Why are parents so reluctant to take out loans?

Parents Forum
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<p>Oh my goodness! Did you think she was saying that she had $2400 per month for these past 17 years, but just didn’t think to invest it? Did you not catch on that YueYang was saying that she didn’t HAVE $2400 per month just hanging around?</p>

<p>Good grief. I love elite schools, it was a high priority for me and my husband and we saved mightily for it and would have sacrificed a lot for that goal – but if someone doesn’t have the money, they don’t have the money. Can’t squeeze blood from a turnip and all.</p>

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<p>We’ve talked about this before- you know it. This is the “density” argument. For some students, it’s important to them socially, academically or on both counts to be in a “high-density” environment. For other students, it’s not as important to them to have high density, and they are fine being part of the “smart tribe” subset of a larger whole. There is nothing new to be said on this, as it’s personal preference.</p>

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<p>The point is, Pizzagirl, that it would not take $2400 a month to come up with the total amount that she said she needed ($240,000 for each kid). She was talking about the difficulty of saving that amount per month, which is far more than actually would be required even with a modest investment assumption, to arrive at the same final figure.</p>

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<p>I’m remembering 08-09. Ouch. Best laid plans…</p>

<p>OP, this thread motivated me to check the definition of “subjugate”.</p>

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Note that the average price paid at private colleges is substantially less than the sticker price. Many private colleges will be less expensive than comparable public flagship under the financial scenario you describe.</p>

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<p>And if you left your money alone after 08-09 and needed it now, odds are that you made it all back and more. Of course, if 2008 was the year you started drawing on your college savings, then ouch indeed.</p>

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<p>So back to square one; does that family that can’t save substantially, all along, then take on massive loans for the gap? We can’t answer that for others because everyone gets emotional about what they want to do for their kids. And some are talking about risk investments. And some can clearly afford much more, earn more, in the first place.</p>

<p>Data, when I run projectors, I see that 1k/month for 15 years, at 5% (which is what my guy calls moderate risk) adds up to 270k. So clearly that poster would need to save more per month for two kids. Maybe you want to check me.</p>

<p>On 80k income, assuming the family had, say, the 80k family contribution OP noted, I’m seeing they’d need to save 650/month, to have that in hand for two kids. All assuming no 2008 style downturn. That amounts to just over 160k. </p>

<p>Of course, there are a few more years to save, after the kid starts college. But also a calculated draw on those resources for each college year. And assuming no job losses illness, emergencies.</p>

<p>Yes, GW, we made back our losses- but D1 began college in fall 2009. And D2 right after her. AND, we were in higher risk funds. Works for some, not all.</p>

<p>Add the fact that some lost on the front end- DH’s salary was frozen for 3 years, based on employer losses. Mine cut staff ferociously.</p>

<p>And that family quoted that earns 80k, has not been earning that all along.</p>

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<p>And, honestly, did the average person- even middle-to-high income, reasonably intelligent person- foresee college costs going in to the quarter-of-a-mill range when they had children in the mid-90s?</p>

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<p>There used to be ads, back when the top colleges cost somewhere around $80,000 all in, for four years, that showed a girl asking, “Dad, can I have $200,000 for college?” I saw those, and thought–oh, no, college will never cost that much!</p>

<p>As Bones McCoy says in my universe: Darn it, Jim, I’m a Quantum Mechanic, not a Quant!</p>

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<p>My H remembers when COA at NU went past $5,000, and he even thought it was crazy of his own father to spend that money. And then when I was there, it went past $10,000, which we of course thought was absolutely insane. We never dreamed we’d been paying $60,000 (per kid x 2). We didn’t have a specific figure in mind; we just saved and saved and saved, both for retirement and kid education. It’s easy for me, as part of a dual-income professional couple with good earning capacity, no health issues and no student loans to pay off, to do that. It’s not so easy for other people and it doesn’t make them lazy or less caring.</p>

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I was referring to grants given by the college, leading to substantially reduced cost for middle class families. For example, you mentioned an 80k income, so I’ll use the following scenario – 80k income, 50k savings/assets, and 2 kids in college. Using these stats on the NPCs for the USNWR top 20, I get the cost to parents listed below. I only included grant aid and student work study aid (since it is often required as part of the financial aid), no loans. Costs include tuition + room + board + expenses. The median cost to parents for the colleges on the list was $5700. The only college on the list that might require the listed $80k+ loan is Berkeley when out of state. Even if the parent had a college fund with enough savings to cover the a full sticker price $250k 4 years, the financial aid is still often quite substantial. For example, having $250k in savings, increases the cost for Stanford from $2300 to $8700.</p>

<p>Cost To Parents : $80k income, $50k savings
Yale – 2000
Stanford – 2300
Harvard – 3200
Princeton – 3800
Notre Dame – 4000
Duke – 4100
Vanderbilt – 4200
Columbia – 4400
MIT – 4500
Rice – 4700
Caltech – 5700
Cornell – 5700
Penn – 5900
Chicago – 7300
John Hopkins – 7400
Northwestern – 7600
Brown – 7800
Emory – 7800
Dartmouth – 8000
Berkeley (in state) – ~8,800 (calc reports 4k CTP, but includes loans)
Georgetown – 10,000
WUSTL – 12,000
Emory – 13,000
Berkeley (out of state) – $31,000 (calc reports 4k CTP, but includes loans)</p>

