<p>30 year conform is 4.375%. I need to shop around for my sister.</p>
<p>“Nope, I understand perfectly well, as do I think most of us “on the east coast.” Different schools will have different “brand pulls” to different degrees in different areas. Did you consider that as a mid-westerner, maybe Notre Dame has a bit more of a “brand pull” for you?”</p>
<p>I grew up on the east coast. I’m not from the Midwest, as my accent proves 
</p>
<p>
When we had incomes of about the same (could not remember it exactly), we bought a house which costs $179,000. (Why could I still remember this number exactly?) The down payment was likely 20% for us. The mortgage was about $144,000. It was quite a shock to us at that time.</p>
<p>It was around that time that we managed to purchase a prepaid public college plan while paying the mortgage at the same time. But our retirement account was almost non-existent then.</p>
<p>Mcat, we bought a house for $98,000 with a 10% down payment. It’s all we had. Our payments per month, including our escrowed taxes, were about $1200 a month. Honestly, we didn’t have two dimes to rub together. And we had no other debt…at all. But we both contributed to our retirement accounts! </p>
<p>Home mortgage debt isn’t comparable to student loan debt because it is (a) secured by the property and (b) typically amortized over 30 years (currently at a lower interest rate than student loans as well). You can get out of debt by selling the home. It is debt that is tied to a tangible investment – one that can even be insured against. </p>
<p>It also comes essentially with on offsetting discount: homeowners don’t have to pay rent to someone else. Additionally there is a tax benefit connected t the ability to deduct mortgage interest. So that math that goes into deciding whether to take on a mortgage is very different than student loan debt.</p>
<p>Student loans are pretty much a no-way-out affair. </p>
<p>You can’t compare the pros/cons of secured debt vs. unsecured debt - and especially not secured debt that is being used to finance necessities of life like a home or means of transportation (such as a car loan, which can make a lot of sense for a young person starting out who needs a reliable car to get to work each day, but doesn’t yet have the sort of savings to purchase a decent car for cash).</p>
<p>^^^
Exactly! </p>
<p>There’s no comparison of home loans to student loans.</p>
<p>That said, I still think it’s crazy to have a $500k mortgage with a $170k income…especially as a middle-aged person. At that point, a person should be winding down any home debt. In a number of states, such a home (assuming the cost was about $600k), would have quite the pricey property tax to go along with it. </p>
<p>Re: a young person who does not have much money yet.
Several colleagues of mine were graduated about only 1 or 2 years ago and they are buying condos worth 400k to 500k. I guess the bank of mom and dad finances such a big ticket item.
Another is still an intern and has not graduated from the school but she has just bought a brand-new mid-sized VW with cash, likely with the help of the bank of mom and dad.</p>
<p>When I was just graduated and had a job, I bought a used car. I believe my income 30+ years ago was about $33k to $34k a year - it was in a high living cost area (bay area). My friend’s 4-bedroom house (not in a particularly prestigious area but it was next to a nice park) costs about $190k at that time. His house was pricier than the houses of most others in his circle of friends. (I wish I could afford any house back then.)</p>
<p>We had our child after I had been working for only 3.5 years. We purchased our first house 6 years after I had started working - in a much cheaper state. A few years later, we started to pay our child’s “future college tuition” - a prepaid public college plan offered by our state government (when he was in the 2nd grade.)</p>
<p>We thought we had been doing great at that time (in our standard.) We could not believe that we are still paying his education expenses (albeit only partially now) this year. We will finally be done next spring.</p>
<p>There’s FHA loan that you only have to put 3.5 % down.</p>
<p>Using a 0.36 debt-to-income ratio from: <a href=“How Much House Can I Afford? | Bankrate | New House Calculator”>http://www.bankrate.com/finance/mortgages/how-much-house-can-you-buy--1.aspx</a></p>
<p>gives around 5K per month of a mortgage for 175K per year. If they owe a lot on their house, and bought according to well-established guidelines (guidelines I have heard since the 1980s), they’d be paying near that monthly.</p>
<p>The secret of all of this FA stuff for middle class families is whether the family pays 3K or more per month in rent or mortgage, or if they don’t. Colleges DON’T care whether you owe money or not; our EFC with and without owing 500K on our house was the same. No one considers your debt, so if you took on a lot of debt (because as the bankrate.com site indicated, and other financial sites indicate, you “can” afford it…), and then find yourself calculating how much you can afford for college, the result is far different than if you don’t have debt.</p>
<p>That is, the result in regards to whether you can actually afford your EFC.</p>
<p>Your EFC is assuming you are debt-free. It is even more obvious when schools ignore whether you own your home outright or have 80% outstanding on your mortgage.</p>
<p>According to @DrGoogle 's calculations, the family in the article would be able to afford an almost 700K house. But the monthly payments from that, using @DrGoogle 's 4.375% for 30 year rate, would be $2,750 per month. That is 33K per year, which is probably a bit less than their EFC but should be close. Either the family in question does pay that per month or doesn’t. If they don’t, they should be able to afford Williams depending on the FA package. If they do have that kind of mortgage or rent, the kid should be looking at CCs or full rides, especially if he plans to go on to medical school. Or the armed forces.</p>
