OT: College loans/expenses

[notsew]

Originally Posted by batman1425

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.

I get that. And I don't want to discount anyone's experience. Everybody has different needs. But, you also can't discount the financial reality. All things being equal, you need to do a lot better in life if you have $150k in student loan debt from going to a small liberal arts school. Its hard for me to look at any of this without considering the return on the investment.

[shovelhd]

Originally Posted by batman1425

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.

Well I get a little payback this year. I am long term unemployed, our income is about 35% of what it used to be. We've already had the conversation. They are going to pony up.

My oldest son graduated two years ago from a private university and has about $5k left of Stafford loans. He is living at home while he looks for a full time job and does freelance work. He is currently writing for USA Today.

My youngest son is in his 3rd year of a 5 year program. The state school was not an option as he didn't get in, yet he got into the number 1,2, and 3 schools and chose #2. He's at the top of his class. He will have significantly more debt than his brother, but his employment prospects are very good. There are only a dozen or so of these programs in the country, so the "state school" mantra doesn't always apply.

[bicycletricycle]

Originally Posted by notsew

I get that. And I don't want to discount anyone's experience. Everybody has different needs. But, you also can't discount the financial reality. All things being equal, you need to do a lot better in life if you have $150k in student loan debt from going to a small liberal arts school. Its hard for me to look at any of this without considering the return on the investment.

personal anecdotal experience-

went to well known (#1 or #2) school for industrial design. Tuition was about 40k per year at the time. Got some scholarships. After graduating I got a job that paid the same I used to make as a bicycle shop manager plus the cost of my new school loan bills. This supported the same life style I had before but my new carrier has a much higher pay ceiling.

So, taking on debt for an education is a risk, but as an investment can pay easily pay for itself, even an overpriced BA in art.

[batman1425]

Originally Posted by notsew

I get that. And I don't want to discount anyone's experience. Everybody has different needs. But, you also can't discount the financial reality. All things being equal, you need to do a lot better in life if you have $150k in student loan debt from going to a small liberal arts school. Its hard for me to look at any of this without considering the return on the investment.

I'm not discounting the financial reality and you are 100% correct, you have to have a plan in mind to take on 150K in debt. The problem is, too many students don't and make decisions to attend x or y school with out considering the financial reality. It is not impossible to recoup the investment of an expensive liberal arts education. Lots of people do it, but it requires direction, focus and planning - something most 18yr olds lack. If what they want to do with a degree cannot cover the financial costs of obtaining it at your chosen institution, you either have to find a cheaper alternative of obtaining it, or train for a different field. I get frustrated by the kids who bellyache about 200k of debt with a BA in an unemployable field. You can blame the system all you want for not better preparing kids for making that decision - and there is blame there, but at some level you have to be aware of and responsible for your own destiny. No body forced these kids to pay 200k for a degree.

[54ny77]

Who knows. Maybe they think by enabling the kids now, they're investing in the future when their kids will need to change their diapers and care for 'em in old age! And if there's any equity left, just get a reverse mortgage.....

On the positive story side I'm happy to give advice to one of my young family members (who grew up modest working class background, similar to me) and understand the power of youth and compounding. Little by little (a few hundred here & there, plus the occasional bigger check) next thing they know they've got a nice 5 figure nest egg started. Every penny of each little investment could have been spent in a blink--new shoes, dinners out, electronic gizmos, whatever. And now they're hungry to keep saving more. This, after helping them understand how to maximize paying down student debt. It's been transformative, and to say I'm so happy for them is an understatement.

So, yeah lots of people out there get it. And lots don't.

Great thread by the way.

Originally Posted by batman1425

^^^^ 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?

[brockd15]

I'm sure some it's not the same for all of us here, but in my experience a person's work ethic matters more than where they graduated. It's not uncommon for people to end up in a field other than what they chose as a major, and having a degree from school A, B, or C will at least get their foot in the door for interviews. Once the job starts it very quickly becomes about work ethic, experience, personality, etc. In my mind, paying multiple times more for a degree from a certain university, even if it is Harvard, Yale, Stanford, Princeton, Texas Tech, etc., just isn't worth it.

[BobC]

How many of you folks with young kids have started 529s?
& how many of you that have kids currently in or around the college age have 529s?

[EDS]

Originally Posted by BobC

How many of you folks with young kids have started 529s?
& how many of you that have kids currently in or around the college age have 529s?

I have two young daughters and have 529s for both. I wish the $10k limit on tax savings were per child. Of course, even if I put in $10k per child per year it won't be enough.

[echappist]

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.

by retirement savings, do you mean 401k/IRA? If so, that's mightily scary...

Anyways, by top tier i mean HYP, some of the other ivies (e.g., not the cheapskate Penn), Stanford, and the very top notch liberal art schools.

Personally i think most other private schools (e.g. George Washington, Boston University, NYU, etc) are rip-offs and that one would be much better served attending the honors college at the state's flagship institution.

