OT: College loans/expenses

[echappist]

Originally Posted by Mark McM

Recent studies have shown that the ROI (Return on Investment) for private (read: expensive) colleges is actually worse than for public (read: inexpensive) colleges, in terms of future earnings. In other words, the increase in potential future earnings from attending a private college is often small, and not worth the extra cost of a the private college.*

Like many other things, higher education is largely follows the rule that you get out of it is largely based on the effort you put into it - a dedicated, hard working student will get better education when attending an inexpensive school than a disinterested, lazy student attending an expensive school.

I think the message should be that a student might attend the best college they can afford (and that means not going into excess debt), but going to a college they can't afford is just a bad investment.


*Some may argue that the value of a college education is more than just the potential to increase future earnings, and it is true that there may be some intangible benefits only available at more expensive schools. But if so, these intangible benefits should be considered luxury goods - if you can afford them, great, but if you can't afford them, then it makes no sense to pay for them.

the real disclaimer you should have added is that if the student comes from an upper middle class family or below, the chances are, the student's tuition would be comparable to state school tuition at the top notch private schools. Furthermore, not all private colleges are created equally.

[bicycletricycle]

I purchased thousands of dollars worth of coffee while in school.

This was my experience for what it is worth

1. First 5 years of community college was self funded by part time bicycle shop job (city college) drank about $3 dollars of coffee per day (average of one americano from local and/or starbucks)

2. Last 3 years of college was at a private school (50k a year before scholarships and grants and things) I was able to make about 10k a year on average working part time. The rest was supported by student loans. Coffee consumption was raised to about $8 dollars per day. Between school work and part time jobs I was not sleeping very much.

So I guess I could have borrowed about 9 thousand less dollars if I had drank no coffee, or maybe 7 thousand less if I had made my coffee.

During that time I tried to make the majority of my food when possible to keep costs down.

Looking back on it now I am comfortable with my coffee costs primarily because the job that degree earned me pays the loan payments and my current overhead just fine.

We can always spend less on things, at some point I guess it becomes a quality of life issue.

I am surprised by how many people get degrees without knowing the potential job market for those particular talents.

[jensenn]

Originally Posted by brockd15

My parents really didn't teach me about finances other than letting me learn it for myself. For me, maybe starting with matching dollar for dollar early on and then decreasing it over time.

In early high school I was into basketball shoes, big time. I distinctly remember wanting the Penny Hardaways in a bad way, but they were $140. There was no way my parents were paying that for shoes, so if I wanted them I could save and buy them (I had a job). I did buy those shoes.....and promptly returned them after much buyer's remorse. Instead I got some not-as-nice-but-still-nice shoes and saved the extra money.

There a few of those examples that I remember when growing up and the lessons learned have served me well.



Those Penny Hardaways are still sweet! ^^^^^

i was very lucky to have my mom always teaching me ways to save and also showing me how much it costs just to live (groceries, utilities, mortgage, etc.) she also helped me build my credit from a very young age. after starting my first job, she helped me get my very first credit card at 16 years old with a $500 limit. she told me to never use it unless i already had the money in the bank. so by 20 i had all my scores above 800.

i also loved shoes growing up, still do, but i always felt bad asking for a new pair knowing how hard my parents work. so i started buying and reselling shoes using my credit card. $500 used to be a lot of money and would allow me to buy 3-5 pairs of shoes every weekend. i would only go for the "limited" ones. if i was able to get 5 pairs i could sell off 4, get my money back, make profit and able to keep a pair of shoes for myself. did this every weekend and at one point i had over 100 pairs of shoes in my bedroom that i pretty much got for free.

this model worked way better before social media and widespread use of the internet. there are so many shoes now, come out with new colorways so often, and they're so expensive its more work than what its worth now.

[54ny77]

I'd like to explain that concept in a polite way without offending, but it's not my place.

Originally Posted by christian

There is no prestige benefit conferred by any university which isn't at least as good as UCLA, Cal, UVA, Michigan, UNC etc.

