“I am 57 years old and perhaps I have a good ten years left working.”
Our bodies don’t always agree with this. An apparently very healthy person can be out on the bike trail, and either in the cardiac catheter lab (and then ICU) later the same day, or get a “you have cancer” call from their doctor as soon as they get back home. Some people can work well into their 70’s, but I don’t think that any of us can count on it.
Another thing that I discovered as an older parent, at least according to the NPCs the schools don’t care about your age. That money in a mutual fund (not IRA not 401k) might look like retirement funds to you, but looks like a college fund to them, even if you are 65 years old when your child starts university, or even if you are retired when your child starts university.
I am 65 and retired with my oldest graduating university this year. She is starting to look for her first job after university. The fact that she can do this without any debt is a huge gain, since the “first job” often doesn’t pay all that well and she would prefer not to live at home with her parents for a few more years while paying off debt.
I think that each of us needs to “play the game” and find the school that makes sense for us, where “makes sense” includes affordability. There are a lot of schools out there, and a HUGE range in prices.
@PurpleTitan --you got me. You came up with a worst case scenario in every aspect that contradicts what I said. And let me just add, if 800k savings is not enough to retire on, most of us are screwed. I don’t have that, but I feel pretty okay. (you left out SS, for starters.)
I stand by my assessment that overall, most people–not all, but most-- if they get a high EFC from Harvard, should not have to borrow it all. It certainly isn’t a “requirement” as implied in the OP.
(and as an aside, way back when a no-aid uni (not an Ivy) cost us about 35K a year, we paid that out of income and saved the equivalent every year (this was aside from automatic pre-tax retirement savings) meaning 70K a year from an income which was just a little half over that 270K, in a high COL location.)
I’m not saying it’s the norm. I’m just saying that the average Ivy aspirant is not being “required” to take out loans.
@garland It does not dramatic take scenarios like @purpletitan posted not to be able to afford your parental contribution without loans even at generous privates. There are plenty of non-full pay families who cannot afford to pay what even generous schools determine as should be financially possible.
I very much support the OP’s sentiment. We need to think hard before we borrow, or the kids borrow. But I’d add another consideration. My kids got through the undergraduate college without any debt (thanks to their parents and grandparents), but one of them decided after a few years in the job market that she needed to go back to school (for an MBA and MS). That’s when the debt built up, even through we paid her rent for the three years, along with a monthly expense stipend. In the end we came to her rescue, to end the usurious Federal Direct loan interest rates, and to liquidate >$100K of total debt.
We were a one-income family. It was my daughter’s return for advanced degrees that kept me from retiring at “normal” retirement age. I retired at age 70. In addition to the several added income-producing years at my highest career salary rate, I was able to build up my retirement funds (mainly 403b and SS). So when I did retire and began to draw income, I was in a much more financially secure position. Still, paying off my daughter’s loans took a chunk of actual cash. Did I have to do that? No. But it was extremely burdensome for her, and we had the money.
I think there’s an important principle getting lost in the math here- people need to take responsibility for their lives. I am all for a social safety net- and would be happy to pay more in taxes if it actually went towards that safety net, but the idea of someone liquidating 800K to send three kids to Harvard and therefore having zero in retirement- wow. That’s a level of either entitlement or poor judgment or just willful ignorance. And I don’t think “society” needs to come up with a systemic solution to that family’s problem. Solution A- the kids don’t go to Harvard. Solution B- stash your retirement money in a 401K or IRA for god’s sake. Solution C- I’m sure everyone else here can come up with a bunch more options.
Adults who are smart enough to stash 800K away over the years are smart enough to figure out that spending that down for college- in the absence of another, tax advantaged retirement account- is a dumb move unless they are planning to drop dead on their 68th or 70th birthday and not need a dime of retirement.
@blossom:
“but the idea of someone liquidating 800K to send three kids to Harvard and therefore having zero in retirement- wow.”
Uh, I’m not saying someone should do that, but I am pushing back on the idea that Ivies/equivalents give such terrific fin aid that you’d be fine unless you had “really, really significant income and assets”.
Evidently two $135K earners with no savings is “really really significant income and assets”.
