Why are parents so reluctant to take out loans?

[QuantMech]

<p>I don’t think the Waltons qualify for Title IV aid (unless you were talking about John-Boy Walton’s family).</p>

[tk21769]

<p>

How does a family USE this detail? X% at some school got some form of T4 aid and what? Better chance you kid can get in? Better chance they get the aid they need? Not overburdened by student loans?

</p>

<p>The best way to estimate how much aid you’re likely to get is to use an online net price calculator.</p>

<p>

I am not sure about some of the “elite” LAC’s on collegehelp’s list of desirable schools. I doubt that they have endowments that permit the same financial aid policies as Harvard, and suspect that they are skewed toward higher incomes, relative to the Harvard group–although Harvard may have more of the super-rich.

</p>

<p>Of the colleges with the largest endowments per student, 5 of the top 10 and 14 of the top 30 are LACs ([College</a> Rankings - Home](<a href=“http://www.ordoludus.com/quality.php?sort=ES&dir=down#data]College”>http://www.ordoludus.com/quality.php?sort=ES&dir=down#data)).</p>

<p>Of the 61 colleges identified by USNWR as claiming to meet 100% of demonstrated need, 36 are LACs. ([Colleges</a> That Claim to Meet Full Financial Need - US News and World Report](<a href=“http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/09/18/colleges-that-claim-to-meet-full-financial-need-2014]Colleges”>http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/09/18/colleges-that-claim-to-meet-full-financial-need-2014))</p>

<p>For 2012-13, ~56% of Amherst freshmen received n-b aid. The average n-b scholarship/grant award was about $44K. The corresponding numbers at Princeton were about 59% and $38K, respectively.</p>

[Sue22]

<p>

I don’t think the Waltons qualify for Title IV aid (unless you were talking about John-Boy Walton’s family).

</p>

<p>So true. :)</p>

<p>I was just thinking about the fact that some people seem to be equating schools with a high percentage of folks in the top income category with an environment of privilege.</p>

[lookingforward]

<p>Difficult to make social fit projections based on how many kids get some aid. People make friends in all sorts of ways. It’s not like you can be assured all the lower income kids will hang out together. Or will even like each other. Plus, income alone can be misleading, doesn’t really tell about interests, how educated a family is or their intellectual drives. </p>

<p>Averages or counts are only what they are. None of these long lists of numbers are telling enough. As said, a better zoom would come from NPCs.</p>

<p>tk- just an example. Grinnell, with its large endowment: average award- $38.7k, 87% on some aid. My friend’s Fafsa EFC was roughly 9k and they left her with a tab of over 35k.</p>

[ucbalumnus]

<p>

@lookingforward

just an example. Grinnell, with its large endowment: average award- $38.7k, 87% on some aid. My friend’s Fafsa EFC was roughly 9k and they left her with a tab of over 35k.

</p>

<p>Divorced parents with a wealthy non-custodial parent who won’t contribute anything?</p>

[tk21769]

<p>^^ Many selective private schools with good FA require supplements to the FAFSA. If your friend was left with a tab that large, then her EFC was not that low after the supplementary information was factored. Grinnell is one school that does require the Noncustodial PROFILE.</p>

[grifhunter]

<p>HUNT:

Selective schools are pretty good. The most selective schools have a lot of really smart, motivated kids, and there are some advantages to going to school with them. They may not have any better morals than kids at less selective schools, but they will differ in some positive ways (on average) from less accomplished students. Some of the most selective schools also have a lot of money, and that can translate into a lot of cool opportunities for the students.

</p>

<p>^HUNT’S post is a sober and factually accurate post in a field of somewhat defensive and resentful posters. </p>

<p>You can read all the magazines and blogs you want about the lack of benefit of prestigious schools and horrors of borrowing, but as someone who paid their own way through a top ranked private undergrad and subsequent public graduate school, there is a difference. (I also have a son in an Ivy and another in a big state university at the same time right now). Everything Hunt said is correct. I’d only add that there are advantages to the famous school; whether they are worth it or not is up to the student, but some schools ARE just so scary amazing we in good conscience couldn’t deny my son simply because of money. The interviews, contacts, faculty references, internships, and academic rigor are superior at the elites. </p>

<p>Debt is part of modern life, and the extent and future ability to handle it is what matters. After inflation and job growth, the monthly payback amount after 7+ years is not oppressive if the parent and child share in the repayment.</p>

[sevmom]

<p>If you couldn’t in good conscience deny your son “simply because of money” you are very lucky. For most parents, cost is an issue. My youngest son , a recent public school college grad, is working for the same employer as his HYP grad who was the HS valedictorian. My kid did not peak in HS but has found his stride since that time.</p>

[jacefromLA]

<p>As a student that is an absurd amount for your parents to borrow. $340/month is still a lot of money, sure people can afford it, but that is going to mean cutting back on other expenses just so that the child can be an alumni of University “X.” I do believe parents should help pay for their children’s school, but it should be a reasonable amount where the parents feel they are paying comfortably and can retire as planned. Money matters never hit an 18 year old in the head very well, all it has been to us is just spend and spend and spend… I believe do what it takes to succeed, meaning work hard with what you have and accept all consequences of the risk you or your parents are going to embark on.</p>

[sybbie719]

<p>

The percentage of students receiving Pell grants might also be indicative of how economically egalitarian a school is and it would be based on all undergrads, not just those receiving Title IV aid:

</p>

<p>

Sue22, I think the % Pell grant of the enrolled undergrads has meaning by itself. It shows roughly the SES mix you will experience among your fellow students if you attend. Controlling for the number of applicants in each income category would tell you if there is bias in admissions ONLY if you also control for their academic records. Perhaps low-income applicants are also less qualified academically than high-income students, or vice versa, thus leading to different admit rates. I think the percent Pell grants of enrollees is more telling about the likelihood of “fit”.

