Why are parents so reluctant to take out loans?

Parents Forum
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<p>Erin’s Dad, it is a difficult thing to prove empirically that a top 30 is better than a mediocre public or a flagship because the data is so terribly lacking. There are successful individuals who graduate from flagships and from “top thirty”. But, I think we should be more interested in the averages and probabilities for success (however you define it). To know that, you would have to track almost every alumnus’ salary, job stability, job “significance”, leadership, promotions, and so on. The proof is mostly a logical proof deduced from the fact that colleges review student applications and each admits the best qualified students they can based on academic performance, recommendations, extracurriculars, standardized tests, and personal statement. The fact is that some schools enroll better students than others. These are the classmates who will mold their mutual experiences for 4 years and govern the level of instruction at which professors can teach. They will be the role models and friends.</p>

<p>My proof is also based on my direct observation of students at a mediocre public, a flagship public, and a top 30 private. I have been affiliated with each. I have seen drunkenness, drug use (marijuana), fights, crime, casual sex (not directly), poor work habits, revolting attitudes, and so on.</p>

<p>How much do your kids tell you? Try asking them.</p>

<p>Sally35, I am actually a reasonable person who just happens to disagree with you. Parents sometimes don’t understand the differences among colleges. They might not know what makes a school better than another. It is important to make information and perspectives available to them, especially parents who never attended college themselves. They might not know that a private school can be less expensive than a public for low income families. And, they need to know the benefits as well as the costs.</p>

<p>I don’t think we should accept parental self-indulgence at the expense of children. I come down on the side of children. Some parents need to clean up their act. I don’t buy the live-and-let-live philosophy although I respect a broad range of acceptable parental practices. I have values and I think some parents are lousy to their kids. If the shoe fits, wear it. Sorry if some good parents take offense. </p>

<p>College education is important when kids get older but I agree that, when they are younger, it is not the money that is important but the relationship. When kids get older…yes, it is possible to express your love by helping them financially. College is one way to help financially. You can also use your money when they are younger to buy them books, experiences, educational toys rather than too much house, a boat, and so on.</p>

<p>I don’t think I am oversimplifying. Parents should do whatever they can to maximize the chances that their children will have a good life. This includes a good college education. On the other hand, I think some of you are overcomplicating it.</p>

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Inputs do not equal outputs, and your observations are just those–observations. For every one of yours, someone else will have their own that counter them. </p>

<p>Are you a parent yourself? You DO seem to oversimplify many things.</p>

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<p>However, many students are successful, despite doing their bachelor’s degree work at what you consider a “mediocre public” like Arizona State University.</p>

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<p>I was a bit outraged earlier by some of collegehelp’s statements but I’ve gotten to the point where I’m just laughing.</p>

<p>Collegehelp, just out of curiosity we would all love to know how old you are. I’m personally certain that you are not a parent ;)</p>

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<p>Once upon a time, a student started at a [community</a> college](<a href=“http://www.scc.losrios.edu/x35945.xml]community”>http://www.scc.losrios.edu/x35945.xml). From there, he went to a [state</a> university](<a href=“Berkeley News | Berkeley”>Berkeley News | Berkeley). Now, he is a [PhD</a> student](<a href=“http://sociology.fas.harvard.edu/people/aaron-benavidez]PhD”>Aaron Benavidez | Department of Sociology).</p>

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<p>“I know of a family who is very tight with their money and sent their kids to a two-year commuter community college. One went on to finish at a 4-year public but is now working at a grocery store. The other is working at a rather low-paying job unrelated to their major. I can’t say for sure, but I wonder if the kids might be doing better if they had attended the best college that would admit them instead of the least expensive.”</p>

<p>LOL. </p>

<p>I know hideously successful adults who barely darkened the door of their high school, and hideously unsuccessful adults who have ivy and ivy-peer degrees. Who is successful and who isn’t depends much more on individual personalities and the strength of a local economy at the time someone is out there looking for a first job, than it depends on where someone went to college (or if they went to college at all).</p>

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<p>sally305, inputs don’t EXACTLY equal outputs but they are highly correlated…just as SAT (input) is highly correlated with graduation (output). </p>

<p>Those of you who “know somebody” should be wary of bias in your thinking. Are you only remembering the cases that confirm your bias? Are you overgeneralizing from the one or few cases that you know? Have you sought out disconfirming examples? As I said, we need to know overall probabilities and averages. Just because success is possible doesn’t make it likely. And, for those who were successful, the four years as an undergrad in a “mediocre” public may have been like 4 years in purgatory…like my friend who went to a mediocre SUNY for undergrad but Caltech for grad. He hated it but took heavier courseloads and went summers to graduate in 3 years. “Never would do THAT again!”</p>

