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genevieve
09-15-2010, 07:14 PM
I think mpal was saying that for those who aren't getting parental help, it is too difficult to get adequate aid because the system assumes parental help and determines aid based on the parents' financial status. They end up with tons of loans, too often. I don't think the point was that those getting parental help should not qualify for any assistance.
Thanks, that makes sense.

KCC
09-15-2010, 07:17 PM
I used a combination of scholarships, work-study programs (I did everything from being a janitor to re-writing a lab book for a professor), and a enrolling in a co-op program. The co-op program alternated semesters of classes with semesters of a modestly-paid internship that gave me cash and good work experience at the same time.

Even though I alternated work with school starting mid-way through my sophomore year, I graduated with my class in 4 years by taking heavy loads during each class semester. The alternating semester plan helped me with burn-out and the experience was critical when I was looking for a full time job. Came away with ~$4,000 dollars in debt, but it was at a really low interest rate and was quite manageable.

When I related my story to my sister-in-law, she said that she would never allow her sons to be janitors. Instead, they work at Starbucks -- so much more prestigious, but they need a car to go to/from work. Her boys live in San Diego, where living expenses far outweigh tuition expenses.

I do think that comparing one's debt level to an expected income level is a good exercise. (Why don't banks do this???) I encourage high school grads to design a budget for how they would like to live at age 25, and I help them to calculate student loan payments for $10K, $20K, and $30K loans, assuming a 10-year payback. We get their expected income level from the Bureau of Labor Statistics. It is eye-opening for many of them, because their budget for travel and entertainment usually goes away completely.

reckless
09-15-2010, 09:17 PM
A number of schools outside the Ivies now have plans to cap student debt on graduation. My alma mater, Grinnell College, capped the student's loan amount at $2,000 per year (plus some students have to do work study equivalent to another $2,200 per year). So the max amount the students will graduate with is $8,000 in loans. On top of that, it has become tradition for alumni classes celebrating major reunion years to raise funds toward paying off student debt. Even before the debt cap was adopted, those gifts were wiping out the debt of 30-40 students each year, approximately 1/10 of the graduating class. The eventual goal is to have students graduating without any debt.

Now, I should add that the cap is on "need-based" debt, which is determined by a formula that expects parental contribution for students of a certain age. Schools have to make those assumptions and stick to them because otherwise families that can afford to pay something toward school will claim they cannot, which will further deplete endowments that have suffered significantly from the economic downturn. I definitely understand and sympathize with the students whose parents refuse to pay, but I think those generally are the exception not the rule.

"Need-based" debt also is used for the cap because it does not want to encourage families to take out extra loans because the school will pay them off.

GarrAarghHrumph
09-15-2010, 09:29 PM
In general, I advise students to take out in student loans only the amount equal to their expected first year of salary. Total. If they take out twice that, as I often see, IMO, they'll face significant amounts of trouble paying it off. If they take out more than twice their expected salary, I tell them I'd not be surprised if they went into default. And defaulting on student loans is extremely serious business.

I've seen students from private schools like Drexel take out $100,000 in loans. Even a petroleum engineering student would have a hard time paying that off.

Hannahclear
09-15-2010, 09:48 PM
When I was a senior in high school, I had my heart set on going to a Boston-area university that was quite expensive and moderately selective. I got in, but did not receive enough financial aid.

I got a full merit scholarship at my safety school, which my parents insisted I take.

I HATED going to school there, but I got three semesters in for free. I then went to a state school for a semester before moving out of state to join an AmeriCorps program. The year I was there, I established residency in the new state and when the program was over, I applied to the state uni there. The AmeriCorps money paid for most of my junior year and my parents gave me the money for my senior year.

Really, I made out quite well.

Now that I have a baby, I'm thinking of college. What do you guys think of those 529 plans where you lock in today's prices? That's the way I'm leaning, but I'd be interested to know if anyone had experiences with them.

Prancer
09-15-2010, 11:49 PM
I definitely understand and sympathize with the students whose parents refuse to pay, but I think those generally are the exception not the rule.

Well, I don't know about that--seriously, I have no idea what the stats are on that--but I would be surprised if there weren't significant numbers of people who fall into that exception, mostly because I think there are a lot of parents who don't refuse to pay but can't pay, regardless of what the forms might say.

Look at it this way--if those students who graduate with loans find the debt crippling, why wouldn't their parents find it the same if they were footing the bill? Yes, the parents are likely to be making more money than a new graduate. But a household that can fork over five figures, even low five figures, every year for tuition without hurting is pretty rare. Given the amount of debt and the lack of savings that the average household carries, putting a child through college can break the bank.


Add into this that the kid has had a job for two years and spends every dime he makes himself on whatever he wants--he ordered his fourth iPod Touch from Apple this week

Sorry, but I have little sympathy for him. If he really wanted to go to that college, then the onus is on him to make it happen. If he continues to spend his money on bigger and better iPods, then he doesn't want to go to that college enough.

I'm in the camp that believes that parents don't owe kids college. If the kids want to go and the parents want to help, that's great. But if they don't, well, then it's time for their kids to grow up a little and take responsibility for themselves.

Community college hasn't killed anyone yet; it's an opportunity. It's up to him to make the most of it, and if he doesn't, that won't be his parents fault for not sending him to the school he wants.


The other problem is that financial aid is determined with the assumption that parents will pay a share unless a student is over 24, married or has dependents. This makes it difficult for traditional students to have access to need based aid that is not from loans if their parents aren't helping.

