Why are parents so reluctant to take out loans?

Parents Forum
461

<p>I’m going to comment on Collegehelp’s thoughts about the “atmosphere” of a college with some anecdotes. I know a fair number of senior level executives who are currently involved in hiring highly educated college grads in various fields. What I find interesting is that more than one have commented on their perception that students who graduate from schools with a “party” reputation tend to to fare better in work environments which involved dealing with people - i.e., communicating, “reading” people they talk to, etc. - than graduates of more straight laced and academically competitive schools. As one put it: “Those Berkeley grads can crunch the numbers, but I’m embarrassed to introduce them to a client.”</p>

<p>I’ve known a lot of very successful grads (my age) who went to Chico State and UC Santa Barbara (perhaps the most famous “party” schools on the west coast in the 70’s) and I’m seeing the pattern play out again with the next generation.</p>

<p>This may be less important for careers dealing with mechanisms, organisms and data than those which require dealing with people. Say, surgeon vs. pediatrician, actuary vs. financial consultant, tax lawyer vs. trial lawyer. But it may be that four years of navigating the social waters of a college where there’s “all types” may serve as a better training ground for some careers than being surrounded solely by driven, organized, “responsible” students.</p>

<p>Just food for thought.</p>

462

<p>Many of you underestimate the influence that the campus culture and the behavior and attitudes of peers will have on your child.</p>

<p>OP, you don’t seem to know this- you seem to be assuming. As if you are working this through in your own mind. It’s true, imo, that high density colleges offer a different bar, in several respects. But not true that it’s all this simple.</p>

<p>We get lots of candidates who say, “You’re the best; me, too. I worked hard and can flourish there in ways I can’t anywhere else.” Or even, “You have lots of smart students and faculty; that’s where I’ll make the most of my future.” But they can’t articulate beyond that, can’t name a program, aspect of learning, or activity that makes this more than superficial. They don’t get far. It’s incomplete thinking and short of what we expect. </p>

<p>And for many kids, even the most accomplished, if they were to take that hard look at the programs and influences at a variety of schools, they would find empowering matches in surprising places. If they really are bright lights, they have interests and the ability to focus that naturally steers them away from some supposed lowlife element that would seriously disrupt their academic paths. </p>

<p>But, my own hangnail: what friends and families think is extraordinary, in the local hs context and in terms of stats and rigor, really doesn’t make that kid some special snowflake. As we often say, there are tens of thousands of these kids, only so many seats at elites- where do you think these kids go, if they are denied at HYPSX? Are their futures really doomed? Or do they rise, like cream, if that’s really what they are? Associating with other cream at their colleges, wherever it may be.</p>

<p>If they do get into a tippy top, the decision how to pay belongs to the family. Our opinions are only opinions.</p>

463

<p>

</p>

<p>That was the rep of the U of Chicago undergrad programs many years ago. And frankly it was borne out by a lot of truth. Book-smart people, who couldn’t interact socially to save their lives.</p>

464

<p>I have never had any difficulty interacting with U of Chicago grads–actually, no difficulty with a single one that I know. And I have never read Thucydides . . . not even in English. Also, I don’t mean just the Chicago STEM types. </p>

<p>The thing is, I don’t believe that the stereotype is all wrong. I just think that extroverted people far outnumber the quieter, bookish types. However, the party-school extroverts don’t generally do all that well in terms of their people skills, when they are trying to interact with the smaller numbers of bookish types.</p>

<p>There are some exceptions, of course.</p>

465

<p>My UChicago math/CS guy does presentations all the time for his job, does recruiting and teaches. No communication problems there – and he used to be one of those nose-in-book uber geeks. You’d never guess it now. :)</p>

<p>Relevant to the thread: EFC has been running ~30% of gross income whether we had one in college or two.</p>

<p>A family friend who graduated from Chico State recently is working at one of those high tech places everyone wants to be. She was sal at her HS and took the merit $$. She had no problem talking shop and science with the many STEM grads & PhD candidates at S’s wedding. :)</p>

466

<p>

The percentage of income varies tremendously depending on income and assets. For example, using the FAFSA calc at <a href=“https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e3s1[/url]”>https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e3s1&lt;/a&gt; with 2 kids in college and no student income or assets, the results work out to approximately </p>