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<p>Yes, this is an underrated factor in one’s lifetime success. Those entering the labor force during an economic downturn are less successful than those entering the labor force during better economic times. In some cases, one’s career can be over before it starts, because graduating directly into long term unemployment can make someone unemployable even after the economy recovers.</p>

<p>There are also behavioral changes based on when one enters the labor force: [Recession</a> Generation Will Spend Less for Life](<a href=“http://mag.newsweek.com/2010/01/08/the-recession-generation.html]Recession”>Recession Generation Will Spend Less for Life)</p>

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<p>I thought my eyes would’ve been stuck by now from all the eye rolling this thread has me doing.</p>

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<p>Your anecdote about your friend is hilarious-his “mediocre” SUNY didn’t seem to prevent him from getting into Caltech for grad school!</p>

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<p>You know, I totally agree. I think it’s scandalous that well-meaning guilt-ridden parents are feeding the status beast at the expense of their own long-term financial security. The best thing you can do for your child financially is to make sure that you don’t have to come knocking on her door for money when you’re old, all because you didn’t save enough for retirement. Of course, that also means that you may not be able to finance the “dream school.”</p>

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<p>*Parents sometimes don’t understand the differences among colleges. * I think you have spent a lot of time advising kids on CC and missed the parent comments. We get it. But our vision extends further than what you purport to be true.</p>

<p>*Not sure why it is so hard to see the relationships among my comments. * That’s just it-- we DO. And it doesn’t make full sense. Any single “fact” you posted represents one piece of the puzzle; you can’t take that and extrapolate in the absence of other factors.<br>
One set of data, one or more assumptions–don’t make anything predictable.</p>

<p>One example: sure, the average net price at some school may be $x. But that’s based on the total number of kids paying what they do-- each based on individual circumstances. Some will have near full rides, others will get considerably less. Some are full pay. What does an average tell me? No, it gives other institutional monitors input they then use in their own ways, for their own assessments. </p>

<p>can you think of parents who ARE personally and financially self-centered? Yes, but is it germane to a thread that states, from the get-go, that parents should be willing to risk all, jeopardize financial security for the family? You gave an unreasonable example- 80k income borrowing 80k (that could be fiscal IRresponsibility) – and went on to show how valid the “costs” were based on a 12 year old loan at an interest rate and term that no longer exist. </p>

<p>So, yes, we’re paying attention and it doesn’t add up.</p>

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<p>Collegehelp, I just don’t think going to a “name” school helps remotely as much as you think it does. I’m betting that there are many more Yale BAs at Harvard Law than UConn BAs, but that doesn’t mean that a given student has a better chance getting into Harvard Law if he goes to Yale, it means that Yale admits a lot more of the super-bright student who are likely to get into Harvard Law four years later than UConn does. A law-minded student who gets into Yale but goes to UConn for financial reasons is probably going to be a standout in college, do quite well on the LSATs, and be very well positioned to get into an excellent law school.</p>

<p>Honestly, I don’t think there are many fields where your undergrad school is going to play a massive role in your future success, and I don’t think there are that many schools where the name brand is impressive enough to make much of a difference at all. On CC, we know a lot about colleges, but I really don’t think that you get a lot of credit in the real world for having gone to Wesleyan or Vassar or Bowdoin. </p>

<p>Of course, none of this is to suggest that going to an elite school isn’t valuable. You are right that being in a school full of extremely bright and talented people has advantages. It may make for a richer four year experience, and will almost certainly have some effect on the level of instruction and discourse. All of that is worth something - but “something” stops short, in my opinion, of going into significant debt.</p>

<p>I have no problem judging people who spend a lot of money on luxury items but won’t make relatively modest financial sacrifices for their kids education, although I think that describes a small enough group to make it almost a strawman for the purposes of the argument. But for the most part, it seems to me that whether to splurge on the more expensive school is a complicated choice that involves a number of factors, including the relative levels of the schools involved, the cost differential, the extent of the financial burden and, frankly, just how smart and intellectually serious the kid is. Most students I’ve encountered at elite schools are very bright, but only a comparatively small minority, from what I’ve seen, are so off the charts brilliant that I believe they would be intellectually stunted in the academic wasteland of the non-elite flagship state school. And even in those cases, a self-motivated student could still manage to make the most of those four years and then earn his or her way into an elite grad or professional school, which is where most of that type of student is eventually headed.</p>

