Should you incur substantial debt for dream school or even pay the "dream" tuition?

[idic5]

I am a member of the middle class, shall I say the shrinking middle class* and I see from perusing the FA packages of non elite, non dream schools, that we as a family will incur substantial debt for our kids to go any of those schools, 60 - 100+ place schools or lower.

The FA packages think that loans can get you to EFC (incredibly); of course, our EFC, or a goodly portion of it, will probably also have to be delivered with loans too.

[ wait, not for long, I was, literally, just downsized after 20 something years at the company store ]

I am suggesting that this discussion is not just for the elite dream schools.

[originaloog]

I think that the crux of the problem in this discussion is the wide gulf that we assume when comparing a "dream" college and the alternative. That is not generally the case.

The most highly selective universities(HYP et al) have such huge endownments that those fortunate enough to attend will have finaid packages with few if any student loans. But a miniscule number of students have even a remote chance of attending these few colleges. I know our son was in that category.

His dream college would not have been MIT or HYP but someplace like Cornell, CMU or Northwestern, mighty fine universities imho. To attend an affordable alternative he merely ratcheted down his dream college a bit and applied to colleges like Case, RPI, Oberlin and our fine state flagship university. By making this small compromise he probably saved himself a cool $100,000 in tuition payments. For a young adult that is a huge difference. And given the fabulous things he has experienced during his four college years both academically and socially, we cannot imagine that any other college would have been better for him in the end.

[Atana]

ucsd,
The dichotomy is in the increasing number of ivy's who are moving to assist lower income students inherently abides in the fact that these are pilot programs which affect fairly few schools. And that, as admirable as their efforts are, the income cutoff to be considered for the aid, demonstrates exactly how skewed their perception of deprivation actually is...at one pilot program 75,000 a year is the income level considered to the lower point of income. Good they have established these programs, disturbing that this level of money is considered the 'poverty' point.
And the contention about fewer in the future being able to practically afford college still holds even if current trends indicate more are attending. The unfortunate reality is that, although currently more do attend, when their future potential earnings are compared to the debt load it is often considerably more than that future income will be able to absorb. And that unfortunate percentage isn't restricted to the ivy's. Simply because those who do attend state schools have much less of a reserve to absorb these costs.
What will happen, and this is already beginning to manifest is that certain classes will reevaluate the premise/propaganda that college equals success to the empirical evidence they see with their brethren who did go to college and essentially are in debt bondage to the finance industries. So although there is a form of pervasive propaganda which states that college studies are a route to success, for many practical experience is leading them to see this a chimerical. For example, at the institution I currently work, students still desire to proceed with their educations when they assess the decision on an emotional level, but intellectually they are terrified of the costs. And this is within a state school, the institutions that some are using as alternative examples. And as noted earlier the NEA is taking a hard look at these trends and is becoming very concerned that future teachers will not be trained because of these conditions. Now compounding these developments to the current overall economic troubles, the current trends of rising college enrollment may not hold. And from a political view, if these developments continue the social safety release of a college education will also disappear which from a pragmatic view could be dangerous.

[ucsd_ucla_dad]

There are all kinds of college choices out there for a diverse set of wants and needs. I know people who are fully willing and able to spend what's necessary at the more expensive institutions which includes a lot more than HYPS of course. I also know people who are taking a more economical route of attending a CC for two years and then switching to a UC or CalState. They're able to attain a degree at a highly respected college for far less cost than those going to certain privates without aid. I also have a colleague, an immigrant to our land of opportunity, who's sending all 5 of his kids to a local CalState as commuters (not all at the same time). The actual cost to do so is manageable for him ($3400 Tuition plus books per kid per year). $3400 per year is less than most people make in car payments and is an amount that can be earned at a summer job or easily paid back if loans were taken out.

Different people have different priorities and pain points. IMO some people do seem to spend too much, not defined as an amount of dollars, but defined as over-leveraging and risking their home and retirement (the OP's topic), and other people seem to not spend enough, for example, forcing the kid to the least expensive route even though they have a good income and could easily afford much more, but that's just based on my own outlook of spending for a kid's education.

Fortunately, there are lots of solutions for lots of conditions and graduates from all of the aforementioned paths have the opportunity to achieve and do well in life as one can see by studying the backgrounds of the industry leaders in this country.