<p>The thread at <a href=“http://talk.collegeconfidential.com/parents-forum/1556344-checkbook-org-article-does-net-price-calculator-experiments.html[/url]”>http://talk.collegeconfidential.com/parents-forum/1556344-checkbook-org-article-does-net-price-calculator-experiments.html&lt;/a&gt; has links to specific costs for different colleges in various regions of the country and comes to a similar conclusion. The general pattern was the high sticker price, selective private school was the least expensive for all but the maximum included $200k/year income group.</p>

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<p>^this is exactly why they say to cast a wide net when applying to find the best fit/school you can afford. It’s the “CAN AFFORD” piece that’s germane here :slight_smile: and nobody really can evaluate that one until the packages are all in!</p>

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<p>That doesn’t align with what families are reporting.
Our experience has been that FAFSA EFC is 1/4 to 1/3 of before tax income for families who earn less than $100,000.
PROFILE EFC of course, can be quite a bit higher.</p>

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<p>And Fafsa is rarely the final EFC . Data, was asking for someone to check the amount to save based on 240 or 80k needed.</p>

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<p>How many of you who are reluctant to spend for a more selective college for your child nevertheless paid more for your house to be in a better school district? Now tell me that the environment is unimportant. Many of you underestimate the influence that the campus culture and the behavior and attitudes of peers will have on your child.</p>

<p>You might find this interesting:
[Affording</a> a House in a Highly Ranked School Zone? It?s Elementary - Redfin Real Estate Blog](<a href=“Affording a House in a Highly Ranked School Zone? It’s Elementary - Redfin Real Estate News”>Affording a House in a Highly Ranked School Zone? It’s Elementary - Redfin Real Estate News)</p>

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<p>The environment of a(n) elementary/middle/high school is different from a university in terms of the culture and how one is affected by it. In the former, the student spends are larger deal with a smaller group of children for a longer amount of time. In the latter, the student spend an average of 15 hours with a large amount of people. Additionally, the latter has a more diverse culture, this lessens the effects of certain undesireable aspects and values the student may come in contact with.</p>

<p>I do get what you’re trying to get to, but comparing the campus culture to a district school is not an adequate comparison.</p>

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<p>response to #455</p>

<p>Yes. We probably all do this. Most of us give our children all the attention and opportunities we can afford. The majority of students at the most competitive colleges come from very enriched backgrounds, regardless of the actual income level of their parents. Of course they have worked very hard at the sorts of things these colleges value. (The “excellent sheep” argument ;)) Other students, without the same educational opportunities or the same level of parental involvement don’t have equal access to these colleges. They may be working very hard just trying to keep their families above water. Judging them in this way seems inappropriate. I had problems with my own children being in such elitist environments, but saw no way around it if they were to have the academic opportunities for which they had worked very hard. So I’m a hypocrite. FWIW - I find it a huge problem that is is possible to buy your child a better public school education by living in a more “desirable” neighborhood.</p>

<p>adding: I do NOT necessarily find the campus culture at the most competitive and expensive colleges better than at less competitive and expensive options except to the extent it is sometimes (not always!!) more “PC”</p>

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<p>If my kids can’t make the most of whatever opportunities they have by age 18–and take initiative ON THEIR OWN to find like-minded peers or intellectual stimulation–then I have failed as a parent. Fortunately, I DO have resourceful kids who I believe could thrive in a wide variety of environments. My son already is at his small LAC, and I have no doubt my daughter will succeed whether she attends a solid but not “top” state flagship or a regional private university (her preferred choices right now).</p>

<p>Kids who can’t succeed UNLESS they are in the “perfect” environment of an expensive, prestigious school are like hothouse flowers. And that’s not a good way to prepare for life in the real world, IMO.</p>

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<p>It appears that you are making the assumption that campus culture, behavior, and attitudes of peers are necessarily “better” at elite schools than at other schools. Given the differences between individual schools, that is unlikely to be the case. It seems highly unlikely that Columbia and Dartmouth have similar campus cultures, for example, so a student looking for a good “fit” in campus culture is unlikely to rate them similarly.</p>

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<p>I wanted a <em>good</em> school district, but it was not important to me to move to or get to the <em>very best</em> school district (like a New Trier). “Good” would just have to do. And the New Triers of the world have significant disadvantages, too – too much confluence of wealth, parental pressure and expectations can be a bad thing. </p>

<p>And as someone who personally sought out the “high-density” environment (both for self and kids), it’s not because I thought the low-density environments would be “negative influences”; it’s rather that I was personally happier in a high-density environment. That’s a huge difference between our positions. </p>

<p>It is one thing to say I prefer to be in a high-density-smart-kid-environment because that makes me happy. It is another thing to say a lower-density environment would be full of “negative influences.” I don’t think they’d be negative influences; I just wouldn’t have been as happy, particularly socially.</p>