Are you willing to pay or loan for the expensive ivy or top 20 schools instead of cheap state Univ.?

Parents Forum
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If we make a somewhat arbitrary assumption that a family can pay college costs of 25% of its income, then probably around 97% of students/families are FA/scholarship-dependent for expensive private colleges, around 80% for in-state public flagships (residential), around 50-60% for in-state public four year schools (commuter), and around 35-40% for in-state public community colleges (commuter).

However, it is likely that 25% of income is on the high side of what most families can actually pay, so that means that more students/families are FA/scholarship-dependent than assumed above.

Of course, since many colleges (including public ones in some states) do not have good FA/scholarships for many students, affordability of college for many FA/scholarship-dependent students/families may be difficult to find.

Today, a college graduate’s college name, and the fact that s/he graduated from college at all, is as much or more a result of parental financial circumstances and choices as it is the result of the graduate’s high school academic achievement.

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Perhaps the student who chose CSUN also got into USC, but had to choose CSUN because s/he was denied FA at USC because his/her divorced parents are still fighting their divorce, resulting in non-cooperation from the non-custodial parent for USC FA.

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“How about comparing between USC and UIUC/UT-Austin instead? Or heck, even USC vs. 'Bama/UT-Dallas?”

But the more relevant comparison for Californians is USC vs UCLA. Not many will choose CSUN over UCLA unless money is really short. And most students capable of getting into USC should have a good chance of getting into UCLA. So what’s the benefit in spending twice as much to go to USC instead of UCLA?

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“So what’s the benefit in spending twice as much to go to USC instead of UCLA?”

Well, UCLA does not have an accounting major for one. Plus, I wouldn’t call it a “cheap university” at 150k for 4 years for full pay families. The cheaper option would be a CSU at 100k for 4 years.

But my point is that the cheaper option is not always the best option for some students/career paths and you can’t just say that you will get the same education choosing the cheaper route.

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This thread should be renamed “Does selection bias effect the way we approach spending money?”

lol.

OP. Good advice can be found among the various posts. The answer I will share will not be based on selection bias, the car I drive and level of frugality or not. Those are questions that are important during the early accumulation phase. It’s not relevant to the distribution phase.

Your family either has funds or not. If not at the level needed to fund the school of choice. It then becomes a fairly simple and honest economic modeling question.

If the potential income stream post graduation - reasonable expectations for employment - is greater than the cost of the debt service after reasonable living conditions are met - borrowing can be okay for a top school if that is important to you.

If you will need additional education and resources to pay for this requirement. No. Full stop.

If you are entering a field which is fulfilling for you but will not make the economic model work out. No. Full stop.

If you are a parent - if the child can’t pay for some reason on the debt service and it will cripple you financially. Borrowing money beyond the normal federal student loans. No. Full stop.

If you have the resources available and earmarked. Go wherever gives you the most opportunity to thrive and be happy. It’s really important to not just attend. It’s really important to thrive.

If you don’t have all of the funds available, an honest appraisal of your post graduation financial situation is the only way to answer this question when it comes to taking on debt. At any level.

Discussions about “having the money” and whether or not to spend it on a top school is a different question.

The tougher process is the honest appraisal of post grad finances. Most will over estimate income and under estimate expenses. Don’t do this! It’s the greatest single way to problems down the line. A line item evaluation of expenses is a daunting task. It is worth the effort. And add 10 to 20 percent to every expense category. The costs today will be higher in 4 to 20 years which may be life of your repayment schedule.

Don’t forget that marriage, children and life will complicate this analysis.

A few years of living in the edge and sacrifice is ok. However the idea that you won’t want to have fun or “I never go out to eat” or “buy new clothes” is both unrealistic and dismal.

Be careful with expense is all I am suggesting. People grossly underestimate these as a rule. They forget about those pesky taxes and insurance payments. The new cell phone on a payment plan, Prime Netflix and the other requirements of life for a twenty something. And no one ever expects the transmission going or the flat tires needing to be replaced. The co pay for an unexpected emergency room visit etc.

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It really is a personal decision. My answer is hypothetical because neither of my kids were accepted into “top” tier schools. Only one child applied and that was to Northwestern and WashU. I would not have paid if the difference were significant. Studies have shown that kids who get into top tier schools but choose to attend lower tier schools have similar outcomes to those who attend the top tier schools. It seems the important thing is that they are capable of getting accepted to the better school.

While I understand borrowing money is sometimes necessary for paying for an education I thinks it is important to know what you are comfortable borrowing. I also think that parents should be very wary about borrowing for their kids. You are the collateral. You have become the lender so to speak. If your child does not meet expectations and cannot pay you back then it’s on you. If one understands that upfront then it’s their choice.

What I don’t believe is that just because a student gets accepted to a university then they should feel entitled to attend. I understand you worked so hard. Continue doing so and regardless of where you attend you’ll do well. The second half of the equation is being able to afford it. If you can’t move on to a university your family can afford.

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“Studies have shown that kids who get into top tier schools but choose to attend lower tier schools have similar outcomes to those who attend the top tier schools.”

This is a dubious statement as it doesn’t factor in the actual education and real experience one gets between the ages of 18-21 years of age. Yes, the North Dakota State student (who chose the cheaper undergrad college) might wind up at the same graduate school as his/her peer who attended say Amherst or UPenn but there is little chance both students had a similar 4 year experience.