[Mark McM]

Originally Posted by echappist

the real disclaimer you should have added is that if the student comes from an upper middle class family or below, the chances are, the student's tuition would be comparable to state school tuition at the top notch private schools. Furthermore, not all private colleges are created equally.

Well, true. When I referred to what a student could afford, I meant the net cost to the student/family, after all scholarships/grants/etc., plus factors like if a school was close to where the student's family lived, so money could be saved by living at home. The point was that loans are not "free money", and need to be considered as part of the cost of education.

And, obviously, cost is not always a sign of quality. There are high quality, low cost schools, and low quality high cost schools, but public and private.

[notsew]

It's become a strong line of thinking these days to say, skip school, go into the trades. I find that argument generally is strongest in folks that haven't ever worked in a trade. Most folks that work with their hands ("craftsmen" excluded) push pretty hard for their kids to go to college and move up to a cushy desk job. There are obviously exceptions, but that's been my experience.

I spent a decade after college working on boats because I got a useless degree (political science/history) and wanted to live in a beautiful place with a crap economy. Seeing the guys who had been doing it for thirty years was an eye opener. I went back to grad school so I could start a career that didn't involve coming home sore and exhausted everyday. So, I get that college isn't for everyone, but do you want to be that guy wrenching all day? Do you want that for your kid?

On the topic of spending 100s of k's on private college. That's nuts. Debt or not, unless its Harvard or Yale where your going to be on a fast track to a hedge fund (or whatever), you are throwing money away. I know a lot of folks who went to 40k a year liberal arts schools and most of them were less prepared for life then those who went to state schools. College is what you make it, you can make the most of it, and least of it, almost anywhere.

[93legendti]

Originally Posted by christian

If it's not a top-15 national university, the right choice is to go to the best state school possible, and be the best possible student you can be there. There is no prestige benefit conferred by any university which isn't at least as good as UCLA, Cal, UVA, Michigan, UNC etc.

Thank G-d for the University of Michigan and instate tuition.

[Ken Robb]

Originally Posted by JAGI410

He'll graduate, but probably with a 1.75 GPA. He's got "senioritis" something fierce.

So, does it make sense for him to start college with that attitude? Our niece had a severe attack of senioritis and Cal State revoked her acceptance. Luckily she was able to get into a community college with the idea of transferring to a 4-year school. I don't know what her chances are now. She didn't make the jump after her first year in CC.

[vav]

Originally Posted by notsew

On the topic of spending 100s of k's on private college. That's nuts. Debt or not, unless its Harvard or Yale where your going to be on a fast track to a hedge fund (or whatever), you are throwing money away. I know a lot of folks who went to 40k a year liberal arts schools and most of them were less prepared for life then those who went to state schools. College is what you make it, you can make the most of it, and least of it, almost anywhere.

Big sigh...my cousin's daughter (they live in NJ) got accepted with a full scholarship to a local private university (Setton Hall) with automatic acceptance into their law school program after finishing the BA. She (the kid) refused to go arguing she wouldn't experience college at its fullest so close to home and she ended up attending Boston College where mom (my cousin) is paying close to 60K/yr...talk about crazy and throwing money away

[AngryScientist]

Originally Posted by vav

Big sigh...my cousin's daughter (they live in NJ) got accepted with a full scholarship to a local private university (Setton Hall) with automatic acceptance into their law school program after finishing the BA. She (the kid) refused to go arguing she wouldn't experience college at its fullest so close to home and she ended up attending Boston College where mom (my cousin) is paying close to 60K/yr...talk about crazy and throwing money away

thats crazy.

[54ny77]

That's just plain lunacy.

We don't have kids, but have family & friends that do and some things we see boggle the mind. Like doing major cosmetic upgrades to the home but meanwhile there's no college fund. Or driving a nice fancy car (leased, of course) but again, no college fund. Plenty of i-pods/games/vacations/whatever, a constant keep up with jones's, but again...the future? Eh, we'll deal with that later. Let's get what we want NOW.

