At what point is shelling out 200K for an undergrad education fiscally irresponsible?

Paying for College
1

<p>I’m an international student whose targets (well, a good number of them) are very much need aware. If I apply for financial aid I’ll get tossed into a hyper competitive pool.</p>

<p>My parents will not discuss their financial situation with me. At what point is paying 50K per year not worth it? When your family’s net worth is below 500K? One million? What do you think?</p>

<p>Don’t take this as meaning I expect my family to handle the financial burden. I’ll probably pay back loans for 20 years if I end up in a situation like this.</p>

2

<p>In my opinion, whether or not an education is “worth” any particular expenditure depends on the individual situation. If $200,000 is an amount a family can pay without compromising its basic needs, and if the family is willing to pay that amount for an education, it could be considered fiscally responsible. On the other hand, $60,000 for an undergrad education is too much if it compromises the family’s basic needs. It’s not the amount that matters … it’s whether or not the family can make it work.</p>

<p>I work in a school with many low income students. Some choose to borrow to live in the dorm when they would have all of their costs paid if they lived at home. For some families, this may be an investment that they consider to be fiscally responsible. For others, it might put them into a financial hole from which they may never escape. It all depends.</p>

3

<p>At the point when it will trap you into doing something you hate just to make enough to pay back the bank.</p>

4

<p>Are you asking if parents should pay $200K for a college education for their kids? If so, that is a personal family decision. Some families can and will do so. Others won’t.</p>

<p>If you are asking if the STUDENT should take out loans in the amount of $200,000 to attend college, I would say that it will be virtually impossible for you to get loans in that amount in YOUR name (the student’s) only. You will need a cosigner. Personally, I think if you find yourself paying out of pocket (with loans) that amount, you are being irresponsible. The payback amount for those loans will be thousands of dollars a month for a LONG time.</p>

5

<p>From a blog post a few months back…</p>

<p>Student Debt - Stop this insanity!
May 27th, 2009
· by Scott Anderson · Filed Under: College Costs · College Selection · Student Loans</p>

<p>Students graduating with college debt is the topic of “A Steep Climb for Indebted College Grads” in the most recent issue of Business Week magazine. It tells of the horror stories of students graduating with mountains of college debt… $50,000; $75,000; $100,000 in debt before they ever get a job. This is insane!</p>

<p>Towards the end of the article, there is a story of one young woman who graduated with $160,000 in private loans alone… just for her bachelor’s degree. I assume she probably has at least another $15,000 in public loans on top of that. This has got to stop! At least she had the maturity to say “I have to deal with the consequences.”</p>

<p>There are two demons to blame for this astronomical rise in student debt.</p>

<p>First… students really have no understanding of debt and what it does to you. A few years ago, I was in a conversation with a student who asked me if $100,000 is a lot of money to borrow. I had to do a double take at the question alone. We need to better educate students on the nature of money. Honestly, I think Rich Dad, Poor Dad by Robert Kiyosaki should be required reading in every high school. I would be in far better shape if that book was available to me 25 years ago.</p>

<p>Second… the ideal of the “Best” college is killing our kids. Students and parents alike have this perverse idea that there is only one “best” school for them, or only a handful. Typically, this handful of schools comes out of some beauty pageant list, such as the “Best Colleges” issue of US News and World Report. Students have got the idea that if they don’t get into one of only a small selection of colleges, then their future is shot. Then when they do get into that one college, they put the rest of their life in hock to pay for it.</p>

<p>NEWSFLASH — There is no “Best” college. There is only the best colleges for you. Notice that colleges is plural, not singular.</p>

<p>This expectation of only one or two schools are the right schools is absurd and must come to an end. There are over 3,000 colleges and universities in the United States. It is a very easy process to find 6 to 10 very good fit schools for any student at a bare minimum. And these schools will not break the bank when the student graduates.</p>

<p>I challenge all of the parents, students, guidance counselors and teachers reading this post to take a stand against these two pervasive problems.</p>

6

<p>somebody once said that there is nothing quite like seeing that 1500$ bill for the first time</p>

