I am 57 years old and perhaps I have a good ten years left working. As I have gone through some of the net price calculators and found some schools indicating I should borrow $20,000 + per year I came to a very important conclusion as I did some research.
The United States is now facing more and more parents whose social security is having part of it deducted for parent loans , parents are no longer able to afford. In a nutshell if you borrow too much later in life be ready and plan to be able to keep on working on and on to pay off the loans.
You may think you can go on forever but the reality is you may come to a point you need to retire. I have diabetes and the reality is I am not going on forever.
As a parent think and consult a financial planner to see if and how much is a realistic point you can borrow to for your kids. It is quite possible as a older parent you need to focus the college search towards public universities in place of private.
As my son has scores that make having a competitive application to the Ivy League I have had to see that for a middle class parent the Ivy League requires too much borrowing for many parents. They have become the home of students who come from resources or low income. There are a few schools that are good like Princeton in offering aid but far and few between and the upper level colleges.
I would have older parents Google news articles of parents who have over borrowed and tried to discharge student loans in bankruptcy and or have had their social security deducted. There is a cost and benefit to going to a top 10 school but at some point it may not be worth having no debt at a excellent public university.
We just said no to parent debt – direct or as co-signers – it is just too risky. We have 5 kids and we tasked them each with finding a school that would be net out of pocket cost of a certain dollar amount per year that we agreed to pay as they went. They all managed with merit scholarships, athletic scholarships and choosing certain schools that some tell them are ‘below’ them – whatever they are getting educated and none of us are going bankrupt.
Don’t get me wrong x5 it still hurts but it isn’t hanging over us for decades. We are 55 and 56 and married at 50 and 51 after very costly divorces so we could NOT do the debt thing.
And while you think you may have 10 more years to work, you never know if that will be possible. While job loss is possible at any stage in life, getting a new job at close to 60 or older can be much more difficult, especially at the same level and salary.
Heh, my husband will be 65 when the kid enters college. He works a physical job and medially can’t work many more years, he is hoping to hang out until 65 but it’s getting to be tough. We are hoping that the FA departments will take this into account.
I’m a middle income parent whose child had ivy league scores. She went to a LAC with generous financial aid and cheaper than state school I agree, don’t borrow a lot but I’m glad I let my child apply and wait for the financial aid package.
H was older when our kids were applying for and attending college. We kept that in mind in having S only apply to schools where he would get major merit awards. As it was, H was fortunately able to keep working and finally retired at age 70, after 45 years of working at a mostly non-physical job. Both our kids and we did not take any loans for their education. Ed Loans are NOT discharged in bankruptcy.
@Baddog11710 - The key is for the parents to get real about the money, so that they can help the kid get real about it, and so that the whole family can stay on the same page through the process. Knowing that you aren’t willing to borrow will help your kid frame their college search.
Ivy stats? Harvard, Princeton, and Stanford have “super” financial aid. Run their net price calculators. If the money would be workable, then those could be your kid’s big reaches if the kid has ivy dreams. Meanwhile, there are a bunch of not-quite-ivies that have merit aid that might make your kid’s attendance affordable, and another bunch of automatic merit places that are happy to pony up full tuition or even true full rides for kids with ivy stats. Pop over to the Financial Aid Forum, and read through the thread on automatic full tuition scholarships to see if anything looks good.
I don’t think it matters if you are 45 or 55 or 65 - no one should be borrowing a lot of money to finance college.
If the parent is 45 and still hasn’t repaid the student loan by the time the parent starts collecting SS and the loan is in default, you bet it will be deducted from your SS payments (and tax refund, and any other government check).
The closer the parent is to 65, the less likely the loan will be in default and thus subject to SS garnishment. If the parent is 65 and the child is a freshman, the parent would be 69+ at graduation. Of course there will be deferment for grad school, so parent-borrower is now 70+ . The loan might not go into default for several year.
Hey, the parent could die! That would show the government who is in control.
Not sure there are a “bunch” of not quite Ivys that offer significant merit. While some have a few very competitive scholarships, not a lot of almost Ivys offer merit to more than a handful of students that would make a dent in a $70K COA. There are many fine schools that offer merit, but generally a bit farther down the prestige ladder.
I only make this comment because i think too many families really believe there is a lot of merit money for high stats kids that will make it possible to attend a $65K+ COA “dream” school.
Not sure there is anything earth-shattering in advising being careful what you borrow–at any age. We wouldn’t borrow a dime for our kid’s education at any school. We, too, are older parents and our kid’s education does not trump our retirement or solvency, ever. We all make these decisions based on the consequences we are willing to bear.
We are in our late 50’s and our youngest of three is a college junior. The biggest gift we ever gave our children and ourselves was to avoid all school loans.
