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

[K9Leader]

My point in my original posting is that parents and their children don't necessarily have to incur as much debt as they think for that private "dream school" ... there may be ways to pay for it that take some creativity.

Rcdmom:

It's great that you were able to find a solution that worked for you. However, the financial trade-off you made is not much different than assuming debt. You have given up home equity, an important component in most people's net worth and in their retirement funding, in exchange for no debt (either yours or your daughter's or some combination). Either way, the balance sheet is pretty much the same - either no debt but no home equity or debt but home equity. Of course, this is not an exact balancing - the vagaries of the real estate market and that sweet job benefit on the tuition are big variables.

Additionally, your situation is pretty unusual - not many can or should sell off everything, move cross country, and totally change our lifestyle. Nor could many line up jobs that would make it even doable. Your ability to do this attests both to your own ability to reinvent yourselves and your marketable skills acquired (or honed?) at state schools.

Do you see this change as permanent for you or do you envision your city living as just until your D graduates and goes out on her own?

[StickerShock]

K9Leader, I thought exactly the same thing. Giving up home equity to avoid debt may have worked, but in the end, it's a big piece of the retirement funding that is now gone. It's one solution that this family can handle because the student is an only child & good jobs were available across the country.

It kind of reminded me of that old Steve Martin routine, How To Make a Million Dollars & Not Pay Taxes. --- "First, get a million dollars....." Families with other kids, elderly parents to care for, less flexible job opportunities, etc., etc., etc. could never use this solution.

[BCEagle91]

In this particular case, selling the home was a wise move, college funding or no college funding. The price of houses does not always go up in an intermediate timeframe. In my area, prices dropped thirty to fifty percent in the previous recession. Selling 10% off the top allows you to buy when prices are supported by the average income and/or average rents.

I agree that this kind of change is available to only a few but it appears to be a big win for the family involved. They can sock away their cash from equity in a safe investment while the housing market continues to fall. I certainly don't see a recovery in 2008 and 2009 is a stretch. I think that home prices are still crazy relative to incomes in California.

[rcdmom]

K9Leader, StickerShock, BCEagle91: Housing prices in our area of Calif. were already on the downturn, and we actually got out just in time to save a decent amount of profit (although if we had sold a year before, we probably would have netted another $100K).

To make a long story even longer :-), here is what we did. When we moved to NYC, we bought a tiny and relatively inexpensive (under $200K) co-op in the Bronx. It was much cheaper on a monthly basis (by at least half) than renting an apt. anywhere in Manhattan.

Because we have this great benefit where Columbia Univ. (our employer) is paying our daughter's NYU tuition, we now had additional money freed up from the sale of our home in Calif.--so we used some of it to buy an investment property in Paris. It will be rented to vacationers, and we will use it 2 weeks/year.

So now, we own 2 properties, both in cities with considerable home-value appreciation possibilities. The NYC area seems to be immune to the housing downturn. And even if it isn't completely, we are still saving money by not renting. Paris has seen consistent real estate appreciation for the past 15 years or more and our money is now invested in Euros.

To answer a couple of other questions: We are both writers, so yes, our job opportunities can be more flexible (albeit less lucrative) than other people's. But it was scary to move across the country without jobs waiting for us.

Is this a permanent change? Yes. Our ultimate goal is to move to Europe and probably retire there. To put it succinctly, we are nervous about growing old in the U.S. and want a better safety net. So moving over there is our next challenge once our daughter graduates from NYU.

Gotta keep life interesting, right?

[rorosen]

be sure to bring your own air conditioner

[SlitheyTove]

It might be interesting to know what other employers have that nice benefit of covering children's college tuition. I know that many universities and colleges cover tuition at the home institution. I also know that for people who rise up in the management hierarchy, the benefit extends to other institutions. But I didn't know that anything like the Columbia benefit existed. Talk about a sweet recruiting tool, especially for those with kids in high school where there's a reasonable chance the benefit will still be there when your kids finish high school.