By attending one of the aforementioned schools, I ended up paying less than half of what I would have paid had I gone to Rutgers. Then again, I may have gotten a full ride to Rutgers, so...

[EDS]

This is a good thread.

Saving money is hard. If you have a two income household with kids and take advantage of tax advantaged programs and maximize 401k and 529 contributions (that would be $46k next year, which is a pretty big chunk of change) you still aren't doing enough it seems.

[AngryScientist]

Originally Posted by EDS

This is a good thread.

Saving money is hard. If you have a two income household with kids and take advantage of tax advantaged programs and maximize 401k and 529 contributions (that would be $46k next year, which is a pretty big chunk of change) you still aren't doing enough it seems.

hey, you can only do what you can do; and saving for kids college education at the expense of financial security for retirement is a fools errand.

time = earning power, and when your time is up, there is no reset button.

[jlwdm]

Originally Posted by BobC

How many of you folks with young kids have started 529s?
& how many of you that have kids currently in or around the college age have 529s?

I give a little to my business partner for her two young daughters at Christmas and birthdays. Not sure what she and her husband do though.

Jeff

[45K10]

I have sort of unique perspective on the college cost and what it maybe worth.
I joined the Army straight out of HS did my time and paid for school and worked full time because I got married and had a kid while I was in.

I started out at a local community college and transferred to a state school and graduated with a engineering degree. Took about 6 years and didn't cost me anything except sleep.

Jump to five years ago, I was a single dad (my wife split and it was just me and my son for about 6 years) I didn't have anything saved for his college but I made decent money. He had two full rides to go to University in the state we were living in but decided to go out of state to a small engineering school. He had a partial scholarship so tuition was $20K/yr. I was able to pay that plus his living expenses so no loans for him but it hurt. He got a job offer on graduation day mostly because of where he went to school. He has been working since June making $70K/yr. So the investment was worth it to me and him

Now presently, I am re-married have a two year old and have a substantial amount saved in a 529 for my younger son.

I think the cost of education is probably higher that it should be, mostly driven by all the administrators that Universities have these days but if you do your due diligence you can make it work and have a good ROI

[batman1425]

The current grind I have is the student loan interest income tax credit which is locked at $2500, and that is only if you are under the income restrictions.

Basically no financial support from the government to help pay back those loans on an accelerated schedule. Yes, the gov't forked out a bunch of cash to subsidized some loansduring schooling but many students max out subsidized loans and have to take on additional unsubsidized govt and private loans that start accruing immediately. As we all know, the debt picture is ugly.

Imagine If that credit were expanded to say how it is for mortgages, where you can deduct up to $1M in interest for joint filers. A lot of people could get a handle on their debt and pay their debt down faster. Govt (and the private lenders) will lose interest in the long run which they won't like and they are entities that can afford to wait lifetimes for returns. The flipside though is they will get the bulk of the money back on a faster schedule. Money they could do other things with rather than it trickle in over decades or have folks default on all together. I think you'd see a significant bump in quality of life for a lot of the folks out there with big student debt, especially those at the low end of the income scale where the credit could make the biggest impact relative to their bottom line.

Obviously it is always in the best interest of the buyer to expedite repayment as best as is reasonably possible, but this is one area where I think some tax changes could make a big impact. Provided people apply the bulk of the credit to their debt of course and don't use it to buy more phones, cars, and home additions. Heck - I'd be fine if that were a provision - where the credit or a commensurate amount of your income tax was routed directly back to the lenders or current administrators of the loans.

[gomango]

Originally Posted by christian

I haven't given it much thought, but I'm committed to paying for my kids college for the simple reason that we've set the expectation that they'll go, and it seems unreasonable to establish an unfunded mandate of my kids that will put them into debt. We're fortunate enough that need-based financial aid is not going to happen, so if my kids go to private college, it's going to cost hundreds of thousands of dollars. I'm all for self-sufficiency, but saddling them with $300k debt seems unproductive.

Now, if my oldest, who is presently 8, decides he really does want to go to West Point, I'm totally going to have to get a PhD to use up the 529 balance. But I suppose that's a good problem to have!

Sounds like a good approach.

We started saving for the boys' college tuition the day they were born.

Our oldest is at the Carlson School of Mgmt. at the University of Minnesota.

So far, so good. Debt free and he works his tail off in the summer as a camp counselor for a local YMCA. In addition, he subs as a special education paraprofessional in my school district. This next summer he will be a paid intern for a local bank. So, he pays what he is able.

Our youngest is a senior in high school. High honors each year and he did so well on his ACT he is going to get a decent scholarship for his first two years at Winona State. He works summers as a life guard here in St. Paul year round to save for school. Again, we are ready to help him as needed.

We simply don't want these guys to graduate with debt. Especially as they start looking at Masters programs down the road.