What would be a typical scenario for paying for child’s education if parents shoulder the costs and parents EFC is high and student does not get any scholarships
It can be whatever scenario you want. What is your real concern?
There are need-based scholarships which it sounds like you are not eligible for. There are merit scholarships that are based on GPA/SAT/ACT scores.
Does your student have a good GPA and SAT/ACT scores? Then you can go for merit scholarships. Your student would look for colleges where their scores are >75%tile.
Does your student have a more average GPA/SAT/ACT? Then start at Community college and then transfer to your State College/Univerisity.
So first try to find a lower cost College…because you are in-state, you have merit scholarships or just a lower cost college.
THen you use money from savings. Maybe you have been putting money in a 529 plan?
Then you or the student take out loans.
We can’t pay the full cost of college even at our instate public schools.
Our kids applied to schools where their stats were above average and they could get merit.
They attend instate publics since we qualify for a state grant.
They take student loans and work in the summers.
They applied to all local scholarships they qualified for.
We paid the full cost for undergraduate for both kids out of our savings. I realize this is unusual and that we were lucky.
Both kids later got graduate degrees. One was in a research-oriented program and supported himself through a research assistantship plus depleting his own savings. The other got an MBA after working for a few years. She got a fellowship for part of it, used her savings, and took out loans.
No need based grants mean you are not low income. No merit based scholarships means that the student does not have high stats for that college or he chose to apply to a college that does not offer merit aid.
The typical scenario in your situation would be to apply to in state publics colleges or colleges that offer merit aid where the student’s stats put him in the top 25% of admitted students. If he plans to enter college this September then it may mean community college at this point.
Typical scenario 1: Parents write large checks every semester.
Typical scenario 2: Kid finds school that costs less than EFC and parents write smaller checks every semester.
Scenario 3 (but I won’t call it typical or even wise): Parents take out large loans every semester
Fundamentally, the problem is that almost nobody can pay college costs out of their current income, even if their EFC is too high for them to get need-based aid. You have to use past income (savings) or future income (loans) or find a way for somebody else to pay part of it (merit scholarships).
I’ll add:
- paying from a college saving account that was started when the child was born.
In California, it is increasingly common to plan to attend a community college for two years, live at home, work, and pay the very low community college tuition out of student’s wages and parent cashflow. Then, student and parental loans are taken for years three and four once they transfer to a university, if the parents haven’t saved anything for college.
We had two working parents; lived off one salary, at first, used the second salary to pay off our OWN student loans, then took that same amount and put it into college savings every month. Had to supplement from current income once the kids started college but the fundamental principle was to live small- less house than the realtors thought we should be looking at, old cars, essentially manage on one income. One of the wage earners was unemployed for a while when there was still one kid in college but our savings cushioned that blow.
I realize if you’ve got HS kids the advice to “have two incomes and save one of them” doesn’t do you much good retroactively… but that’s how we paid for it, so it was our “typical”. I was ready to spend the extra cash once we paid off our student loans, but fortunately, my spouse had a better understanding of the value of compound interest (and capital gains, and a rising stock market for some of our kids childhoods).
Her stats are good but we are worried because she likes the more prestigious schools and these are way beyond our r means…So how do we work out the finances as far student loans go…that was more my question…the optimum way to finance her studies
Students are can only borrow $27K in total during the undergraduate years-$5,500 freshman year, $6,500 soph, $7,500 junior and senior years. Any loans above and beyond that would require Parent Plus loans and/or private loans. Private loans in the student’s name will require a co-signor.
Generally it is best to limit the amount of ug loans…if your D has the stats for prestigious schools there would be options for merit at many very good schools. These are not the tippy top schools, but schools where the student is generally in the top 25% of applicants, stats wise. Your state flagship/directionals are likely lower in costs as well.
Run the NPCs at schools on the radar, and have the budget/affordability talk with your D sooner rather than later.
If elite doesn’t work for your budget it doesn’t work. My kid has 99% scores and great transcript and extra curriculars and elites/need based only schools are not in the budget. Be honest up front. Anything over federal loan limits (27K over 4 years) are on you. There are many great more affordable options out there.
My kid can attend our flagship honors program (ACT 31-34) for less than 1/3 the price of an elite school at a well regarded research university that launches kids to a wide array of grad programs. He applied to many merit possible options too. If you are early in the process don’t get entrenched in prestige and rankings.
We decided what we could reasonably afford out of savings and current income and gave our kids that budget. We would not take on debt for ourselves or co-sign loans for them. This was our personal decision. It meant that our kids could not pursue prestige, even with their excellent stats, since our budget was well below our EFC from colleges. They pursued large merit scholarships instead, received them, and have gone on to find success at the colleges they chose, which met our budget and afforded them the opportunities they needed. They did not need student loans and have thanked us for giving them the gift of graduating without debt.
Then you need to tell her this even if it is the first time she won’t get what she wants. Otherwise you will have a high debt burden and end up postponing retirement and possibly be written up in the media complaining about how you were “forced” to take out this debt for your daughter’s education. In fact you took out the debt to give her the “prestigious” school that she wanted.
From what I hear when I talk to twenty somethings, it can be typical to live at home and commute. it can also be typical to begin but then leave for a year to save up and then return. I have also heard a lot of people took out co signed loans with parents and graduate is paying them back. Definitely the majority of twenty somethings I meet with some college or college degree have loans to pay. Often these loans are significant (>300/ month). If they have children anytime soon, they will be finding it very hard to save for their children’s college from birth. That is just not in the cards.
For our own kids, we are using some tuition benefits and some 529 savings (from “near birth” but not nearly enough). we are also using income and plan to ask student20 to take out the federal loan if necessary. We will not be co signing loans with our kids…personal preference but we just don’t want that kind of relationship.
You tell her early in the college search process what the price limit is. You and she run net price calculators on the web sites of colleges of interest to determine whether they are affordable. You make it very clear that admission without enough financial aid or scholarships is equivalent to a rejection. Also, when assessing reach/match/likely/safety, if a merit scholarship is necessary for affordability, the reach/match/likely/safety assessment must be based on the merit scholarship, not admission.
A typical college student can take $5,500 in federal direct loans first year without a cosigner (increasing a little over later years). Loans beyond that have to be parent loans or cosigned loans, generally not a good idea. College students also commonly have part time jobs that may earn a few thousand dollars over the school year.
@MKurianMathew “we are worried because she likes the more prestigious schools”. Stop worrying and give her a number that you can afford. Add to that $27K over four years in student loans (if necessary) and whatever amount of $$ she could reasonably earn during the summers. That’s her budget. Make her stick to it. Easy peasy.
Many of our students aren’t going to their first choice or even their 10th choice. Never too soon to hit her with a reality check lol.
I would also add that MOST high school students “like the more prestigious schools” simply because those are the schools they have heard of through the media, and that get praised constantly by teachers, administrators, and other community members. Help her do a little more digging into a wider variety of schools and she might find something that fits your budget and her desires.
Also in our state, if you are in the top 15% of your HS class, you can go to Community College for free.
Then if you maintain a 3.25 GPA, you are eligible for more scholarships at instate schools.