What do you pay for?

Parents Forum
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<p>Actuarial Science is a fantastic and growing field of study. I think there are tons of examples you would study outside this college discussion regarding the “skin in the game” argument. The first that comes to mind are studies of the behavior of the staked professional poker player vs. the self funded player. There is a far higher beta coefficient of risk in the staked player. This directly relates to what we are talking about including scholarships. I know we would like to think so, but our kids in most cases do not treat parents money the same as their own. </p>

<p>It is too much of a generalization to say wealthy candidates are a issue. There is a added risk in the wealthy candidate, but time and again we see fantastic applicants that have rebelled a bit against this and have gone to pretty great lengths to distance themselves and show their independence.</p>

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<p>OP, I paid for everything through UG + 1 month. then 5 months of car, it is kind of an expensive BMW (gas and insurance) so $$.</p>

<p>She graduated 6 weeks after turning 21 with a job, but took 6 months to become financially independent. pdf’d me her first auto deposit from her employer/bank, she’s what I call a junior exec, flying around the country seeing clients. She had three 60k+ job offers on graduation, so there is work out there. </p>

<p>kid 2 is hard to quantify $$$, she can make more in a week than most parents in a month, but I’m still responsible for paying, in her eyes!</p>

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<p>Here’s a situation that you might find interesting:</p>

<p>If all else is equal (Hypothetically): GPA, EC’s etc… etc and the two applicants worked the same amount of hours. Applicant A had a job that paid for school. Applicant B had an unpaid intern job that was related to his field. They both worked the same amount of hours. On one side you have a kid who worked in a job that prepared him for his field. On the other you have a kid that worked a job not related to his field, but that paid for college.</p>

<p>I’m sorry, but in this situation, the kid who paid for school would be the riskier hire as he has no real experience in the field.</p>

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<p>Since we are talking about the same child being educated with or without debt then all else is actually equal.</p>

<p>So in that sense a debt free education will always be the greatest gift.</p>

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<p>Shawbridge indentured servitude is a bit harsh, but conceptually it is a bit of the same idea. The industries I work with there is absolutely no chance to go through the motions. The market is very efficient today and you will get fired. You are absolutely correct, it is almost impossible to get good data because as you alluded, some good people leave for better jobs and there is no proper way to adjust for that.</p>

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<p>Graduating w/o crushing debt frees our young people to have options to explore and contribute to the world in ways that are meaningful to them. This can include volunteer or minimally paid positions.</p>

<p>Kids who are fortunate enough to receive the gift of a paid for education from whatever source have the option to volunteer or take low-paid positions/internships for the experience with very little or no regard to the compensation. As was pointed out above, this can give them more experience and a better idea of what they want to pursue and makes them more attractive job candidates due to their greater experience in the field instead of working as a bartender where they could have made 2-3X more in tips.</p>

<p>We have no regrets having about having our kids graduate without crushing debt.</p>

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<p>jsanche32, I have no background to comment on your example in technical fields, but in the business fields, internships are looked at far more sceptically than they are on College Confidential. Many are dismissed outright as they are structured to make the student like the firm and actual learning the rigors of the job is highly suspect. Technical fields, you may probably be correct.</p>

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<p>In what fields is the labor market efficient? I work with a number of management consulting firms at the high end and private equity and have worked i-banks. There are some folks who are very, very good in those fields, but there is an awful lot of pomposity and charm masking weaker talent. I don’t see these people getting fired, though they may move firms more frequently. Trading, maybe, but I think the financial crisis shows us that there are a lot of people who look like great traders in up-markets because they take excessive risks. </p>

<p>My recollection is that there are a couple of areas of the hedge fund world in which the those firms in the top 25% of performance in one year are much more likely to have top quartile performance in subsequent years.</p>

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<p>I was one of those kids who was on full FA, worked 30 hours a week in college and never had more than $10 in my pocket. For the first 10 years of my career, I was chasing after money, I changed jobs every 1-2 yr, my salary often doubled every time I changed my job. Some of those jobs were not good career moves, but I was driven by money because lack of it growing up. In my case, I don’t think I was a better (loyal) employee because I had to pay for my schooling. </p>

<p>On the other hand, my daughter is not going to be as desperate, she will choose a career which would challenge her. The interesting thing is she is starting a career that’s similar to mine. When she had option of going with one of four firms that made her an offer, she didn’t choose one what most people would consider to be most prestigious. She weighted in her future career aspiration and each firm’s strength to make her decision. Unlike me, if she should have a down year because her desk wasn’t as profitable, she probably would take a more long term view and not move to another firm as fast. </p>