[Atana]

Quite true that other schools often serve as gateway institutions. However there are some conditions developing which may cause some concerns amongst parents attempting to use that alternative.
Amongst all the ballyhoo about raising the pell amounts, what was obscured in the fine print was that the increase was really only effective for students who are already enrolled, and in all it was quite a nominal amount anyway. And actually for entering students especially at certain classes of schools, the amount was actually cut.
Also the gateway schools (especially the smaller ones) are becoming increasingly vulnerable to cutbacks and limited state funding. The universities have tried to close their funding gaps via endowments and other legitimate means or god help their immoral souls by sweetheart deals with loan financiers. However the CC's often lack these resources, and may soon find themselves under increasing pressure to make the same inadvisable arrangements with finance companies.
Additionally in some states (like Colorado) there is a substantial debate (caused by governmental support being hacked in the last few years) as to who gets the greater share of the increasingly limited funding. To the extent that one argument that is being applied is that CC's should do nothing but vo-tech, and do not compete with the universities for academic courses.
And alas, because of what appears to be an almost engineered campaign to deny educational opportunities, the point at which students and parents will need to borrow is increasingly beginning earlier. And the lenders know this, to the extent that some are starting to provide 'counseling' for students at the CC level. Now obviously the slick posters and programs they are providing do not have the intent of giving students accurate information about the remaining and limited number of student funding sources outside of loans. I have attended several of these 'counseling services' and quite literally all they are is disguised attempts to ensure students do little but take out loans. And it gets worse, at several schools these companies have effectively subcontracted to vet student aid applications. The colleges have done this under the temptations and pressures of needing funds and attendant offers by the finance companies. Which is at best slippery ethics and at worst a massive betrayal of the trust of students and parents.
So even at the CC level, students and parents are becoming very vulnerable to a contingent of very slick and very unethical people who are gaining control over the students futures.

[ucsd_ucla_dad]

Maybe it would be useful for a HS (or CC) to provide a brief seminar to HS students, open to their parents, to provide at least a rudimentary understanding of the financials involved in a college education including the realities, practicalities, and options available. This might be useful to those students and parents who are naive in this regard and otherwise would 'follow their heart' without regard to the consequences. I'm sure some schools already offer this but really, the equation isn't complex and shouldn't be that difficult for most to comprehend. If they understand the true costs and implications and are still willing to purchase the product, then they know what they're getting into.

As with anything - caveat emptor

[FLVADAD]

Atana, you certainly paint a bleak and frightening picture. I certainly hope the severity of circumstances you are forecasting won't come to pass.

[momofthreeboys]

To me Atana's picture is not bleak but definitely a provocative read. As children of the seventies my husband and I made the decision not to provide a "high cost education on loans" for our children. We have been very satisfied with the experience and caliber of our son's first year experience. We have not yet once questioned our decision not to "loan our way" into the caliber of school that we attended in the 70s. While our educational levels Class of '78 are equal to those of our Class of '49 parents "we" (my h and I) will not achieve the adjusted net wealth of our parents at the same stage in life and it will not surprise me if this generation of boomlets may not achieve adjusted greater net wealth than "our" generation. Maybe if we inherit from our parents who are still frisky, maybe if we conserve our net wealth and are able to pass on some, but I'm betting probably not so we are disinclined to "fund with debt" to risk that bet or put that burden on our children's backs. In the old economy companies made something or provided something and there was an exchange of dollars from which there was hopefully income. Today's economy is global, US income or revenue can be simply a component of the value of the Euro vs. the value of US dollars or companies are built on capital that is completely invested in goods or labor with no revenue to speak of. Purchases are made not on the basis of what one has in the bank, but what some bank is willing to loan a person on the premise of future revenue. Salaries are predicated on where in the world the same output can be purchased for the least amount of money. Entire industries have vanished in our lifetime. Who is to say that some industry of our children's won't vanish, too? Too much gambling for our taste and a legacy of debt is not what I want to leave our children or have engraved on our tombstones regardless of what our FAFSA says "we can or should pay."

[Christcorp]

There are definitely some very expensive schools out there. One of my son's backup schools was right at $50,000 a year. They offered him $24,000 a year in merit scholarships and another $5000 for one of the honor programs. That was still going to leave about $20,000 a year. That includes everything at school, but there's also spending money and transportation back home.

Now; normally I would agree that the cost of college is very expensive. However, there are 2 things that put a wrench into that train of thought.

1. Dollar for dollar; the price of tuition, books, etc...; inflation; scholarships, grants, endowments, private scholarships, low interest loans, etc..... It is actually easier and cheaper for a kid to go to college today that it was 30 years ago. When all is said and done, it isn't that expensive. Even the average MIT student, if accepted, will probably only have to pay $10-$15,000 a year for school.

Now; just because some people don't know how to find the money, doesn't mean it's an actual problem.

