<p>To what extent will the Ivies consider a parent’s debt load in calculating need-based aid? </p>
<p>I’ve looked at the Princeton calculator, and researched this question for a while now, and it appears that debt may be largely irrelevant.</p>
<p>If so, how can that be?</p>
<p>For example, assume a parent’s annual income is beyond the level at which need-based aid normally is awarded. But also assume that legitimately accumulated debt requiring substantial monthly interest payments (credit card debt, lines of credit, etc.) all representing expenditures made for good reasons-- e.g., putting the kids through private middle and high schools, monthly living expenses (as opposed to gambling debts)–has prevented the parent from saving much and now prevents the parent from making the contribution an Ivies says it expects the parent to cough up. Won’t these schools look at the whole picture when assessing need, or is their calculation limited solely to the categories listed on their forms?</p>
<p>NO OFFENSE INTENDED TO ANYONE READING THIS RESPONSE…I hate to say it, but most accumulated debt is by choice. Sending students to private schools, buying items and putting it on credit card, living in very expensive homes, having second homes, etc…those are CHOICES…and the implication is that some of that expense could have been put aside for college. Remember need based finaid is for students with financial NEED…not for families who have very adequate income and assets, but choose to spend their monies on items other than college.</p>
<p>some schools if you have a great deal of ongoing debt- like paying for a parents nursing home- or astronomical medical expenses- may consider that.
If you can’t afford what they say is your EFC, then your students best shot at a great education- of which there are many alternatives besides need based only schools. Even top LACs like Carleton offer some merit based aid. Some schools who offer need based aid only, also use their own forms to decide if you have need. If this is a student that they really want- they may decide that all those dbts are worth taking into consideration for an aid package. I know one girl for instance who is getting tuition covered for 4 years whose family has a great deal of debt, but a decent income by one of the “little” Ivies.
Its worth looking around to compare aid packages you may be pleasantly surprised.</p>
<p>If your debt is medical, it will be recogized. I believe there is a spot for school tuition. If it is housing, consumer, etc, it is personal choice and neither the schools nor other parents want to subsidize your life style. The whole picture is simply that you had the same options everyone else in your income bracket had. Most of my income for 10 years went to plane tickets to maintain contact with my child 2000 miles away. That didn’t count either.</p>
<p>thumper1 - although I agree with your comments to some extent, we made a choice to sacrifice discretionary income, have a stay at home parent, money in a retirement account, etc. so that our children could attend a better school in a much more expensive community. I am not sure I would do that again but that was a choice we made thinking it would provide a better education and greater opportunity for our children - expensive community btw, does not equal mansion. Personally, I grew up in a poor family, in a tough urban setting, so I know the difference in the environemnts (pros and cons) and therefore feel like I made an informed choice. However, by doing so we had to spend WAY more money on a home in a very high real estate market, had to have a second car, pay astronomical insurance rates, foergo luxurious vacations and put off putting money into a retirement fund. Plus, regionally, the cost of living is very high here. Having two incomes that look like a lot on paper doesn’t mean that the income goes to vacations and designer clothes…! Since I feel as though I sacrificed a lot emotionally and in lifestyle to work while my kids were/are growing up, I am a bit miffed that the kids whose Moms stayed home are getting the financial aid!! I think my husband and I missed economics 101 because we have just plugged away. Not wishing to start the argument of working/non-working Moms but there is always more than one perspective…I won’t even talk about heating costs…I guess my point is that some families chose to have a stay at home parent but are now asking for financial aid because they made that choice…</p>
<p>I don’t think you can second guess your choices now- doesn’t make sense to say coulda, woulda shoulda. While one family may have had the priority of having a more affordable home in a more affordable location and without the perks of living in an expensive suburb, you can’t really compare whatever aid they are or aren’t getting to your students aid package.
We live in a pretty expensive area, but nothing compared to Sanfrancisco or NYC. BUt it is our choice to live where a gallon of milk is $5 and a tank of gas is $42. ( I do try and walk or take the bus where I can though)
I grew up in a fancy suburb but recoiled at raising my kids there. The tradeoff was that one of our kids attended private school K-12 and the other I have had to hire tutors and consultants to get her a decent education in the public school system.
For us- while dealing with the urban school district has been an enormous PITA, it has been worth it to live in a great thriving community.