<p>D1’s friends from prep schools came from wealthier families than her friends from college. Most of those kids I have known since they were in grade school, some of them do spend a lot of their parents’ money and are spoiled, but a lot of them are hard working kids. One of D1’s friend was flipping burgers at Central Park one summer while living at a NYC apartment owned by his parents, but on another summer he was working at a 5 star hotel. Whereas D1’s good friend in college with close to 200k debt didn’t really work in the summer and never had a job in college. This girlfriend graduated with an engineering degree, had no job until few days ago because she didn’t even bother to look until she graduated. </p>

<p>We can all give anecdote examples, but it is hard to make a sweeping generalization. As a hiring manager, I would care more about what they did and what they have accomplished or over come instead of their family financial background.</p>

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<p>I had FAid & with that & part-time & summer jobs, paid my way through college & grad school but was able to secure a great job upon graduation. I am glad it was not held against me that I did not graduate with crushing debt and in fact, I think some employers do credit checks and may not hire people with bad credit ratings because that might make them unduly suscptible to who knows what negative influences.</p>

<p>Several jobs I know of and one I had held required me & other similarly situated employees to submit annual credit reports and file financial statements.</p>

<p>I don’t think it was held against S when he was interviewing for his REAL job that he didn’t work his way through college, tho he did hold summer & part-time jobs. When he was evaluating his options, he chose the job that was most interesting to him rather than the ones that paid the most but he thought would be less challenging and engaging. We fully encouraged this choice.</p>

<p>D & her friends are a mixed bag. Several of them work various odd summer jobs which have no connection with their career aspirations but are a way of earning some money. A few are fortunate enough to get something related to their proposed career path.</p>

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<p>We pay the balance of what the merit scholarship $ doesnt pay (room, board, books and a monthly spending allowance). However, both boys ended up buying/selling many of their books on their own and paying for it out of the $ we give them. Older s paid allhis expenses during the summers he had internships (summer after soph and jr year) and he worked as a camp yonselor sumer after freshman year so was away from home that summer as well. We pay car insuranace, but they pay gas, maintenance, etc. YOunger s is living in a college frat this summer and paying ofr it himeself with the $$ from his 2 internships. We are paying for the classes he is taking this summer. He has a subletter for his room at his house at college so is working that out with the subletter (we are covering the small price difference between his rent and the discount rent he offered the subletter).</p>

<p>I agree that it is nice to be able to offer a debt-free education to one’s kids. But thats simply not possible for everyone. Younger s sees that one of his roommates will be graduating with a ton of student loan debt and realizes that this roommate will likely never dig his way out of it. He realizes this was a financial mistake on his roommates part. So he is learning the financial lesson first and second hand.</p>

<p>We have talked to him a lot about spending habits and budgeting, as having had his car on campus this past semeste and a girlfriend was expensive. He hit his savings, which we didnt like. COnveniently his 21st bday present helped to refill some of the $$ drain, but he still needs to work on the savings. His internships dont pay very well, unfortunately, despite being in engineering and pharmacology. He is paying his own gas and feood expenses this summer. He comes home to wash his clothes and raid the fridge! That is fine by me.</p>

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<p>POIH- do you remember the late 1970’s and early 80’s? 8% loans? I had 12%!</p>

<p>Debt is a tool. I used it to go to graduate school. There were many advantages to my carrying debt- for one, H and I didn’t buy more house than we could afford since we were paying off school loans. I took minimal maternity leaves since we were paying off school loans. We vacationed at grandma’s house instead of Aruba during the years our kids were growing up.</p>

<p>Choices, trade-offs. I have peers who haven’t worked in 20 years who are now discovering that the working world isn’t greeting them with open arms and wondering why they stepped off the employment track. They didn’t have school loans- I did. One of them left a lucrative legal practice and is now trying to get hired for ANYTHING which will get her back on track. Yogurt shop? Handing out towels at the local spa? Try telling the judge during your divorce that you need alimony when he’s looking at your resume and wondering why a person with all those fancy degrees can’t support herself. And yet- no, she can’t support herself.</p>

<p>So don’t demonize debt or idolize a debt free education. Sometimes those loan payments are the only thing standing between a young adult and foolish financial decisions. And sometimes they can crush you- for sure.</p>