The enabling industry of student debt relishes in that kind of upbringing, because the apples do not fall far from the tree....and oh what net interest margin apples they are.

Originally Posted by vav

Big sigh...my cousin's daughter (they live in NJ) got accepted with a full scholarship to a local private university (Setton Hall) with automatic acceptance into their law school program after finishing the BA. She (the kid) refused to go arguing she wouldn't experience college at its fullest so close to home and she ended up attending Boston College where mom (my cousin) is paying close to 60K/yr...talk about crazy and throwing money away

[batman1425]

Originally Posted by notsew

On the topic of spending 100s of k's on private college. That's nuts. Debt or not, unless its Harvard or Yale where your going to be on a fast track to a hedge fund (or whatever), you are throwing money away. I know a lot of folks who went to 40k a year liberal arts schools and most of them were less prepared for life then those who went to state schools. College is what you make it, you can make the most of it, and least of it, almost anywhere.

I know plenty of liberal arts students, many of them my classmates and colleagues that are wildly successful in non-hedge fund or related fields (geology, physics, gemology, social work, health care, languages, tech companies, social media marketing, etc.) and plenty of state school students that are living paycheck to pay check off entry level jobs and consider state school level student loans to be a crushing burden. Paying ANY amount for college is nuts if you are there to go through the motions and not extract a commensurate value to your tuition in education and training. Where you go, and commensurately how much you spend, changes the math for the decisions you make and what have to do to extract that value.

Also there is more than cost in the equation when it comes to state vs. private. My primary drivers for choosing a private school were 1) the state schools weren't that great, 2) I didn't want to go to a school with 10+k kids, and 3) Div1 Athletics weren't offered in my sport at the state schools. I wouldn't have done well at a big state school - the environment wasn't the right place for me to find success and that is the one unifying factor across all types of college education. Succeeding where ever you choose to go to school is directly proportional to predicted success and productivity later in your career. That applies to state schools, IVY league, community colleges, and everything in between. IF (and that's a big if) one decides that a college education is what they need to achieve the goals they have for themselves, the best decision they can make is to pick an institution where they can be challenged but also excel - wherever that may be and however much that may cost. As long as you walk into the process with your eyes open and are aware of the implications of the cost of education, then you'll be ok. The people who are nuts are the ones that go to college because thats what I'm supposed to do, right? Those kids, who are at schools across the fiscal spectrum, are the ones that suffer when loans go into repayment.

[shovelhd]

Originally Posted by echappist

the real disclaimer you should have added is that if the student comes from an upper middle class family or below, the chances are, the student's tuition would be comparable to state school tuition at the top notch private schools. Furthermore, not all private colleges are created equally.

That has absolutely not been how it turned out for us. Not even close. We are also not upper middle class. If you have any kind of decent retirement savings, you're screwed.

[batman1425]

Originally Posted by 54ny77

Sorry, but that's just plain lunacy.

We don't have kids, but have family & friends that do and some things we see boggle the mind. Like doing major cosmetic upgrades to the home but meanwhile there's no college fund. Or driving a nice fancy car (leased, of course) but again, no college fund. Plenty of i-pods/games/vacations/whatever, a constant keep up with jones's, but again...the future? Eh, we'll deal with that later. Let's get what we want NOW.

The enabling industry of student debt relishes in that kind of upbringing, because the apples do not fall far from the tree....and oh what net interest margin apples they are.

^^^^ This. The concept that things are what will fill that void and make us happy rather than making decisions that will make the whole of your life better.

Genuinely curious, what do you think the response of people like this would be if you asked them - Was it worth it? As in - were the fancy electronics, a marginally nicer car, and that back addition on the house worth a potential lifetime of crippling debt for your self or your kids?

[batman1425]

Originally Posted by shovelhd

That has absolutely not been how it turned out for us. Not even close. We are also not upper middle class. If you have any kind of decent retirement savings, you're screwed.

Not been my experience either. Lot of state schools are just as expensive as their private counterparts, and you don't have to make very much for the FAFSA to be completely useless.