<p>We obviously don’t know all the ins and outs of your mom’s financial situation, but I find it extremely hard to believe that she’s taking home $110k after tax and that her monthly expenses are only $1,500. I’m sure there is a lot you’re not taking into consideration. </p>
<p>Losing almost 85% of the college savings in the current crash is certainly far worse than it should be as it would mean that the investments in question have significantly underperformed the market. However, if the investments weren’t well diversified and in the wrong sectors (eg banks) then those sorts of losses, or even worse, are certainly possible. The bigger issue though is that if you are nearing college there’s absolutely no reason why most of that money should have been anywhere near the stock market. Asset allocation is something a lot of people ignore in good times, but then get totally slammed for during bad times. The vast majority (eg at least 75%) should have been in 100% safe investments like CDs to ensure the money is actually there when you need it. As the time when you need the money nears, the risk of said investments needs to start decreasing dramatically. Obviously that advice is too late now, but other parents take note!</p>
<p>There is nothing wrong with taking out some student loans to pay for college, but make sure you’re realistic about how much and how long it will take to pay them off. If you’re not careful, those loans can be a dark cloud over your head for a long time. Remember that the cost of a school generally has little relation to the quality of education that can be achieved there…</p>