<p>2 in College EFC ~= (income - $35k)<em>15% + (assets - $35k)</em>2.8%</p>

<p>With 1 child in college, the percentages double to approximately</p>

<p>1 in College EFC ~= (income - $35k)<em>30% + (assets - $35k)</em>5.6%</p>

<p>Note that the percentage increases to a much larger degree for student assets than parent assets, which were not included. With US median income & assets + 2 kids in college, FAFSA EFC would likely be well under 10% of income; and with high income & assets and 1 kid in college, EFC might exceed half of income (this group can still get financial aid at some colleges, in spite of FAFSA calc result). The $80k income + $50k asests + 2 kids in college situation I listed earlier, results in an EFC of $6600 using the FAFSA calc, which is reasonably close the median NPC calc result I listed of $5700, more so if you consider differences in work study estimates.</p>

467

<p>

Yes, I did pay more for my house for the school system. But I bought a house that I could afford. I did not buy a house in the best school system in the state, because I could not afford to. Because of job setbacks and the various crashes, we probably would have lost such a house by now.</p>

<p>Your question posits that parents should send their kids to the “best” school system regardless of affordability - most of us would not.</p>

<p>

I don’t think we do. What we do not agree with is that the “best” school will have the “best” culture or behavior and attitudes of peers. Even within our excellent school system, there are slackers and druggies and alcoholics and teen pregnancies and drop outs. There was a PSA recently that said something along the lines of “60% of illegal teenage drug use occurs in cities. So where do you think the other 40% occurs?” (In fact, prescription drug abuse is more prevalent in wealthier communities.)</p>

<p>Have you considered the effect of the campus culture or behavior or attitudes of peers on a child who cannot afford to attend events, take trips, buy clothes, have cars that their richer peers can? Have you heard the phrase “fish out of water”? There have been studies that show that students who are totally out of their socioeconomic strata do not fare particularly well without significant support. Are you willing to support that?</p>

468

<p>Here is a list of some selective private schools and their 3-year average net price for tuition, fees, room, and board after financial aid for families with incomes $30K-$48K.</p>

<p>ave net price, SAT midpoint, name of school
1921 1525 California Institute of Technology
2547 1500 Harvard University
3020 1425 Amherst College
4762 1490 Massachusetts Institute of Technology
5148 1485 Columbia University in the City of New York
5499 1420 Williams College
5559 1445 Pomona College
5859 1475 Stanford University
5875 1440 Duke University
6040 1500 Princeton University
6136 1445 Rice University
6297 1480 Vanderbilt University
6439 1400 Vassar College
6450 1455 Dartmouth College
6752 1425 Brown University
7043 1490 Washington University in St Louis
7350 1260 Sewanee-The University of the South
7503 1430 Bowdoin College
7558 1450 Swarthmore College
7901 1445 University of Pennsylvania
8032 1495 Yale University
8643 1415 Haverford College
8957 1390 Wesleyan University
8998 1350 Davidson College
9097 1385 Wellesley College
9097 1390 Hamilton College
9153 1385 Middlebury College
9302 1310 University of Richmond
9370 1415 Cornell University
9387 1390 Grinnell College
9431 1275 Brigham Young University-Provo
9529 1360 Colgate University
9707 1380 Cooper Union for the Advancement of Science and Art
9709 1430 University of Notre Dame
9720 1410 Claremont McKenna College
10470 1335 Colby College
10535 1290 Trinity College
10896 1345 Scripps College
11123 1485 University of Chicago
11597 1360 Oberlin College
11791 1390 Georgetown University
11804 1285 Gettysburg College
11859 1405 Johns Hopkins University
11974 1110 Harding University
11998 1280 St Olaf College
12001 1325 Kenyon College
12073 1290 Lafayette College
12283 1370 Macalester College
12536 1435 Tufts University
12801 1315 Wheaton College
13349 1335 Colorado College
13457 1295 George Washington University
13522 1310 Bryn Mawr College
13587 1300 Lehigh University
13603 1495 Harvey Mudd College
13680 1240 Beloit College
13843 1345 Barnard College
14112 1300 Occidental College
14168 1255 Gustavus Adolphus College
14388 1430 Carleton College
14555 1285 Dickinson College
14624 1265 Centre College</p>

469

<p>

QM, that is fotflmaomomn funny.</p>

<p>Kudos. Your point, of course, is entirely valid. Of course, party-school graduates are not necessarily extroverts - but they have had to deal with extroverts (and a lot of other “characters”) while still navigating four years of college.</p>