[StickerShock]

be sure to bring your own air conditioner

How true! It was shameful how France neglected senior citizens who died in great numbers because nobody cared about their well being during heat waves. Watch out for the rioting, as well.

[rcdmom]

Columbia covers private K-12 and undergraduate tuition. They used to cover graduate school, but no longer.

I know Johns Hopkins has the same tuition benefit: for each parent employed, they will pay 50 percent of your child's tuition anywhere they attend.

At Columbia, you have to be an "officer" to receive this benefit, but that category covers the majority of skilled workers. The best thing is, it's called a scholarship so there is no tax.

(The reason why many people died in the European heatwave is because, similar to NYC, most apartments face one direction and do not have cross-ventilation. It usually doesn't get that hot in Paris, thankfully--not nearly as warm as NYC.)

[Atana]

"Our ultimate goal is to move to Europe and probably retire there. To put it succinctly, we are nervous about growing old in the U.S. and want a better safety net.' Rcdmom its very likely an increasing number of people will chose that alternative.

For those who did have the misfortune to graduate with high ticket education and loans, or had a smaller amount blown up by fees and enhancements their safety net was ripped apart. And ripped apart several years ago by special interest lobbying by the edudebt industry. Unique to all other forms of debt, social security payments and such as state disabilities can and have been seized by these companies. And there is no remedy because the conventional protections relating to consumers rights and debt have been shredded within the SL context.
And there are other tricks such as the denial of professional licenses for outstanding student loans. These policies have been proposed and in some cases have actually been sweet hearted by some state policies...which essentially shred the social safety nets for those who have made the mistake of educating themselves in the professions. They won't be able to apply that profession for their own stability or to pay their inflated debts.

Some of my generation who have obtained advanced degrees have elected to leave the US because of these conditions. They no longer perceive the US as a place wherein their educations can be applied without having the costs of that education marginalize them or the unreal harassment which government policies have granted to the edudebt cabal makes a stable life impossible. Recently and to the detriment of the common good a lawyer who served with distinction for a victim rights organization has elected to make that decision and has left the US.

In my case I have taught outside the US, and if I take another such posting I don't think I'll return to the US again. For the simple reason that safety nets and legal rights seem to have been so compromised that it seems to be better to be elsewhere.

[Cel]

Which would be the best situation:

Going to a top 50 university with a debt of 6000 per year for room/food (~24000 total debt) vs. going to a third tier - but growing - university without having to be indebted. I also plan on going on some kind of grad school (bus, med, law) after undergrad...

[rcdmom]

The university you attend as an undergrad can have a substantial impact on where you are accepted for graduate school--which, in turn, can have an impact on whatever career you choose.

[Atana]

As long as the third tier school isn't operating from an old garage it may be the better alternative. Yes where one does get the Bach. has a effect on graduate admissions committees especially at the Ivy's. However there are other factors which also bear on on admission committee decisions some of which can be more important than where the under grad degree was obtained. Aspects such as background, social class, and application essays can also be defining. As can the interview, at the schools which still do these.

And sometimes those rationales for admissions are just bizarre. For example it's not always a advantage to have the wonderful 4.00 GPA. I've seen a few instances where the grad. admissions committees turned down good students for not being well rounded enough. To the extent I do advise current students to not worry too much if they tank one course.

And of course they do other things which have nothing to do with the relative merit of the student. Little tricks like admissions to intermediate graduate degree programs (to hype the enrollment) or to push people on thesis back into the lesser degree (to give them something or to 'shame' them enough to resubmit over (with the attendant costs) what could be a thesis with minor flaws)

And anyway, at the grad degree level there is often fairly little aid available so whatever personal resources you can muster will be definitely needed. And so perhaps not expending these on costs at the Bach. level might be advisable.
Plus the costs of a graduate terminal degree, or professional degree is in the oh my (insert your deity here) range. So not wise to accrue debt before that point, gods know you'll end up with enough from the graduate degree,