids who they consider the best of the best, and they can’t go there because they have parents deemed able to pay who won’t or can’t due to some issue unrecognized by the financial aid process. </p>

<p>OP falls into this category as do a lot of kids. </p>

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<p>My reality is that I will need loans eventually. I am currently at a California CC and financial aid is giving me a full ride, but when I transfer (Probably a CSU, but maybe a UC.) I will need loans. My family has no money for college, and I don’t either. I’m going to try and minimize debt, but it cannot be avoided, especially because I am going to need to attend graduate school if I want to have a good career in my chosen field. Less debt is always good, but circumstances are what they are. In my case, I’m managing them by going to cheap state schools, and I’m planning on a CSU or UC for graduate school, too. If you don’t have money, that’s the route you should probably take. </p>

<p>I don’t get the attitude against CCs. De Anza is the same quality of education I’d get at the undergraduate level at a university at a fraction of the cost, and they don’t care that I bombed high school.</p>