<p>I have to confess, I have a crush on Chico. If I was a high school senior with an 18 year old’s brains and a 60 year old’s experience I think I’d choose Chico over pretty much any other college in the country. It’s actually an excellent academic school in a classic college town with a very wide range of life experiences available for the taking. </p>

<p>But I never could talk any of my kids into going there. Maybe my grandkids…</p>

470

<p>

</p>

<p>Party schools have their own challenges. Some vulnerable students go overboard with the partying, to the detriment of their academic performance, or worse (binge drinking and associated increased risks of doing something stupid or becoming a crime victim). Perhaps navigating a party school without falling into these traps may be a sign of accomplishment itself.</p>

<p>Of course, the set of party schools is not necessarily disjoint from the set of elite schools. <a href=“http://www.nytimes.com/2013/10/02/education/dartmouth-in-the-glare-of-scrutiny-on-drinking.html?_r=0[/url]”>http://www.nytimes.com/2013/10/02/education/dartmouth-in-the-glare-of-scrutiny-on-drinking.html?_r=0&lt;/a&gt;&lt;/p&gt;

471

<p>So now OP is quoting well under the 60k mark? And an average net price- which tells us what? Pre-NPC, we warned folks all the time not to believe averages apply to you. No idea what your source is, but you’re presenting a moving target. If this is for a specific income range, would you cite where it is from? Btw, Harvard notes the “average NP” is roughly 18k, as does College Scorecard. And the real research would be via a family’s own look at the NPC. </p>

<p>[Harvard</a> Net Tuition Cost Lowest in Ivy League, Reveals College Scorecard | News | The Harvard Crimson](<a href=“http://www.thecrimson.com/article/2013/2/21/harvard-tuition-lowest-league/]Harvard”>Harvard Net Tuition Cost Lowest in Ivy League, Reveals College Scorecard | News | The Harvard Crimson)</p>

<p>Data, sorry, but our Fafsa EFC has always been roughly 25-30% or so. For one and then the total for two.</p>

472

<p>

I’m not clear on why you are apologizing, as your post fits with mine. The formula approximation I gave based on the FAFSA EFA calc output was (assumed no student income & assets and located in CA):</p>

<p>FAFSA EFC ~= ((income - $35k)<em>30% + (assets - $35k)</em>5.6%) / number in college</p>

<p>Most on this site probably have high incomes (compared to typical incomes in US), resulting in the first term falling not far below 30% of income. Assets would boost somewhat, so 25-30% sounds like a common result for persons on this site with 1 kid in college. However, there is a wide range of possible results with different incomes and assets, so a single result means little without knowing income and assets. For example, using the median family income and median net worth in the US as assets, the FAFSA calc website returns 8% of income, suggesting a large portion of families in the US would have FAFSA EFA of under 8% of income. The formula gives an EFA of ~150% of income for me because I have large assets in relation to my AGI (using formula estimate because calc output is “system error”). So the result might be 8%, 25-30%, 150%, or anywhere between for different situations. And of course the actual financial aid given often differs quite a bit from the FAFSA EFC and varies tremendously for different colleges.</p>

473

<p>*The $80k income + $50k assets + 2 kids in college situation I listed earlier, results in an EFC of $6600 using the FAFSA calc, which is reasonably close the median NPC calc result I listed of $5700, more so if you consider differences in work study estimates. *</p>

<p>Dunno. Maybe I can’t follow because your link isn’t working for me. </p>

<p>Just ran the Fafsa4caster, from the Fafsa folks. EFC only. See how this can vary? You can also see variables via the IFAP worksheet. My point is one can’t assume averages hold or that a rough formula or median number expresses it. </p>

<p>AGI 80k, 50k investments, no stu assets, no parent liquid
First figure CA, parentheses is Ohio, to show how this changes.
4 in family, 1 in college, : $9473 (10237)
3 in family, one in college: 11555. (12319)
4 in family, two in college: 5423 each, 10846 total. (5805/11610)
3 in family, two in college: 6462, 12924 total. (6844/13688)</p>

<p>Whatever.
No, not 30%. No, does not predict aid. Yes, based on 80k.</p>

474

<p>Yes, Ohio and CA have different tax results, leading to slightly different EFC calculations. With higher income and assets, Ohio and CA FAFSA EFC results usually differ by about $1k. This $1k variation is a small term that will not change any point or conclusion made in this thread, so it is not a key term in the formula approximation. The same could be said for number in family. At higher incomes, EFC differs by about ($2k/num in college) for each member of family. It’s straightforward enough to add this term in or +/-$1k difference for different states, if you want a more precise estimate. Similarly one could add in a dozen other small offsets. However, none of this is necessary to make the earlier points about FAFSA EFA varying with income and assets, such that EFC is far smaller than the reported 25-33% of income values reported in this thread for the $80k income + $50k assets example (or in general for typical US income & assets) and show why persons with higher incomes are expected to frequently be in the previously mentioned 25-33% income range. </p>