2. Depending on your point of view about college; mine is that for your Undergraduate Degree, it isn't all that important which school you go to as long as they are a good school that is offering the classes and degree you are looking for. As such, school doesn't have to cost all that much. The average state school; without any scholarships; without any grants; just money from the student, parent, and/or loans; averages $12-$15,000 a year, all inclusive, for in state residents. For the average family, that is doable. Especially considering that the average kid can get some decent school and state scholarships to reduce that even more.

Now, if someone is going to complain and whine that it's not fair that they can't afford to go to George Washington University and instead has to go to the University of Maryland; all I can say is "OH WELL". I guess if I was a socialist, I would also think that it's not fair that I can only afford a Ford or Toyota instead of a Ferrari or Lamborghini. There will always be something out there that you can't afford. That's good. It gives people incentive to work harder to achieve goals.

Anyway, every state has plenty of excellent schools that are reasonably priced. Without ANY scholarships or grants, a student can get an excellent education, all on loans, worse case scenario, after 4 years, and only owe between $48,000 and $60,000. Heck, I've seen people WASTE that much money on buying a car. There are even programs like the "WUE" Western Undergraduate Exchange program; comprised of the western states that allow student from 1 state to go to a state school in another state at almost in state residency rates. So, if you are from Oregon, Washington, Arizona, Alaska, Hawaii, Montana, Wyoming, etc.... you aren't stuck with only going to the school in your state that you can afford. Not all schools participate, but many do.

The point is, unless you have some proof that going to a particular school at $60,000 a year is the only way you get get a decent education, then there is no excuse for going into debt by not going t a less expensive school. And, as pointed out many times before, if the school you really want happens to be one of the mega schools like Ivy, West Coast Ivy, MIT, etc... because of the market, they have been reducing costs and generating more outside money. It's actually cheaper when all is said and done to go to Harvard than it is to go to many schools in the country. Especially if you are the "lower" middle class or below. Then again, I've also seen a lot of unrealistic complaints about school. Person complains about the cost to go to certain schools, yet they are sitting there with a 2.8gpa and and 24 ACT and 1500 SAT. They couldn't get into one of the mega schools anyway. They'd be lucky to get into the "University of I shouldn't have wasted all that time in High School".

[Atana]

Well I would hope for a better potential future for both parents and students, but working within academia and being part of the generation which did have to mire in debt to acquire an education, its not hard to see some very disturbing trends becoming established norms.
And as momofthreeboys so clearly explained some of these disturbing developments are also linked to seminal changes in our economy and culture. In recent years there have been several influential essays written noting the increasing tendency for our social systems (such as colleges) to become less and less focused on service or duty to the commonwealth and more upon maintaining their own status-the analogy they used as a comparison was the aristocracy in rococo France.
But perhaps knowing of a growing problem, comprehending the root causes and those entities who cause them, is the best and first step towards the discourse to correct the matter.
So there is hope, but not for another generation if nothing is done.

[momofthreeboys]

Today my super intelligent, highly educated, highly technical, way smarter brother's global company stock bottomed out and he has more kids that are younger than mine. Debt for education.... bah. I'm old, I'm gray and I'm somewhat wise. In the 70s I wrote an off the wall op-ed piece for our college newspaper that predicted that we college students would during our lifetime pull within and revert to some very basic economic fundamentals. People thought I was nuts. They thought I was even nuttier in the 80s. Micro-econ I never got. Macro-econ I get.

[momofthreeboys]

Plus I have learned that the very smartest profs live in very cool places - so that's where we sent our first son.

[NorthMinnesota]

We'll never get FA and our Ds are smart(top 10%) but not uber-smart, well rounded and athletic. D1 looked for OOS LAC and found it very worthwhile...D2 better stats but we're still pushing the 2nd/3rd tier schools and then up the ante for grad school. D1 will have no debt upon graduatin...D2 .... we'll see this time next yr!!!

[arachnophobia12]

I refuse to be over $140,000 in debt when I graduate from college, so instead I'll be attending my State U this fall-full tuition scholarship + other money in hand... (why do I have to be middle class?!? stupid CSS profile )

[originaloog]

NorthMinn, dont assume that your D's cannot get very nice finaid awards. Our son was in the top 6% of his class with a 1450 SAT and recieved merit scholarship offers totalling $350,000 from 6 colleges. He is attending RPI with three scholarships totalling $25k/yr.

If she applied to colleges like St Olaf, K'zoo, Beloit or Wooster you may be surprised what scholarships they might offer. Carleton-nope.