I don’t know if I would make the same choices again- but that is irelavant. We deal with the decisions we have made- it just brings frustration to spend time thinking about others decisions.
I am sure your kids appreciate the sacrifices you have made to live in a nice area with nice schools or if they don’t, they can always make different decisions for their own kids
Yes you will probably want to include schools that offer merit based aid, if you won’t qualify for need based- but your kids probably have a better foundation to get that merit aid, than those students who have been raised in a lower income area, with school districts that have less resources.</p>
<p>LOL - we are done with S1 for now. I am not sure I would call living in a community with better (and not best by any means) schools living with perks if education and safety are now perks. I am writing checks today for user fees for S2 today - $150 per sport (2) and $65/club or activity (4) - the cost of being in a town whose real estate costs have outpaced what the average older citizen can afford for taxes. Therefore overrides to increase taxes for our financially struggling schools are continuously voted down and as a result we now have fees for all activities, extremely old and underrepaired buildings, and lack fields and science labs. My only point is that things are not always what they seem when one family chooses to spend more money on housing than another. Geographically, we would have to move out of state to be able to find employment and a better cost of living. I don’t think we should have to do that to pay for college - that should not be what is meant by parents making choices about how they spend their money… …but maybe I am wrong. My son applied to a school ED and did not receive merit money - he most likely could have but we were of the philosophy that we would pay for undergrad wherever he wanted to go…another stupid way of thinking…yup we missed Economics 101!!!</p>
<p>If you have a lot of consumer debt (credit cards & the like) and are a homeowner --if at all possible try to get a second loan or refinance and pay off the consumer debt with home equity money. This will improve the debt situation (lower interest rates), and it will also reduce the amount of home equity - which is beneficial for financial aid. The Profile schools will not consider consumer debt, but they do add in home equity. A refi may also substantially reduce the payments needed to cover the oustanding debt – so its a winning strategy all the way around.</p>
<p>calmom - we have a lot of equity mostly because housing has increased in value significantly - we could not afford to buy our home today!!! We are a little wary of tapping into the equity as we keep hearing that the bubble in home values is about to burst. We are in the Boston area - it is so bad here that the teaching hospitals cannot hire their own residents since the residents can’t afford housing plus paying off their loans! We don’t have a lot of consumer debt but do you still think that is a good idea given the possible housing bust here? My friend is a broker and she believes that things are about to drop - things are slow for family houses, I guess the crowd coming behind the babyboomers is just much smaller. Thanks for the input btw.</p>
<p>Hey, we are evaluating the relative value of a luxury good here. No one NEEDS a Princeton education. It is nice if you can get it, and nicer when the alumni (over the course of two centuries) are willing to help you pay for it, and nicest when they provide a subsidy for all students, as they do, and financial assistance for those who need more. It’s a nice perk, but I would think they should be allowed to dispense it any way they want, and I’d leave what borders on “moral” concerns out of it.</p>
<p>If you aren’t going to move and you can afford the increased house payments, it can make sense to take out home equity to pay down debt- use for tuition etc. However if you think you will move soon, I don’t think you would want to make your loan for more than what your house may be worth. That would be like those poor souls who go and wreck their car before it is paid for!</p>
<p>mini - it is my sixties mentality that takes issue with this - equal opportunity is just that - equal opportunity…this is not about who can go to McDonald’s versus who can afford Morton’s! Princeton comes with certain perks upon graduation, steps toward the future, exposure to things perhaps not found elsewhere, etc. Not only that, Princeton does not actively discourage the many who will not be chosen from applying - they purport to be an equal opportunity institution and most families are clueless about what that means. Obviously equality is a difficult thing to put into practice but I would challenge you that need and equal opportunity in eduation are different things. When you consider the potential outcomes I would not be so concerned if the average family approaching college selection and application really understood what they were up against when applying to Princeton or really understood what the philosophies of the admissions office were all about. I don’t think an education at Princeton is a luxury - I think it should be something that each student has an equal opportunity to achieve if they have done the work. As one of the premier institutions in the country Princeton should be accountable for their decisions - sorry, don’t agree with the idea that they shoud be cowtowing to the alumni only. I suspect that Princeton gets a lot of federal money…they should adhere to broader concepts of equalty and opportunity than those of the alumni and should be accountable to the eminent position they hold across the nation…IMNSHO - LOL. That said, I am not sure how this relates to this thread about determinatin of financial aid…but I have my senior moments, and many of them.</p>