<p>still, unless you or your parents have the cash for all four years up front and then some, i would not expect them to pay out-of-pocket w/o aid for every year</p>

7

<p>Scottaa, I agree with you. Somehow, we need to help kids see what debt really is (so they can stop asking me for “the loan I don’t have to pay back”) and what it does to their futures. I don’t have much hope for that happening, because I am not sure there are too many folks left who can teach what needs to be taught.</p>

<p>I remember the day 2-1/2 years ago like it was yesterday … when my D opened the acceptance to Tufts and looked at the financial aid award enclosed. She did some quick addition, put the paper on the table, and said, “Well, at least I know I COULD have gone to Tufts.” She was fortunate to have started her college search knowing full well what kind of financial aid packages she would need to see in order to be able to accept an offer. While she would have loved to have gone to Tufts (and it would have been a great school for her), she knew that there were more affordable options for her that would be just fine. And there were!</p>

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<p>Ooh I want one of those loans I don’t have to pay back. Where do I sign up? :rolleyes:</p>

<p>It must be interesting to be a fly on the wall in the FA offices sometimes.</p>

9

<p>You would love it … you seem to have a great sense of humor, which is a necessity! :)</p>

10

<p>Getting back to the OP’s situation…HopefulLion, you need to have a talk with your parents NOW to determine what they can pay – and are willing to pay – towards your college education, so that you can shape your list of schools where you will apply. There is no point to applying to schools that you can’t afford – with or without financial aid.</p>

<p>If you do plan to apply for financial aid, your parents will need to provide data regarding your family’s financial situation; will they agree to do that? If you will need to take out private loans (since you will not qualify for Federal aid programs as a non-citizen), are they willing to co-sign for you? You really do need to discuss these issues with them and then run some numbers regarding the costs of attendance at your target schools vs. your available funds and expected aid so you can determine what is really financially feasible. Then you can develop a realistic plan for attending college.</p>

<p>Good luck!</p>

11

<p>Double ditto on the student debt message and getting it out. To OP, here’s something to consider. Pretend your parents had $250,000 to give you, and notably nothing more.
Your lifetime gift/inheritance is $250,000 – now that’s more than many are fortunate enough to have gifted to them.</p>

<p>Now consider the following:
I’ve mentioned elsewhere my own personal strategy that seemed to have assisted in both motivating my son to obtain scholarships and to select an in-state school that carried a much more viable price tag than alternatives:</p>

<p>We went “house-hunting” during jr./sr. summer - early in Sr. year. I would drive by places I’d looked up on the local real estate site and say: "That house is worth x. You might need a 25 year mortgage to repay it if you buy it when you are x years old. If you earn Y, your available loan ratio will be z. If you go to NYU (out of state and private) or USC (also oos/private), here’s the equivalent house you will be able to mortgage on your debt ratio, which will have less room due to loan repayments (drive him by a nasty dive that’s $150k less…; ) So, where you go to school will directly affect what kind of house you can buy, assuming that all is generally equal in terms of undergraduate degrees, which it is…</p>

<p>I think teenagers respond well to CONCRETE examples of the value of money/burden of debt. Showing a car, a house, tangible items helps them conceptualize the actual impact of a heavy student loan burden.</p>

<p>My s. determined, after some research, that he could live with about the average debt load ($25k) over 4 yrs for undergrad and that in his industry, with his worst case scenario, he could live cheaply and knock the debt down in 10 yrs. In that sense, he did chose a “more expensive” in-state option than the local u. and living at home, but is fully aware that this decision will cost him and that he will have to make sure he gets his return on investment : )</p>

<p>Now, HopefulLion, I have to ask…you do not have an “in-state” choice in America since you are an international student. But if you were to have the option of a $250k gift or an American education, which would you choose? What are the schools like in your country that you aren’t considering them? What field of study are you pursuing – that makes a big difference on what is practical to spend. And lastly, are you aware that there is very little need-based funding at most school for international students?</p>

<p>And if money is an issue, have you looked at schools in Canada? Some of the top schools there can deliver a respectable undergraduate experience for substantially LESS than the US schools.</p>

<p>Just things to consider in your search.
Good luck!
Cheers,
K</p>