</p>

<p>Not necessarily true, because you may still only be getting part of the story based on who is getting a Pell grant. As long as a student has an EFC of $5081 or below, the student is eligible for a Pell grant. You may have a student with a 0 EFC, who is getting a full Pell grant of $5645 or you may have a family with an EFC of $5081, who is receiving a Pell grant of $605. They are still counted as Pell grant recipients.</p>

<p><a href=“http://www.baruch.cuny.edu/financialaid/documents/PellChart1314.pdf[/url]”>http://www.baruch.cuny.edu/financialaid/documents/PellChart1314.pdf&lt;/a&gt;&lt;/p&gt;

<p>Another thing to take into consideration, a student could be a Pell grant recipient, while at the same time receiving very little in need based aid. Situation would not be unusual with divorced parents and blended families. Remember the FAFSA is filed using the income of the custodial parent. At schools that give the most generous need based aid, they require the CSS profile/ non custodial profile or CSS profile along with their own FA forms for the non-custodial parent. </p>

<p>Lets say student has a custodial parent making ~45k a year or a SAHP, who is divorced from a doctor/ wealthy lawyer, real estate/ IB/ family with $$ (choice is yours), who has married some one with similar earnings. </p>

<p>Based on the custodial parent income/asset, student would most likely be Pell eligible; perhaps not full Pell eligible, but Pell eligible just the same. However, once family files CSS Profile/non-custodial profile of custodial/non-custodial + step parent to determine institutional aid, everyone’s money, assets, cars, homes, pension contributions are now part of the financial equation.</p>

<p>Also, take into consideration that many child support orders end once the child turns 18 or have stipulations that non-custodial parent may only have to pay 1/2 the cost of attending in-state public university (none of this matters to the college giving institutional aid).</p>

<p>Stroll over to the FA forum, it is not unusual to find kids with divorced/single parents who make very little money, with high earning non-custodial parents or non-custodial parents married to wealthy stepparents (who are unwilling to pay).</p>

[ucbalumnus]

<p>

@grifhunter

Debt is part of modern life, and the extent and future ability to handle it is what matters. After inflation and job growth, the monthly payback amount after 7+ years is not oppressive if the parent and child share in the repayment.

</p>

<p>Not every elite school graduate ends up in a highly paid job like investment banking or management consulting – some have no interest in such things. Having a large debt over one’s head reduces the graduating student’s freedom to choose a line of work that s/he likes but may not necessarily pay as well as some other less liked line of work.</p>

[sally305]

<p>The fact that people breezily say “debt is part of modern life” is proof of the shifting mindset in this country, and not a healthy one IMO. Who wants to burden their new college graduate with debt if they can avoid it? Especially now…just does not seem prudent.</p>

[lookingforward]

<p>And, it’s not a $340 payment. Again, that was OP’s old example of a family he knows with a low rate and 30 year term. The amount discussed could cost more than twice that, today. You can’t consider this with lowball numbers or high assumptions about the parents’ ongoing financial ability and the kid’s future earnings and priorities.</p>

[Niquii77]

<p>

The fact that people breezily say “debt is part of modern life” is proof of the shifting mindset in this country, and not a healthy one IMO. Who wants to burden their new college graduate with debt if they can avoid it? Especially now…just does not seem prudent.

It may not be a healthy one, but the shift is occurring and will not be changing soon. College is getting unaffordable for the middle class. Loans are a part of the equation. Sure, there may be kids like myself of my generation who were able to get full rides/graduate debt-free, but there is not guarantee for my generation’s children.</p>

[QuantMech]

<p>Manageable debt for son’s or daughter’s college costs = wise choice</p>

<p>Debt for each child equal to annual earnings (i.e., parental household income) = really questionable choice, in my view</p>

<p>Clearly there could be exceptions.</p>

[sally305]

<p>ultraguy, I agree with you. I was thinking of debt more broadly and over a longer term. Many in our parents’ generation would have laughed at the idea of paying the equivalent of a quarter-million dollars for their kids’ college education–and they certainly would not have entertained the idea of going into debt for it either. They also didn’t spend beyond their means to the level that people routinely do today, thanks to the easy availability of credit cards.</p>

[ndabunka]

<p>Good article on “value” applicable to this thread… HERE is why parents are SMART to NOT take out loans…<a href=“Yes, We Should Tell Kids If College Will Make Them Poor”>Newser | Headline News Summaries, World News, and Breaking News;

[collegehelp]

<p>Article on the value of attending a more selective school from the Chronicle of Higher Education:</p>

<p><a href=“Innovations: Learning More at Selective Colleges”>http://chronicle.com/blogs/innovations/learning-more-at-selective-colleges/28415&lt;/a&gt;&lt;/p&gt;

<p>Surprise! Students learn more. There is more “value added”.</p>

[Erin_s_Dad]

<p>^ Let’s keep in mind the cut off for “selective schools” used: “Selective institutions are defined as those in which students at the 25th percentile have a combined math and verbal SAT score above 1150, and less selective are those in which students at the 25th percentile have a combined score below 950.”
You can’t just analogize this to a difference between an Ivy league school and a mid level LAC.</p>

[collegehelp]

<p>^I see your point. Too bad they didn’t treat SAT as a continuous variable instead of the crude dichotomy.</p>