<p>Fun conversation with the DS and DD last night at dinner. As our 25th wedding anniversary is coming up, they asked us what we did on our honeymoon. When we explained that our wedding night was a Howard Johnsons, the second and third nights at a nice Bed and Breakfast in the napa valley and the 4th night in a motel that backed up to the Napa State Mental institution, their eyes got bigger and bigger…</p>
<p>Garland, a nice house in a good neighborhood can benefit the entire family. It gives a great home environment, good schools, neighbors, makes every day life easier. Believe me, I can say so as I have lived in some fringe neighborhoods, in less than nice homes. And I have and do live in a good neighborhood. Also, houses can end up being a good investment. Around here, the older folks were doing well selling their houses at big mark ups and moving into things much more modest. Until this housing crunch, the home was also a big part of the pension picture for many families, and buying a bit more house than affordable was not such a bad idea if the picture for future earnings was good. Many I know did very well this way. If things change in the housing/credit market, it will again be a good investment that is used every bit of the time one lives in it. It is, however, a risk. Right now we are at risk, since we have more house than we need, and it would be very difficult to sell it. </p>
<p>To me, loans, credit is the big problem. If you spend furiously and owe much on consumer goods and get too used to living that way; eating out, entertainment, material goods, it can be dangerous, especially for young people who are living at their parents’ income/asset level which they, the kids are not going to be able to match for a long time. I’m seeing a lot of that here. Garland, your kids are indeed lucky if they did not get an addiction to high price life, as that can really make for ugly, unhappy people. THat is a problem that many of us who are upper, middle income have as we raise our kids and give them all we can, even if we, and ultimately they are not able to afford it.</p>
<p>It’s not just the kids who are hurting with those big loans. I know some families who borrowed PLUS for their kids and dug into the HELOC. They are now hurting. Paying back that money when pay is not what it used to be and the house is not worth what it was, is a big, big problem. </p>
<p>Perhaps with credit getting tighter, more kids and parents are going to have to cut back on loans, and schools are going to have to make adjustments when that money is no longer available.</p>
<p>I think we will see a shift in people’s willingness to incur this level of debt just to pay the tuition bill for an undergraduate degree - at least I hope so. Long term there just needs to be better controls on what banks are willing to lend to students - but that implies a government level of regulation that currently does not exist. </p>
<p>Of course the next gotcha will be student credit cards. I just got the mail and DS just got 4 more offers… What are these banks thinking…</p>
<p>^
watch the interest rate - some are well over 20% :eek:</p>
<p>He knows what to look for. We read the first few offers together - and I showed him where the traps were. </p>
<p>I also showed him how to get a reputable card - which he did. The first couple of bills we went through together - now he knows how to read it and what to do if there is a problem. </p>
<p>As for these offers, he just throws them in the shredder.</p>
<p>My kids got into trouble with credit cards. They got a low interest card, but then blew it when late for a payment. With cards these days, one late payment can bring you into sky high interest rates AND late payment charges.</p>
<p>Cpt–I think we’re pretty much on the same page with what is important. :)</p>
<p>You’ve done a better job in imparting the knowledge to your kids, Garland. That I freely admit. We did our kids no favors when we did not include them in our financial discussions and when we “treated” them too often. They are finally getting it, but not without bumps on the way.</p>
<p>What to do if you have a child who really wants to go to a college that is out of range financially and is going to mean $80K in loans for the child to go there. My son is projected to have $20K in loans. I worry about that. We’ll owe $40K for his education. He could have had a full ride +, but did not want it. He could have gone to a school that would have cost us $15K a year, which would have been no loans for anyone. He could have commuted and gone to a private college for that amount also. But he wanted an unusal LAC, some distance away that is close to $50k in cost, has good reason for wanting the school. </p>
<p>In our case, I am prejudiced towards making school choice a high priority and am willing to go into debt or scrimp to make it happen. Also we are in the financial situation that we can afford the loans and are likely to be able to hopefully help S pay some of his loans back, and help him out in starting his after college life. However, if we were in a tight situation, what would I say, do? Would I take out those loans if they were going to be truly ornerous to repay? Would I “let” him take out more in loans? My second son chose a state school in part because of the financial talk we had. The reality is that he is unlikely to be making much money out of school with his career choice of theater and will probably want us to help out for some years as he tries to “make it”. We could not do it, if he chose a $50K+ school. Because we are able to afford to pay for his college, and he will not have loans, we are likely to be able to continue to support him somewhat for 2-3 years after graduation. We did go over all of that, and it was a prime reason for his choice in schools.</p>
<p>Well, cpt, the one place we did splurge was school. We’ve been able to swing it, but I think, I hope, they understand that their dad and I forwent a lot of choices we might have made for ourselves. And things aren’t perfect in Garlandville, either, with S still on indefinite leave from college while he figures himself out–though at the same time working hard to pay for the “privilege.”</p>
<p>but it is true, they don’t look for stuff much. Neither has a credit card, either, which is probably a good thing, esp. for S. </p>
<p>Paying for the expensive private for D was the right thing to do–it helped her be who she is and learn in many ways, in a way that the public she transfered from wasn’t doing. S? I’ll get back to ya on that.</p>
<p>“As a senior in high school, I’d considered a range of colleges: I looked at some State University of New York schools, other state universities, and a few less expensive private colleges. But, in my heart of hearts, I really wanted to go to the best college I could possibly get into.”</p>