<p>Your printed results show this same conclusion. With 2 in college and the listed income & assets, your results show a FAFSA EFA of ~$6k (+/- $800), with variation for different states and numbers in family you listed. This is ~7.5% of an 80k income.</p>

<p>

It was ~7.5% of income in your results for 2 in college. My earlier calc result, the formula approximation, and NPC median result were all in the ballpark of this ~7.5% of income (+/- $1200). I doubt anyone reading this thread cares whether FAFSA EFC has $800 of error in this income/assets/num in college example. I don’t see how you could conclude 30% of income in this example from anything I have stated.</p>

475

<p>The Net Price figures I posted in #468 are from the US Dept of Education IPEDS website.</p>

<p>It shows that, for families with lower incomes, the net price of selective private schools may be similar or lower than public universities. Many families assume that privates will cost significantly more because of the sticker price and, therefore, do not apply.</p>

<p>The amount of loan necessary might be very manageable.</p>

<p>The Harvard net price quoted in #471 might be for all income levels combined.</p>

476

<p>Data, some of us have already approached this from our perspective as parents. Ie, sweated though this, A to Z, from the forecaster to the official Fafsa EFC, maybe the CSS, then the wait, followed by the pay or borrow decisions. It’s not “why” CA and OH differ but that: one can’t assume averages hold or that a rough formula or median number expresses it. </p>

<p>With 2 in college, an 80k family (in that example of financial position,) doesn’t get an EFC that is 7.5%. That’s for one child. </p>

<p>Does all this matter, as an exercise? No. Aid and our decisions depend on many factors. But EK noted 1/4 to 1/3, which is what my family also found, in real life. Families should run the NPC. And not assume for others.</p>

477

<p>Our EFC ( FAFSA) was $14,000.
Family of four, one in college, one child at home, home equity due to the housing bubble.
Our income was <$50,000.</p>

478

<p>You can get the current FAFSA formula or the one for 2014-2015 by googling EFC formula 20watever. Print it out and work through it on paper to see what factors affect your result.</p>

<p>Home equity is not a factor. Property other than the home where you live is.</p>

479

<p>

In your earlier post you listed FAFSA EFCs ranging from $5423 to $6844 for 2 in college with the listed 80k income + 50k assets example (expressing in terms of EFC for 1 of the kids), with variation for different states and number of persons in family. I’d call that result approximately $6k. ~$6k EFC = ~7.5% of $80k income.</p>

<p>

As stated previously, the point of using the formula **“approximation”<a href=“not%20precise%20result”>/B</a> was to show that FAFSA EFA varies dramatically with different levels of income and assets, such that EFC income % is far smaller than the reported 25-33% of income values reported in this thread for the $80k income + $50k assets example (or in general for typical US income & assets) and show roughly how FAFSA EFC changes as income and assets increase/decrease, resulting in persons with the higher incomes and/or assets that are expected to be common on this forum being expected to frequently be in the 25-33% income range that some posters have mentioned. While an approximation is not a precise value, it’s more accurate than someone posting what their EFC % of income was, without listing income and/or assets, and assuming others will be the same.</p>

480

<p>^We’re talking Fafsa EFC, which is just one piece of data, not a predictor of net price. </p>

<p>I also included the totals for the two of them, since parents generally pay for both. So Fafsa EFC is not just 5423 for kid A. For two in college, one needs to accountant for both kids. Assuming neither has income/assets, each should get a roughly equal Fafsa EFC; that’s $10846. See the percentage shift? </p>

<p>Even if you just look at one kid in college, that was Fafsa4caster $9473 versus your 6k.</p>

<p>Btw, in the case of Harvard, they state “if your family earns less than $65,000 per year, your parents pay nothing for you to attend Harvard.” But at 60k, their NPC shows $4600. What they do is allocate it so the full falls into the student column, work study and student contribution. That’s not free.</p>

<p>OP, when I was sweating FA, I also thought averages could be revealing. But later realized they depend on the pool of families- how many get max awards, how many get much less.</p>