<p>I’d just point out that the original article doesn’t give any indication about the size of the families mortgage or the value of their home. It just mentions briefly that the father is looking into refinancing to come up with the money owed to Williams. All of this discussion about a $500K mortgage came up from a comment along the lines of, $170K for school loans isn’t so bad, people take out way more than that with their mortgages. </p>
<p>If you HAVE to borrow $170,000 to attend a college then it is far too expensive. There is a high likelyhood that the person mentioned in the original post will not finish at Williams and the money spent there will be for not. Perhaps one could choose to borrow that much money because of a future expected change in circumstances that they know would allow them to pay of the loan quickly, however, that does seem to be the case here.</p>
<p>When I read this article Friday, I passed it on to a friend who was my son’s high school guidance counselor. She is trying to encourage her students to look at the bottom line when it comes to debt. This includes her son, who is a junior, the oldest of four children and wants to attend law school someday. </p>
<p>The lines that really got to her were these:</p>
<p>“There’s a real power in being able to build a life right out of college without worry about student loans.” Debt requires a graduate to immediately seek out a few high-paying industries, like finance, rather than “engag[ing] in experimentation he or she would otherwise be able to.” "</p>
<p>My friend got out a pencil and paper to explain debt to her son. The line that got him was that if he borrowed all kinds of money to attend school and had to pay $800 or more a month back, he would be living with her forever. </p>
<p>That got him thinking…</p>
<p>^^^
That would definitely get their attention every time. </p>
<p>One of my coworker told me he kept refinancing his house for paying college tuition. So that’s another method. None of his kids has loan for undergraduate.</p>
<p>Where I live, a $500,000 house is fairly modest, and most folks with $170,000 in annual income wouldn’t blink to spend that sort of money. Most mortgage lenders will generally lend a buyer as much money as will result in a payment that is not more than 28% of the buyer’s gross income. So, someone with household income of $170,000 per year, with good credit, an appropriate downpayment, and not too much other debt, should qualify for a mortgage that results in a payment of roughly $4000 per month.</p>
<p>Fraud. That’s what grabs my attention in the story about this student and his family — but it has to do with his high schooling, not his college choice. </p>
<p>The article reports he lived in a “working-class Chicago suburb,” where he picked up his “slang.” It also reports he attended a Chicago public charter school. </p>
<p>To attend the charter school, he had to have true Chicago residency. Did he? If not, his dad owes Chicago out-of-district tuition for the young man’s high school education.</p>
<p>Of course, the dad might have moved to the “working-class suburb” (which one?) last summer after the student’s high school graduation. Hmm.</p>
<p>If the family owned or rented on the southside of Chicago until last summer, thereby legitimately being eligible for free public education at a Chicago charter school, I doubt their housing costs were high. Maybe $2000/month at the MOST, given housing stock outside, say, areas like Hyde Park. If they’re now living in a “working-class suburb” their home value is likely under $300,000. Maybe that suburb is where this family has been living for years.</p>
<p>At any rate, the reporter missed a big part if this story: Was there fraud committed in this student’s quest for his HIGH SCHOOL education? Seems that there was. He was a surbanite who used a high school seat reserved for and paid for by Chicago residents. And, THAT part of the story pulls this all firmly out of the “middle class college debt” coverage and plants it firmly into “the desperate chase for adequate education by working class and low income black and Latino children and their families” coverage. </p>
<p>Story fail.</p>
<p>Gee, charges of fraud???</p>
<p>In my area, you can go to a local charter without being in the local school district because the money that follows the child comes from the state, not the district. We have many kids from neighboring ISDs who go to charters in the city limits.</p>
<p>I am amused that Gates foundation paid for the article. Why doesn’t Bill Gates just give this kid a scholarship?</p>
<p>Many good common sense things said on this thread.</p>
<p>These parents have been the ‘bank’ for older kids, for whatever reason. Sounds like they have a high mortgage and not much planned for retirement. So this student wants to go on to graduate school (medicine or law) and didn’t blink with UG debt. Parents I guess woke up with the $40,000 plus bill and no plans on how to cover?</p>
<p>Steve Harvey was on Oprah and a guest in the audience was having trouble as she was ‘enabling’ her grown kids (all in their 20’s and it sounds like no-one was still in school) - her H (stepfather to the four children) said he wants to retire in a couple of years, and from what was said, his W has no backbone with the blood-sucking kids/grandkids ‘needs’…It is like some parents have allowed a generation of kids to not realize the financial consequences of having children young/out of wedlock in lower paying jobs and living at a level above their means - latest cell phone with data plan, etc. The youngest, a 23 year old single mother (I think she had two children) was commenting about not being able to pay her cell phone bill or running short with her rent - obviously not wanting to live in a budget and having mom always there to ‘save’ her. A very dysfunctional relationship.With grandchildren involved, there is always a reason to pay for phone etc. however IMHO tough love is needed so these young adults can grow up financially.</p>
<p>Some people plan and make sacrifices for their kid’s education. Some believe a lot of hype and do not look at the numbers. There is a lot to consider, and that is why CC is so very active.</p>
<p>SOS, the non-dysfunctional don’t get to be on TV. Who wants to watch boring people. I mean really.</p>