<p>Rileydog, I do NOT think its a good idea to tap into home equity in your situation-- it is very different when someone has substantial consumer debt or other major debts, such as medical debts or back taxes owed. The problem with consumer debt, of course, is that it generally is also very high interest, with payments going mostly to interest rather than to pay down principal; people in high-debt situations also tend to get dinged with frequent fees for late payments, and a spiraling situation of ever-worsening debt as they struggle to keep up with payments. So a debt-consolidation home equity loan is almost always a good idea - the only downside is that in extreme situations it could lead to loss of the home if those payments fell behind. So its a not a good idea if, even after refinance, the family will have a hard time keeping up the payments. (At that point, its probably time to consult a bankruptcy lawyer - because one way or another, the family needs to get out of debt – and any family in such dire circumstances should not even be thinking about shouldering private college tuition)</p>
<p>In your situation - which I share – it is not a good idea to leverage home equity to pay for discretionary expenses. In the late 1970’s and early 1980’s, real estate prices increased dramatically in California, but so did interest rates. Many property owners leveraged the equity in their real estate to invest in multiple properties, often using creative financing with short term interest-only loans with balloon payment provisions, or negatively amortizing loans. A large part of my law practice in the late 1980’s & early 90’s was bailing these people out of the mess they had created for themselves - which was a sort of self-created pyramid scheme. At that time, there was a small correction in the California housing market - real estate prices dropped slightly - and those who had tried to maximize the “spending” power of their equity found themselves unable to make payments, and no longer able to solve their problems through additional financing. </p>
<p>If you have very high home equity in relation to income, then the best thing to do is to research how college financial aid departments will treat the equity. FAFSA-only schools will not consider it at all, of course. Many schools that do consider it will limit it to a certain multiplier of your income - such as no more than 3 times annual income. So if your income is $50K/year - home equity $500K - the college formula may only assess the home as $150K - and in turn look at 5% of that value - $7500 - as part of the EFC calculation.</p>
<p>So my suggestion about paying off consumer debt only is meant as advice to transfer consumer debt to home equity debt… definitely NOT to create new debt.</p>
<p>Rileydog, every college comes with certain “perks upon graduation, steps toward the future, exposure to things perhaps not found elsewhere, etc” – they just all are different and lead down different paths. Often the best opportunities arise at run-of-the-mill colleges and less selective state universities - the doors are wide open there in many ways. </p>
<p>Don’t buy into the myth that a Princeton education is the road to success and riches. One of the reasons that people have such perceptions about the elite colleges is that the Ivies have ALWAYS catered to a more financially well-off clientele – the Princeton grads are likely to make more money upon graduation precisely because they are the children of the wealthy. Their connections come from their families, not the schools where they were educated.</p>
<p>One thing that separates rich from poor is that rich people are much more knowledgeable about how to manage their money. In fact, I doubt that most wealthy families pay for college tuition out of current income – I’ll bet that the majority set up appropriate trusts and college investment accounts for their children in infancy, and that the full cost of college is paid for out of funds long since earmarked for that purpose. </p>
<p>When we talk about sacrificing or choosing between retirement investing and financing our kid’s college educations, we are not even in the same league as the wealthy families with Ivy-bound kids. As parents we of course can and do choose to sacrifice to make it happen… but if you jeopardize your own financial future for unnecessary expenses (Princeton tuition vs. in-state tuition at a public u, or seeking merit aid at less selective colleges) - then you would be making the exact same mistake as overencumbering your home with loans in a potentially declining market. </p>
<p>That’s what mini means by calling Princeton a “luxury”. If you view a college education as necessary, then the price of the necessity is whatever the market provides at the low-end – the differential between basic education and high-end education is the luxury.</p>
<p>“mini - it is my sixties mentality that takes issue with this - equal opportunity is just that - equal opportunity”</p>
<p>Oh, I understand, really, I do. But my 60’s mentality says that this is a luxury good, and to give it credence as something more than that it to provide it with more power than it deserves. Princeton (or any of the other institutions, including my alma mater, have never claimed “equal opportunity” as a value). They are nice enough to admit a minority of students who could not afford to attend otherwise, which provides a better education for the majority as a result. And this minority gets a good education, too, thanks to the alumni (and the endowment, which represents past alumni). Let’s give credit where it is due, knowing full well that the institution’s priorities may be different from our own.</p>
<p>Now if we were talking about Berkeley (or the University of Washington), that one gets my dander up.</p>
<p>“mini - it is my sixties mentality that takes issue with this - equal opportunity is just that - equal opportunity”</p>
<p>My daughter gets need based aid- no it isn’t Princeton- but she wasn’t interested in attending school on the east coast let alone an ivy school. ( Her school is more expensive than Harvard though )
However- my 60’s mentality ( well I was 9 in 1967 so lets make that 70’s mentality) tells me that we all chose our own path for our families when we decided how many kids to have, what sorts of jobs to take, where to live etc. Actually since neither my husband or I have attended a 4 year college, we probably had even less of an idea of what it would take to send our kids to school than somebody who had a college degree or even an advanced degree.