<p>I find the discussion around asking a job applicant how much of his or her education they paid for fascinating. Personally I think there are better ways to assess initiative, hard work, staying power, etc. but I will ask the psychographic team we use next time we get together to discuss hiring metrics. For sure there are legal issues inherent in any screening questions-- you really need to make sure the questions you ask are not used to screen out in a discriminatory fashion and I suspect HBsurfer’s rejected candidates might end up fitting a pattern which could be used against his/her company.</p>

<p>Shawbridge- for sure the labor markets are highly inefficient. Agree with your comments 100%. My company tracks performance and retention data pretty closely-- but we are more concerned with hiring people who will do well; we are less concerned with those who do well and decide to leave to go to law school or whatnot, regardless of whether mommy and daddy can/will pay for it. The expensive failures are the people you hire who do not do well- so the focus is on hiring few (or none) of them in favor of those who will do well. The fact that a few high-flyers will leave for greener pastures- hey, that’s a cost of doing business. They’ve already paid out by then, and we’ve got aggressive retention programs in place to keep them growing and learning. But hiring the losers? That’s worth avoiding!!!</p>

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<p>That’s absurd. It seems to me a foolish financial decision to have a 8% loan, if one can avoid it, just to avoid making other foolish financial decisions.</p>

<p>How can a foolish decision to begin with can help someone avoid making other foolish decisions?</p>

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<p>POIH- debt is a tool, a vehicle. I borrowed to attend grad school, and even retired my loans early. My first year salary was more than 3 times my salary the year before I quit my job to go back to school. There is not a single economic analysis you could do which would prove that my decision to borrow was a foolish one. The opportunity cost of losing two years of my lower salary while in school, plus the cost of tuition with interest, etc… it all paid out in less than 5 years. I have been on a higher earning curve ever since, and my 401k, other benefits, etc all reflect the much higher earnings. This was not a pie in the sky “what if”- I was a working professional, and put simply, I could avoid debt and earn a fine wage, or borrow to go to grad school for an MBA and make a sound financial decision which would pay off for decades.</p>

<p>So yeah, call it absurd, foolish, whatever. The numbers don’t lie. There are no guarantees in life, but debt is a fantastic way to invest in your own intellectual capital, and if you can launch a career which pays many multiples for those who have a particular degree vs. those who don’t- do the math. </p>

<p>I have neighbors who refuse to borrow a dime for their kids education. Fine- it’s their money, their kids. But they buy a big screen TV on a credit card? take out a Home Equity loan to finance a vacation? Lease their cars? </p>

<p>I imagine you have a culturally based aversion to debt which I respect. But I borrowed to finance my education, have nieces and nephews now working in lucrative careers which were made possible by debt, none of us are deadbeats and yes, all of us can run a spreadsheet. Debt is a tool, it’s not a spawn of the devil.</p>

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<p>blossom:

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<p>No one is pointing to your decision to attend grad school as a foolish decision unless your parent had an oppertunity to provide that education free to you but they thought of giving you a finance lesson by pushing you through the crushing debt.</p>

<p>Have you analyzed what all you could have done if some one had paid for your grad school?</p>

<p>That’s the gift of ‘debt free education’. You should be in a better position to actually realize the value of such a gift.</p>

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<p>hbsurfer: I was worried when you said you have been “lurking” and than you chose this topic to jump into the deep end of the pool on CC. But, your posts indicated you can “take it”:slight_smile: Oh, and since everyone else forgot to say it, I guess because you are an outlier here- Welcome to CC!. </p>

<p>We (my family) are running this little experiment in our extended family right now. Not on purpose mind you, but by trial and error. 5 sets of adults with children (all related) who have graduated college or are still in college. One a rising senior at Private non-boarding HS.</p>

<p>Let me lay it out without being defensive. I was raised in short, with a private LAC education, new Mustang when I graduated high school, no work in college, even in the summers, skied every weekend and weekdays during college, you get the idea. I was not prepared to work when I graduated college , but different time, different world- and most especially I was not aware that failure was not an option. Got a job on the Stock Exchange floor(not common to hire women then) a few weeks after graduation and spent 30 years constantly earning and learning- work ethic was never even considered in the equation. You had to have it. Great career BTW- could be home most afternoons to function as a full time mommy. But I digress.</p>