I believe that college is so much more than the ultimate destination but an incredible 4 years of immersion into learning and opportunities amongst academic peers and faculty that shape and challenge you for who you will become in both your professional and personal life well after college.

I think some families rationalize why they shouldn’t chose the more expensive option or have to “chase merit” at lesser colleges by saying well it doesn’t matter where you go to college, no one cares what undergrad college you went to, etc.

It does matter. HOW much it matters is the ultimate question?

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From a Big 4 accounting perspective regarding USC vs. UCLA (Bus. econ. UCLA does not have an undergraduate bus. school), both great schools, UCLA is the much less costly option than USC. Like USC students, many UCLA grads get hired into Big 4 firms through summer internships or as graduating seniors. Because of the CPA 5th year requirements, there are cheaper options and more “hoops and hurdles” for UCLA students to meet that requirement through AP credits, community college courses, extension courses or a 5th year masters in accounting/tax. Cost wise, UCLA is still the cheaper option than USC if the goal is to work in a Big 4 or any businesses. Many of these firms hire UCLA grads as well as USC grads, both very reputable schools.

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There may be no words with which this site struggles more than “It depends.”

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UCLA and USC have some differences in admission priorities (e.g. UCLA favors HS GPA more than test scores, while USC is the other way around; USC also considers legacy), so that there may be a significant number of applicants who get into one but not the other.

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Of course, whether the student has the opportunity to get the added stuff beyond a basic college education (or even a basic college education at all right after high school) is heavily dependent on his/her parents’ financial circumstances and choices, probably more so than his/her own high school achievements.

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@socaldad2002 To an extent it matters. But, while I think college is very important, it’s not the be all and the end all. The college experience means different things to different people. I know people who were so set on going to a prestigious college and they ended up hating it. It didn’t end up being what they thought it would be.

People need to find the college that is best for them. Don’t go to a prestigious school because you think you have to, it sounds better, everyone wants you to. Go to where YOU think YOU will thrive. If parents have the money, they should pay for the place that is best suited to their child and their needs. If that school is Harvard, great. If it’s Arizona State, great. There is no one size fits all option


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@saillakeerie I agree. It really does depend.

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Probably, depending on their career goals. If you become a medical professional, where you did your undergrad is almost irrelevant. If you want to go into private equity, there is a benefit to going to an elite school.

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This isn’t exactly true. Studies show kids who apply to top tier schools do as well as those who attend. Whether they are capable of getting accepted to a better school is irrelevant.

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“Studies show kids who apply to top tier schools do as well as those who attend.”

What studies might those be? And what is the definition of “do as well”?

Career outcomes for students are complex and are going to have many different factors associated with the concept of “do just as well”.

Heck, I’m going to have my D20 apply to Harvard and MIT in the fall if she will have the same outcome as someone who actually graduates from those two colleges. And then send her to community college for 2 years and to San Diego State her junior and senior years. You just saved me 250K. Thanks!

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@socaldad2002

The Dale-Krueger studies are the ones which get cited endlessly on here, mostly by people who never read them, and income is the outcome measure. Since I saved you $250k, I should get a commission. Does 10% seem fair?

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This is one of the situations where a proxy measure can be effective if no one realizes that it is a proxy measure for something else, but once people target the proxy measure, it becomes less effective. In this example, applying to super-selective colleges as realistic reaches is the proxy measure, but if more students start applying to them as unrealistic reaches, they may be disappointed in that just doing that does not improve chances of future success.

Another type of proxy measure is standardized testing, where test-specific preparation affects what it actually measures and how effectively it measures things other than test-specific preparation.

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Many people pay up to live in a good school district. Why? Because they believe their kids could get a better education and it is worth their while to pay more money for housing. Now, do people actually think about “this public high school is going to be a better fit for my kid”? Or do they just look at the school’s stats: % of students go to 4 yr college, students/teacher ratio, money spent/student
kind of like how US News rank colleges. But all of sudden, when we are paying for colleges then we are talking about fit and never mind rigor of school, post graduate opportunities, facilities
etc.

If my kid were to get into Columbia and U of Colorado, and my kid were to say, “Hey mom, I want to go to U of Colorado because it is a better fit for me ( outdoor, ski).” Guess what, I would have said, “Suck it up and go to Columbia for 4 years. You can go skiing in Colorado after you have graduated(on your own dime).”
Yes, I would pay up for T20 schools, just like I would pay up to live in a better school district.

100

@oldfort

Many people pay up to live in a good school district. Why? Because they believe their kids could get a better education and it is worth their while to pay more money for housing. Now, do people actually think about “this public high school is going to be a better fit for my kid”? Or do they just look at the school’s stats: % of students go to 4 yr college, students/teacher ratio, money spent/student
kind of like how US News rank colleges. But all of sudden, when we are paying for colleges then we are talking about fit and never mind rigor of school, post graduate opportunities, facilities
etc.
If my kid were to get into Columbia and U of Colorado, and my kid were to say, “Hey mom, I want to go to U of Colorado because it is a better fit for me ( outdoor, ski).” Guess what, I would have said, “Suck it up and go to Columbia for 4 years. You can go skiing in Colorado after you have graduated(on your own dime).”

Yes, I would pay up for T20 schools, just like I would pay up to live in a better school district.

oldfort , are you able and willing to pay such as at least two childs attending, for example, Columbia and Yale without FA instead of in-state tuition for the U of Colorado?