We had to figure all that out for ourselves and no we don’t look great on paper as it appears some of youall do. So the colleges- at least the college D attends- decided that it was worth it to have her there- and offered her enough money so that she could.
I suppose she could have attended an Ivy or at least a school with a better advertised brand name- but I don’t think education is about associating your self with a product. There are a ton of schools out there. Many of the schools could have offered D a great education.
She would have been perfectly happy attending the in state public LAC that was her 2nd choice- we certainly did not expect her to be admitted to her 1st choice and didn’t expect that she would recieve a package that had very small loans along with grants so that she could do so. But she did- so the choice was easy.
I didn’t attend a 4 year college, but we have probably two dozen friends who did attend Ivy league schools- but mostly for graduate school. The ones who have college age kids aren’t sending their kids to Ivys for undergrad- in their fields ( sciences- economics- medicine- literature- history) grad school is more important & many schools give a strong base for that.
It may seem like everyone is sending their kids to expensive schools on these boards. But they aren’t really. I know people whose names you would recognize no matter where you live who send their kids to public instate schools, or public out of state schools.
Percentage wise however, we are still spending I daresay a larger portion of our income even with the financial aid than the families who wouldn’t qualify for aid.
Im not complaining, we are happy to be able to send our daughter to college at all let alone an expensive private school. I think she is who the need based schools were made for. a bright girl from a blue collar background who is really going to take advantage of the opportunities offered her at college- rather than someone who perhaps thinks that it is their birthright to be there.
I don’t know how much federal monies private colleges get. I suppose it is well within anyones perogative to be p’oed about schools only offering need based aid, especially when they are perceived as more “prestigous” than those with merit aid. I know I am certainly P’oed at much of what federal money is spent on, but I take that up with my legislator and occasionaly send a letter to Washington. Who knows, maybe someone will read it someday.</p>
<p>What is wonderful about the luxury schools are the luxury of four years with great teachers, terrific resources, hopefully an interesting and intelligent student body, resaonable food and living space, and the mind expansion it affords. I wouldn’t trade mine away, and I’m glad my D. is able to access similar.</p>
<p>But I don’t make it more than it is. The studies don’t indicate that, when corrected for family income, students with the same characteristics (SATs, etc.) who turn down the luxury good for a more mundane one do any worse, either in income potential or professional opportunities. The car analogy is a good one: the passenger in the Lexus may enjoy the ride more (I should hope!), but doesn’t get there any faster than the same passenger driving at the same speed in the Toyota. </p>
<p>So the “equal opportunity” that is lost is the ability to enjoy the luxury good. Hey, I don’t have Parchesi or Frayed sheets, either, but it’s hardly a source of complaint. I’d complain like heck if I were denied ANY sheets, though.</p>
<p>emeraldkity4, I am not against need based aid - not what I am talking about…I was really referring to the difficulty in assuring an even playing field when determining need. We are not eligible for financial aid but that does not mean that you are, necessarily, paying a larger share of your income than I am - or that I have more discretionary income after paying tuition than you do - it’s too hard to separate out the geographic diversities, the expenses in different regions, to assure that this is true. My impression of the pacific NW is that it is much less expensive to live there than here in Boston, for example…However, please don’t think I am complaining heavily - we are happy to send our kid to college - it’s something we believe in, something we believe is worth the price of admission, regardless of Ivy vs non-Ivy… As a grad of a state school, I am not down on public schools. In fact, my son just started at one, just not in our state.</p>
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