<p>We have 8 kids from different parents running this experiment. All families paid for various years of private prep boarding school and graduated UG debt free. All students had plenty of $$$ in college. Except my son. S1 HS was a top rated public in a very affluent suburb surrounded by other very affluent suburbs. So I elected to keep him home. This is the back fill.</p>

<p>Fast forward- All the college Grad’s seem unfocused-The most successful one is 30 this year- never finished top college in Boston but has always been a self taught computer wiz so he is earning $$$- however he quits his jobs when he feels like it, and never has trouble finding another that pays very well. He is not in any committed relationships. Doubt if he would be making more if he had a MS in CS. The rest of them? Having a very hard time getting off the student schedule of setting their own hours as to when to work or play, winter/spring/summer breaks-they feel like they are still entitled to these breaks much to all of the parents amusement. One has a decent job in finance (was a Bus Major) wants to quit cold turkey to “go back to school to do something else.” No idea what, just not THIS. One got a MS in Pub. Health from tippy top uni, but no job hunting for her(very hot field now)- off for a PHd in Psychology on her dime. MS + PHd =massive student loans (not all PHd are fully funded these days, and 3 more years to go. Heer UG was debt free. 26 yrs old, you can’t tell her what to do.</p>

<p>My S1- seemed in danger of loving the surf life above all else. So, he worked in “sweat shop” his HS fres. summer folding surf tee-shirts. It’s part of the surf life right? He was stunned and will always remember how many shirts he had to fold to make $10.00. He also witnessed the struggle of the undocumented worker- drive an hour on bus to work, find out not needed that day but son could not call him because guy does not have a cell phone. (Son speaks Spanish, so he “managed” these poor guys.) This was a life changing experience for him on many levels. HS soph summer- worked for same people, but in retail store in Ultra posh Hotel- doing beach 'smore parties and giving surf lessons +BIG tips for excellent service. This meant talking to big wigs about his “life” plans.He became very comfortable with corp. executives. Junior year more of the same-both Soph and Jr HS year he took 1 college course. Senior year, S1 showed signs of major entitlement issues since he was accepted to many top schools. Needed reality check. So, decided he would take out Staffords every year, and if he applied himself (good GPA) and finished college I would pay them off. That was a non-negotiated deal. It was my deal. </p>

<p>S1 got a job working at campus bookstore (no more than 10+ hrs week allowed), his decision. He has had 2 internships in the 2 summers and studied abroad taking intensive Spanish in Spain. Currently, he has an internship in his field that will probably lead to a great job- we will see. He is on fire with desire!</p>

<p>Son has had everything paid for in college and lives a very nice life. But, just above the struggle level, and my goal was he had about as much as his friends and roomies so there is balance and understanding. I want him to struggle with food budget, gas, pay utilities, have the landlord try to take the security deposit, have to go home from a fun weekend because while he might skip class, he can’t skip work because that affects his teammates and their schedules. You get the idea. Sprinkle some real life struggle in there- but not too much that he can’t double major, write a senior thesis, and keep his GPA very high so Grad school is still an option, not a default decision as it seems to be for so many students.
He has had much less cash given to him than his cousins did. He is the only one who has worked summers and during school. It seems to be working very well. He is 21 is showing signs of a very driven man who is uber excited about his future. </p>

<p>I too started off believing a kids most important job was to study, get good grades and participate in meaningful EC’s. Min. wage jobs just a waste considering he was from a well off family. But, I now observe that very often the kid ends up insulated and self centered in their outlook in the world- especially when they are in their 20’s. They seem to have a loose grasp on money and what their lifestyle REALLY costs. Seems most just want to keep going after the “noble” next degree, which makes them feel safe and important. They become degree seekers well into the late 20’s. And most end up with a lot of debt even though they had the gift of a loan free UG. I do not believe most students understand what a gift that is unless they know what debt IS.</p>

<p>I think a kid who has only had to get good grades and devote themselves to their “passions” also known as EC’s past the high school years is at a huge disadvantage when it is time to get a job, and pick one that “fits”. The oh so mportant notion of “fit” for college is more important in the job search. I agree most internships that are not well paid or well known are discounted by most employers. So easy to fluff up these days. </p>

<p>Side note- On the UC application they DO ask if the student worked and how long they worked, but most importantly, they specifically asked for a detailed explanation of how that money was used. So, I don’t think it hard to believe an employer would ask about work experience during college and what % of the earnings were used to finance the education. Probably a good question.</p>