I plan to make my kids pay back their own loans, then I won’t have to worry about working at age 70! I just don’t get it when parents think their kids need to have zero debt. Unless I have money falling out of my pockets, that doesn’t seem realistic or fair. Rich people gifting their kids free college I get it, normal middle or upper middle class working till they are old and bent over to do it I will never understand. Most of my friends are not paying for their kids college, even the ones who I think probably have at least a grand to throw at COA a month. I want to help out, but not willing to not enjoy our mid life and golden years so the kids don’t owe anything.
Purple, I have family members who are public employees and their salaries are a matter of public record, and somehow even living in places like Philadelphia and DC and NY suburbs and Boston they manage to save money. Do they have enough to send three kids to Harvard with no aid? Probably not. But they manage to educate their kids (flagship public U, merit aid at a private LAC, one kid to an ivy but my guess is with aid), save for retirement, and even take a vacation for a few days at the beach or camping.
I guess I’m pushing back at the idea that all aid MUST make it possible for ANYONE to send their kid ANYWHERE, regardless of the choices that were made 10, 15, 20 years ago regarding lifestyle, costs, expenses. I know people who are broke on 500K per year (and they will readily tell you that living in Scarsdale or Atherton means that you are poor on 500K, that’s how warped their perspective is) and people making 80K in high costs areas who somehow feel lucky about their circumstances. Are you going to live on 80K on the upper East Side of NYC and raise a family there and have extra cash for college? No. But there are people living in the Bronx or Staten Island who do just that.
I don’t have a lot of sympathy for the family who earns $270K and cannot afford to pay for college at their current lavish lifestyle.
I try. The best I can do is try to imagine more details as to why they have no savings. If their taxes and living expenses are so out-of-the-norm compared to their income, it sounds like they would have extra-ordinary need. The full-needs-met schools like Harvard, Stanford, Yale, etc. all are willing to help all families of accepted students - every one of these schools will listen to appeals.
It is not hard to conceive of families with that level of income who have not had it for long, and who also had various financial misfortune. Families who were unable to pay property taxes for years while they had outlandish medical expenses. Families with outrageous debt from business failures. There are lots of reasons anyone could come up with.
For families with this level of income who claim they cannot afford the cost of college without loans, it usually (not always) means that they have made previous choices about lifestyle preferences - they chose their $1 or $2 million home instead of their children’s preferred education. Which is fine, until they complain about the choice they made.
I agree with part of the OP’s premise, that parents need to be careful before taking on debt for their children. And I agree this is a bigger deal for older parents than younger parents.
I heartily disagree with the oft-repeated line that OP includes, that this (parents avoiding loans) means students “need to focus the college search towards public universities in place of private.” While this may be true for OP and his family situation, it is most definitely false for many other families.
We have had our share of financial hardship, especially as single income family with significant medical expenses over the years. But we are still very blessed compared to many families. Though we are assuredly far below the median among families who post here at CC, I don’t consider us poor because I deal with families in poverty every day.
My main point is that each family needs to run the NPC’s for their own situation for their own list of schools, and families should not be at all concerned about what applies to anyone else.
I actually have a lot of sympathy for the family earning that kind of money who can’t afford to pay for college. All the research done by Behavioral Economists (including a Nobel Prize winner) indicates that wealth is relative. Someone hands you $50 bucks on the street and you feel great- until you see that everyone near you got $100 and then you feel anxious and resentful.
I am sure this works for lifestyles also. You and your spouse scrimp and save early in your marriage for the down payment on a lovely 3 bedroom house with a backyard which is in a nicer neighborhood than where you both grew up AND has central air and a dishwasher (neither of which your parents have). You feel so excited and proud, until someone younger than you moves across the street, tears down the 3 bedroom house to put up a McMansion and now all of a sudden your house is shabby and small and who could possibly raise kids in it?
So sure- if you live in a tony suburb and are gasping trying to keep up on 270K or 300K or even 500K your anxiety is quite real. And I feel for you.
But there’s an easy solution. Don’t buy a house in New Canaan- move to Norwalk, one town over, where the housing prices are significantly less, property taxes are less, the lifestyle is less rarified, and you don’t need to join a country club for your kids to have friends to play with on the weekend. Every single expensive town or suburb or city in America has a much cheaper option close by (except for Silicon Valley/SF, I’ll give you that) where you can replicate your lifestyle for a fraction of the cost. Northern NJ? I got a bunch of houses to show you. No- not Short Hills. Boston? No, not Belmont or Marblehead. Chicago? No, not Winnetka. But lots of places where kids go to HS and read Hemingway and graduate and go to college without feeling poor on $270K.