Difficult, yes, but not necessarily impossible; one of my friends went to court and got herself emancipated from her hideous family for just that reason. And again, if you have the grades and you have the drive, you can get scholarships.

rfisher
09-15-2010, 11:54 PM
Difficult, yes, but not necessarily impossible; one of my friends went to court and got herself emancipated from her hideous family for just that reason. And again, if you have the grades and you have the drive, you can get scholarships.

If you work for a year or two and file your own income tax, your parents are out of the equation. I went to radiology school, worked and supported myself, then went back to school. I paid for every penny of my college education.

PDilemma
09-15-2010, 11:57 PM
Sorry, but I have little sympathy for him. If he really wanted to go to that college, then the onus is on him to make it happen. If he continues to spend his money on bigger and better iPods, then he doesn't want to go to that college enough.

I'm in the camp that believes that parents don't owe kids college. If the kids want to go and the parents want to help, that's great. But if they don't, well, then it's time for their kids to grow up a little and take responsibility for themselves.

Community college hasn't killed anyone yet; it's an opportunity. It's up to him to make the most of it, and if he doesn't, that won't be his parents fault for not sending him to the school he wants.



There are some additional circumstances going on with this that are not financial that make me feel a bit sorry for him. But that's another story entirely.

Prancer
09-15-2010, 11:57 PM
If you work for a year or two and file your own income tax, your parents are out of the equation.

That used to be the case, but isn't any more.

jlai
09-16-2010, 12:08 AM
But a household that can fork over five figures, even low five figures, every year for tuition without hurting is pretty rare. Given the amount of debt and the lack of savings that the average household carries, putting a child through college can break the bank.

I think this is the problem: parents don't have money because they're not saving for it.

Which leads me to my rather unpopular conclusion: I found Americans in general don't set aside enough money for the most important things in life like retirement or college but dump much of their money on fixed assets (e.g. housing, cars, stuff in general). That leads to liquidity issues during tough times.

numbers123
09-16-2010, 12:11 AM
went to radiology school, worked and supported myself, then went back to school. I paid for every penny of my college education.

I went to a state university for 2 semesters before attending a nursing diploma program. I had worked summers during high school and saved money for all my "fun" money and room and board for those 2 semesters.

The I returned home to go to the diploma nursing program. Mom and Dad paid for the first semester there and from that time on, I paid for everything. I worked at many different jobs, mostly full time while going to school. Of course tutition was cheaper back then and as a nurse it was assumed I would have no problem getting a job. The year I graduated was a year of nursing overage and jobs were few.

But they did pay for all four years of college for my brothers and sister. They had the means to do that. I would hope that if my parents didn't have those means, my sibs would have worked to pay their college degree themselves.

rfisher
09-16-2010, 12:28 AM
That used to be the case, but isn't any more.

Even if you don't live with them? If so, I'd declare emancipation. You'd probably be better off in the long run.

My niece got married right out of high school. She had a full academic scholarship and her husband had worked for Wal-mart since he was 16. He was 21 when they got married. He sold all those stock options they gave employees rather than money, continued to work and not only paid all his college expenses but their living expenses as well. Between the two of them they put both of themselves through school, graduated with no debt, owned a house which made a nice profit when they sold it and moved to where they now live. It can be done if the student wants it to happen.

jlai
09-16-2010, 12:37 AM
But they did pay for all four years of college for my brothers and sister. They had the means to do that. I would hope that if my parents didn't have those means, my sibs would have worked to pay their college degree themselves.

My parents paid for my college. They lived very cheaply and paid through the nose for my school. I wasn't proud of it but I was a foreign student at that time and I couldn't work off campus or qualify for US government aid. That had a real impact on me and I felt kinda depressed about myself throughout college.

After I graduated and got a job I supported my parents in return.

attyfan
09-16-2010, 12:42 AM
I think this is the problem: parents don't have money because they're not saving for it.
...


IMO, this is an older problem than many think. Fifty years ago, for example, my dad (who worked in the aerospace industry) was banking his overtime so he could send my sister, my brother and myself all to college -- and we weren't even in kindergarten at the time. Many of his friends thought he was crazy ... especially for planning to send his daughters to college ... and they didn't save anywhere near as much. When I reached college age, the market had dropped out of aerospace, but the money was there for us. Many of dad's friends were not able to help their kids (sons as well as daughters) because they hadn't saved enough.

mpal2
09-16-2010, 12:51 AM
So you think the only students who should get financial aid are ones who are shouldering their entire education responsibility themselves?


So you were one of the students taking financial aid while receiving family support?

Not trying to be snarky, just trying to understand where you're coming from.


I think mpal was saying that for those who aren't getting parental help, it is too difficult to get adequate aid because the system assumes parental help and determines aid based on the parents' financial status. They end up with tons of loans, too often. I don't think the point was that those getting parental help should not qualify for any assistance.

:) PDilemma explained it. That's exactly what I meant.

Just a further explanation to my original comment: my parents always assumed they would help for college just because it was so important to them that we go. They were both the 1st in their families to get college degrees. They did it on their own without help and they really wanted us to have an easier experience. College was always the expectation. My sister dropped out halfway through and she got a lot of crap from my parents until she went back. They did save up for it because it was always their goal for us. By the time we were old enough for college there was enough to get us mostly through an undergrad degree. We had to take out financial aid at the end.

Another reason why I needed my parents help is that I didn't have a car for the 1st 3 years of college. My summer earnings didn't go to a car because that was my spending money for the entire school year (books, food, entertainment, etc). Maintaining my GPA for the scholarship money was worth more than I could make at an on-campus job so I did a lot of studying in place of working.

I didn't start taking out financial aid loans until my senior year and grad school. I had a car and a job then so I stopped getting money from my parents for school. It really annoyed me that the financial aid system assumed parents helped students and based it on their income. I just don't see where that's necessarily in the best interest of the student.