Even so, our assumption that we would have a few years now to save a lot prior to retirement (what with the mortgage paid off and no college tuition payments) was dashed to smithereens by my husband’s very unexpected, very rare cancer diagnosis last November. The future is a big unknown, but at least we have zero debt.
You can not count on any future, on any “ten good years of working left”. And the OP already knows he/she has medical issues. Even those of us in seemeingly excellent health shouldn’t count on the future’s benevolence.
Save now, don’t count on the future to bail you or your children out of financial debt.
My dad took out second and third mortgages for us (mostly my brother and sister) to go our dream schools. Both of them went to Ivies. My dad had good 10 years after we graduated before he was forced to an early retirement. Over the years we have given my parents a lot of money (more than what they paid for our education or our living expenses), many vacations and extras in life. They certainly got good ROI out of us. My father was very frugal. He was able to accumulate a lot of wealth during those 10 years, so when he passed away few years ago he was able to leave my mother with a comfortable living.
I know on CC we have debated if it is worth it to go to a top tier school, but I can say if my father didn’t make sure we went to those schools we wouldn’t have done as well. 30+ years ago, as Asians, where we went to schools were our calling cards. They got us the interviews we otherwise wouldn’t. My brother continues to leverage his alumni network for his business.
I think if I had to I would borrow for my kids to go to a top tier schools, but maybe not expect pay back from them.
Good point, @mom2and. Actually, many Ivy-equivalents/Near-Ivies do offer some big merit scholarships, but only a handful at each (and many do not).
I calculated in another thread that if you exclude the military academies (and assuming you are not in-state for MI, VA, etc.), there are probably less than 200 merit full-rides at all the Ivy-equivalents/Near-Ivies added together. That compares with roughly 7000 freshmen slots at HYPSM (roughly 25K freshmen slots at all Ivies/equivalents). In another thread, I noted that MIT gives out many more acceptances than UMich hands out full-ride merit scholarships (roughly 25 times more).
Even if you have a more expansive definition of what is a near-Ivy, that expands to less than 400 merit full-rides. Granted, schools tend to give away more full-tuition scholarships. Still, even with a more expansive definition of what is a Near-Ivy, the total number of full-tuition or better merit scholarships at Near-Ivy or better schools is far less than the number of slots at HYPSM (and far far less than the number of freshmen at Ivies/equivalents). Probably between 1000-1500 total.
And yes, once you get down to the level of an average flagship or lower, full-tuition/ride scholarships are far easier to get. The vast majority of Ivy/equivalent matriculants can land a full-tuition/ride scholarship somewhere, but most of those kids aren’t looking at schools at the level of Alabama St.
Just want to clarify: Ivy League schools don’t “require” borrowing. They meet need more generously than most other schools, and then they offer loans to cover EFC, if you choose that. But the assumption is that that EFC is based on one’s income and assets. So, many people cover their EFC out of savings and income. YOu have to have really, really significant income and assets to get a high EFC from Ivies (and some equivalents). In other words, if you didn’t have “resources” you wouldn’t have a high EFC and you wouldn’t be offered high loans by these schools.
Things were different when we went to college in terms of cost vs income vs expenses. How many of our parents were paying thousands of dollars per year for medical insurance? How many had pensions vs how many now? How many made a huge profit on real estate? I also think there are many that find their EFC is higher than they feel comfortable with (as was the amount the mortgage company would lend us to buy a house) given other expenses, other children, etc.
There are some families that take out loans for their kids college and pay them off no problem and many people that work well into their 70s. Some people downsize their homes and use the proceeds to pay for college. Others limit what their children can spend. The problem is that none of us know if we will have that ability or opportunity to do so. It is great when it works out. But there are also counter-examples where parents struggle to pay off loans or require the kids to do so. I know people struggling to pay off parent loans. It is not a good situation.
“YOu have to have really, really significant income and assets to get a high EFC from Ivies (and some equivalents).”
I ran the NPC for Harvard (which is amongst the most generous with fin aid), and a $270K income for a household of 5 with no savings gets zero in fin aid. Now, $270K may sound like a lot (though that could be $135K from each parent), but in a high tax high COL area, even living modestly, after taxes, real estate, and living costs, saving $70K a year isn’t easy. But say they manage to do that. But say they’re 12 years away from retirement and have no savings (say they had a financial/health disaster in the past that wiped out all savings). If they have 3 kids spaced 4 years apart each and all 3 went as full-pay to a private, that’s $800K to American private schools (and then no money for retirement) or $800K to retirement. And note that at the recommended withdrawal rate of 4% a year, even $800K works out to only $32K/year to support 2 people.
^ And note that that is assuming that both parents keep their jobs for 12 years. At that age, all sorts of bad things that mean a loss of a ton of money (layoffs, health emergencies, etc.) could happen.
My father was very frugal. He was able to accumulate a lot of wealth during those 10 years, so when he passed away few years ago he was able to leave my mother with a comfortable living.