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<p>This is revealing: How much do your kids tell you? Try asking them.<br>
It assumes we’re unaware and you alone have the inside scoop- and that whatever you observed holds. It also assumes you’ve (this phrase has appeared on CC a bunch lately, so I’ll use it) drunk the Kool Aid about a select tier of schools.</p>

<p>In fact many of us have experience with the schools you list above (as students, parents, family, local residents and employees.) AND, we can tell you that nothing makes students at HYPX, Mich, the UCs, UVA, etc- immune to drunken rowdiness, drugs, casual sex or lowlife influences. Some of us could tell tales that would curl your toes. If you think the top tier is immune, I suggest YOU talk with some kids.</p>

<p>So, forget that assumption. I think the consensus on CC is usually that, if you want to entirely avoid all that, go to one of the small colleges where religious principles dominate- or one where most kids self-pay, commute and or work while in school.</p>

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<p>HBUs, women’s colleges, and two year colleges are also associated with less drinking.</p>

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<p>ROI of colleges is usually associated with payscale.com . However, most of its rankings are not major-specific, so of course a school full of engineering and CS majors will have a higher ROI than a similar cost college full of biology and humanities majors.</p>

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<p>Perhaps the more common case of high income families with no savings for the kids’ college or the parents’ retirement is that of gradually ratcheting up spending to a high level, even without too many obvious over-the-top expensive big luxury items. Indeed, such a family may have a harder time cutting back on spending, because there may not be too many big places to cut back on – but they are overspending in dozens or hundreds of smaller categories that do add up to spending beyond their means.</p>

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<p>Exactly. Maybe collegehelp is still in high school? The rose-colored glasses seem to be working.</p>

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<p>lookingforward, I don’t think I ever said that a family should risk all to take out a loan. That was a figment of someone’s imagination. I think I suggested that you shouldn’t risk the poorhouse. And, people have gotten very hung up on my $80K example but point is that an $80K loan on an $80K income COULD be reasonable even without substantial investments to fall back on. I have read that borrowing an amount equal to a year’s income is reasonable.</p>

<p>Can we try a hypothetical dilemma?
Say you are a lobster fisherman in Maine and your family income is $55k. Your child has been accepted at U Maine Machias and will get a free ride. Your child has also been accepted at Johns Hopkins as a pre-med student but your annual net price would be about $16K. You could cover about $14K of the total $65K net price through annual income but would need $50K in loans to cover the rest.</p>

<p>You could make the monthly payments for, say, a 20 year loan by:
buying a used car every 8 years instead of 4
cutting your retirement 401K deduction from 15% to 5%
getting most of your clothes at the Salvation Army
foregoing home improvements, only maintenance
limiting vacation spending to $1000 per year
going out to eat only once per week
cutting your spending on gifts in half
no new cell phones or other electronics
almost no big-ticket purchases of any kind
(you can add your own cost-saving measures)</p>

<p>Would you take out the loan?</p>

<p>You could manipulate each of the factors in this scenario to get a subjective estimate of how much loan you would take under different scenarios.</p>

<p>The question is “what cost savings measures would you be willing to take to enroll your child in the better school?”</p>

<p>Johns Hopkins and U Maine Machias are 500 points different in SAT midpoint. As the difference decreases, I would expect that the amount of loan you would consider would also decrease. Furthermore, the more willing you are to curtail spending on non-essentials, the greater the loan you would consider.</p>

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<p>JHU is full of highly competitive pre-meds, so competition for A grade in pre-med courses will be fierce. It is not necessarily a given that a pre-med student will have a better GPA (and hence medical school admissions) outcome at a more selective school, despite the greater grade inflation tendencies at more selective schools.</p>

<p>Medical schools are also expensive, so parents who are willing to take loans for their kids’ educational expenses may want to save some of their borrowing capacity for when their pre-med kids go to medical school.</p>

<p>Also, fishing income might be more irregular and less predictable than other kinds of income, so a fisher may not want to take out that much debt in any case.</p>

<p>Really, your example should be someone with high income but little assets (high enough income to get no financial aid at HYP – i.e. $230,000+ per year, all consumed somehow) and a kid desiring to go into investment banking or management consulting, admitted to one of HYP and some other school not recruited by those employers, where the some other school is affordable with no loans, while one of HYP would be $30,000 to $40,000 per year of parent loans.</p>

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<p>And in addition to the points ucbalumnus has made, there is no reason a kid from Maine who goes to one of his state schools and does well in school and on his MCAT cannot go on to very good opportunities (not unlike your friend who you say ended up at Caltech after a SUNY).</p>