<p>As for the remark that it would be rude to ask about financial aid status of a student- well, students are rude and do pry. But the dead give away is work study jobs. On a campus where almost all jobs are for work study, if you have that job it is known you are on financial aid. And my impression is kids are so clueless about money these days they feel no privacy breach when asked about their financial aid, and freely give info. FinAid kids almost always have to stay in campus housing in expensive college towns because that is the only way it is fully covered. That is another tell. Kids know who is on aid, they know what is truly on a scholarship vs need based aid, but if they don’t, one of their friends do.
Nothing wrong with being on financial aid, but as parents don’t pretend that their peers are not aware of who is on aid and who is not. I think it only matters to the parents, because we are the only ones who know it means we don’t make enough money to send the child to college. Thus the rampant, merit money claims etc. </p>

<p>To be clear- I will be paying S1 loans off the month before he graduates. Because he had skin in the game, he maximized his college experience on ALL level’s including socially. The bonus is I have been paying the interest so now he has credit too! The interest was worth it to me. One more thing- I am not saying I am above it all- I will be buying him a car for graduation which I expected to last at about 10 years. To me that mean’s he is LAUNCHED! (except for that problem of medical insurance, if job does nto offer it Iwill keep paying for it until he can. Don’t want him to drop coverage to save $$)</p>

<p>This kid thing is just one big experiment of trial and error. Because S1 was near the end of the cousin line, I tried something different because the “get good grades and follow your passion…” just wasn’t engaging our families kids in their own futures. As an extended family we have decided the approach to high school as a means to getting into college is not the same approach needed for young adults in college on their way to independent careers. We have very spirited debates as we watch our kids handle adulthood. We are very fee on placing blame were it belongs- on the parents! My S1 has been a group experiment (he doesn’t know that though) and so we are all invested in the outcome. My S2, well stay tuned, he hates school. Don’t know what to do with that… </p>

<p>But, let the debate on CC rage on! :)</p>

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<p>H & I used debt to finance 2 bachelors degrees, 3 master’s degrees and 1 PhD. We never took out more loans than we thought we could pay off comfortably and we certainly celebrated when that final loan was paid off. But, coming from families of very limited means, we never could have achieved what we have without the federal government, part-time jobs (and full time jobs during graduate school) and loans. My kids won’t have to take out as much in loans as we did - but I’m not averse to them having some debt. My D is only taking subsized Staffords at the moment and working 2 part-time jobs. I’m not sure that she “values” her education more than kids who get a free ride (from scholarships or parents) but it is reality for her, and many kids of relatively modest means. Debt allows many students to get a higher education that will lead to more lucrative, or satisfying, jobs than they would have been able to have otherwise. </p>

<p>As far as asking new hires about their work experience, I can’t imagine not asking. Regardless of the reason that they had jobs (to finance education or earn spending money) - it shows work ethic, commitment and the ability to work with others. I don’t ask how much of their education they financed, or if they have debt - but I do run a credit report on them. I would be wary hiring any college grad who did not have some paid work experience, IMO.</p>

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<p>Come on if you couldn’t teach DS in 18 years anything about finances and need to force debt on him to teach it then do you really think he will get the finances?
what will happen when he will be on his own. Since he has not learn the finances to begin with and there is no mommy arround to force him through such drastic measure?</p>

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<p>POIH: It was to get the 18 year old attention and value college- $5000 a year staffords- not big- unless he quit early or failed some classes- seemed to work for us.</p>

<p>BUT, POIH I KNOW BY NOW YOU ARE ALWAYS RIGHT- AND I DO MEAN ALWAYS- AND LACK TACT IN ALMOST EVERY INSTANCE. I READ YOUR POSTS AND SOMETIMES FELT LIKE YOU ARE A FAKE, GETTING YOUR JOLLIES USING THE INTERNET AS A WAY TO BE DOWN RIGHT RUDE. </p>

<p>Let’s agree to not respond to each others posts ok? I have to admit, you did not squeeze MIT into your post- that’s a first.</p>

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<p>How would you know if campus jobs are for work study? D1 wasn’t on FA, but she worked 4 years while in college. Depending on who D1 is talking to, she could talk about her campus job and having to clean her own bathroom, or she could talk to you about museums and stores in Paris, Florence, HKG, Tokyo, Geneva…</p>