So much of our generation’s angst is self-produced.
Even in Silicon Valley and San Francisco, there are more and less expensive areas. And $270k yearly income is way above median in every city of significant size.
@eastcoascrazy , I am so sorry about your husband’s diagnosis. Your advice is spot on. My husband also went through a cancer battle early in our marriage (Hodgkin’s–he’s cured, but has heart damage from the radiation) and we have always been mindful that the future isn’t a given. I know way too many people who never got to enjoy any sort of retirement.
Out of my DD’s social group, we are the oldest parents and we were the only ones who said NO to loans of any kind other than the Fed Loan that our kid can get on their own.
No Parent Plus, No co-signing.
Some is due to our age, we don’t have 20 years of earnings to get it all paid off, my DH is 60. Some of it is I think the costs of college have gotten just ridiculous. I think this concept that college is supposed to be the be all end all “experience” is sooooo overblown and that attitude is crippling our young people with debt.
My DD had to go after merit, she had no choice, she had solid stats and pulled in a solid offer. Is it her dream school? Nope, but its not a D rated school in the ghetto either. She has aspirations of med school, wants to be a medical examiner, good thing her undergrad is debt free. She will be attending a great school and she will get an excellent education. As for her “experience”? Well, when she graduates and her friends are all drowning in debt, she can grab that backpack and tour Europe or go be an intern in a bakery making peanuts or or or. No student debt will give her many options.
Many of her friends are going to be saddled with co-signed loans or their parents have the attitude of “we will deal with it later” I’m here to testify, later comes along a lot sooner than we think
If you are willing to cosign for your student’s loan there is no guarantee that your student is going to be able to pay for it and you’re the fall back. And that debt will fall on your head. I still think the basic subsidized 27K (or whatever) max loans a student can sign for are a decent rule of thumb. Not that you can’t have some wiggle room on those numbers in terms of debt but it’s a good start. I also think it is the job of a parent to spell out what years of long term debt can look like. It makes job prospects less flexible for a new grad. It can limit greatly limit options for a young family.
@Massmomm thank you for your thoughts. My husband’s cancer is very rare, and was symptomless. He has been in excellent health up until It was found (as sometimes happens) during a scan for something completely unrelated and minor.
Cancer did give us the gift of a laser like focus on what is and isn’t important.
His medical bills (not what we owe, which is zero) are already at a million dollars.
Just think about that and the value of being debt free in other areas of your life as you contemplate the “value” of taking on college debt that probably can not be discharged even in bankruptcy.
I don’t want to derail this thread. I just want people to be cautious about taking on debt.
There are extraordinary differences in cost of living across the United States. Where we live, a family of 4 can live very comfortably in a 3-4 bedroom, 3 bath house that costs around $150,000 - $175,000. Quality public schools too! In larger urban areas on the coasts, that housing price wouldn’t come close to paying for an efficiency (single room) condo. Not even close. Just thinking about housing costs, I have enormous sympathy for the family of 5 earning $270,000 yet struggling to save much money for the kids’ higher education.
My only quibble is with the phrase “middle class.” A household with annual income of approximately $270,000 is easily in the top 5% of the income distribution in the United States (but probably not nearly so high for the local community). Either way, not exactly middle class.
And also on the comment that only the very wealthy and low income can afford Ivy League schools - having a family income of about $120,000 could very likely produce a financial aid package that covers most if not all of that college’s full tuition cost. That income level would place a family in about the 80th (or so) percentile, also not middle class.
Having made those points, paying full cost of attendance at an Ivy League school will be next to impossible for most families except for those in about the top 1-2%. Remember the article in the NY Times from January 2017 - Brown University has just under 20% of its students with family income in the top 1% in the US. Harvard was at about 15% and Princeton at about 17%. THOSE folks are much more likely to be able to pay full price!
$79,831 in Alameda County
$82,881 in Contra Costa County
$87,701 in San Francisco County
$98,546 in San Mateo County
$101,173 in Santa Clara County
Not sure why a family with $270,000 income should be financially struggling on an income more than double the median in every county of an expensive region.