<p>BEST COLLEGE!!?? Says who? Does this mean that the college has a career placement office that will help guarantee employment following 4 years at their school to help pay off that debt? I highly doubt it!! Who rates these schools and how credible is the rating?</p>
<p>I didn’t get credit cards until I graduated from college. I only have them (note: very small balances) because I needed to build up good credit when I get my own belongings (i.e. apartment). Having no credit is unfortunately similar to bad credit.</p>
<p>I guess I’m with Blossom here: it is too early to conclde that gettig into the 90K debt was a bad decision. After all, te girl can stay in New York (where salaries are not bad), live with her parents (saving on housing and, to some extent, on food). College loans will give her a good tax deduction. With a 50K salary she should be able to save maybe as much as 10K a year. In 3-4 years her loans willot be so ridiculous</p>
<p>Garland, love your post #70 and wonder if you can articulate what the extra investment “bought” your daughter.</p>
<p>Salaries are not commensurate to costs most of the time in the NYC area. I am assuming this young lady lived in Manhattan at NYU rather than commuted as some kids in my area have done, given the numbers. I know that 4 years at NYU can run about $140K over 4 years. If parents can contribute $40K of that, scholarship of $26K, $14K savings, leaves $60K in loans. You can find work to bring that down by about another $20K. The kids I know are about $20-40k in debt for going to NYU and commuting. </p>
<p>Don’t know too many kids making $50K right out of school unless they have a nursing or other vocational major that is in demand (engineering, computers, accounting, etc) My son could not make a go of it here on about $40K without living at home. Big problem was he needed a car for his job and it came down to either the car or his own place. Could not find a comparable job that let him ditch the car. Granted, he made some financial errors that he is still paying. But the problem is those early years do not have much margin for such errors.</p>
<p>Cpt…I have known engineering grads who left school making over 50k but were struggling with rent, car, and student loans. The problem I have with loans like the OPs is that they stagnate the young adults ability to be adults.<br>
I do not want either of my children moving back home after their undergrad degrees. When I finished mine, my parents informed me that I could move back home while job hunting and that I had six months to come up with a job. I came up with a job two weeks later, moved out and never moved back.
I know it sounds harsh but I did my part for 18 plus years. Told both of mine they would finish undergrad with no debt. I expect them to be self supporting adults when they graduate. If that means crappy apartments, mac n cheese, TJ maxx, and ramen so be it. I lived through it and so will they.<br>
I totally understand the NYC thing though…when I finished undergrad many of my friends went to employment in NYC. I went to work at Yale because New Haven was way more affordable. We were all making about 12K then and the NYC group was living at the Y or in Hoboken.</p>
<p>cptofthehouse,
Your story of your early years with students loans mirrors our experience. DH went back to grad school when we had been married three years – didn’t buy our first house til we were 37 and had all the loans paid off. We were both from the put-yourself-through and eat ramen scenario. No family members available on either side to aid with college expenses for ourselves, down payments, child care, contributions to 529 for our kids. Scraped it all together ourselves.</p>
<p>On the other hand, we didn’t want our kids to have to struggle that way. They will both have Staffords; the only exception to that is if they get a <em>full</em> ride. They will both have summer and term-time jobs. They will do well in school so they can make the most of scholarship opportunities, but we know that beyond a certain point, scholarship decisions are out of our sons’ hands.</p>
<p>We’ve never gotten used to “all the amenities,” so a big house, cars, TVs, etc. are something my kids don’t expect. As I’ve mentioned many times before, we had the financial chat(s) long before the college chats. S2 has visited a few schools and has already decided that several “weren’t worth $50K a year” and dropped them from his list.</p>
<p>“I know it sounds harsh but I did my part for 18 plus years. Told both of mine they would finish undergrad with no debt. I expect them to be self supporting adults when they graduate. If that means crappy apartments, mac n cheese, TJ maxx, and ramen so be it. I lived through it and so will they.” </p>
<p>Your post made me laugh. I remember graduating and moving on to my first teaching job making 17K a year. Bought my first car, moved into a furnished apt. (hideous furniture, but the complex was brand new, so at least the ugly furniture was pristine), right in the path of a HUGE international airport. I remember being so poor. I look back on one night, standing in my kitchen one week before payday (we were only paid once a month; what a lesson in budgeting), eating cold spinach out of a can for dinner because I was adamant that I would NOT charge groceries to a credit card, listening to the screeching sound of a jumbo jet taking off right over my head, smiling to myself and thinking, “it may not be much, but I’ve got no debt and this place is MINE!!!” I actually felt proud of myself for living (renting) on my own, with only two pair of shoes (one black, the other brown, that’s all you need, right?), an airport right in my living room, and a job paying slightly over the poverty level. But I felt like a true grownup because I was making my own way without any help from anyone. In my profession, going into massive debt in order to attend the expensive private was not only unnecessary, it would have been completely foolish for someone with my financial background and future earning potential.</p>
<p>Franky, I also supported my daughter in going to th best school she got ito. Yes, it was an Ivy for a lot of money instead of SUNY for free. Because I KNOW the difference. If we were unemployed or making 20K a year our dauhter would not have a problem going wherever she wanted - fin aid covers evrythig. But our daughter’s fin aid iz zero. Should she pay for our choices (my choice to work instead of staying home, our choice to live in the city where housing is ridiculously expensive, to have as many kds as we wanted, and even to travel and spend some of money we earn)? So far we are trying to pay for her college. But we have not saved 4 years worth of full tuition. So there may be loans. But for a really good education.</p>
<p>Let’s all keep in mind that salaries have not caught up with inflation (while other items such as tuition and groceries continue to increase) since the 1970s…</p>
<p>What was cheap back then has skyrocketed in price now.</p>