Paying for college

Earlier this week I sat down with a girl I mentor to read over her essays for college scholarships.

She got into some great schools (Tufts and Georgetown), but the financial aid hasn’t poured in the way she hoped. She got into UGA and is eligible for the HOPE scholarship. She wanted to leave Georgia and experience another part of the country, but she’s afraid of graduating with a ton of debt.

Her parents can’t help as much as they’d like. Her dad got laid off about two months ago. Her mom works but said the family will have little to nothing left after they pay the mortgage, other bills and expenses for her two younger siblings

Now she’s looking into grants, college loans and every scholarship she can find on FastWeb and other sites. She’s called some local businesses near her top college choices to see if they’ll have jobs.

This is the time of year when college acceptance letters come pouring in and tough decisions must be made.

Are you saying no to some colleges out-of-state because of the recession? Parents, are you telling your kids they need to stay in Georgia to save money?

32 comments Add your comment

Ernest

April 8th, 2009
8:21 am

Today’s topic is what our family is experiencing now. Our oldest has fallen head over heels for an Ivy that accepted him. Going there would require at least 35K/year from our family, which we do not have. This fixation reminds me of being in love for the first time, when common sense seems to go out the door (at least it was that way for me).

At the same time, he’s been accepted at two local schools and our out of pocket expenses would be drastically lower. Most can imagine what I am recommending. I’ve even indicated that if he wants to pursue his ‘love’, he will be responsible for finding additional monies (which is not guaranteed) along with repaying back the debt. He may not have a ‘typical’ college experience because he may have to work to pay his bills (there are some benefits to this in appreciating hard work and the value of a dollar though). I pointed out the benefits of getting a bachelor’s with little to no debt then continuing to grad school versus incurring over 120K worth of debt for bachelor’s and possibly compromising his ability to go to grad school because of the debt accumulated.

At the end of the day, it will be his decision. I feel all I can do as a parent is point out the pro’s and con’s of his opportunities and ‘hope’ he makes a ‘fiscally responsible’ decision. If anyone else has other suggestions, I’m all ears….

Actually

April 8th, 2009
8:50 am

Keep in mind that kids can’t borrow that much and that parents must cosign for any large loans. Be sure you are willing to do this.

When our kids were applying for colleges, we learned the hard way with the first one, that you need to have a frank discussion about financial ahead of time, if they are going to matter. Who knew that the Ivys and other top rated schools give little to no merit aide because all the candidates have very equal credentials. However, lower ranked (not poorly ranked) private schools often give full rides or lots of merit aide to students whose credentials are higher than their averages. The Ivys are very generous with financial aide based on need but most middle class families aren’t eligible.

It is hard to pass up the HOPE. For top students, and this young lady sounds like one, graduate school is becoming more and more common. In addition, who knows what kind of job market these students will graduate into. Save the debt for graduate school.

DB

April 8th, 2009
8:55 am

The dollars and cents are very important, don’t get me wrong. But I’m not totally convinced that they are THE single most important factor in choosing a college. That’s why it’s so important, up front, before the first college application is even filled out – preferably in junior year, when you’re doing visits to colleges, to sit down with your child and say, “This is the money we have for you/this is the money we will be able to contribute each year. Anything more than this will be your responsibility, either through scholarships or loans.” Put it on the table, and the child can make a rationale decision about how much debt they are willing to take on and how much working their way through school they are willing to do before they fall in love with a school and even apply to a school that they can’t afford. Or at least understand that the school may only be possible if all the stars line up fortuitously, so have a very viable Plan B school that they like almost as well, “just in case.” It’s a shame how few parents do this, out of embarrassment for just how little has been set aside or how little they can afford. Suck it up, parents. Learning that, for most families, money is finite, is something that kids have to learn eventually. If they haven’t learned it by now, it’s time, and no amount of wishing thinking or buying of lottery tickets is going to change that.

It’s just like Coach purses — they really, really want one as long as they think YOU are paying. But when they have their birthday money, suddenly spending all their money on one purse seems a litte . . . extreme :-D You can gauge the depth of their desire by how willing they are to part with their own money. If Ernest’s son really wants an Ivy League experience — it’s his money. He may decide that yes, it IS worth it to him to have that Ivy experience. He certainly won’t be the only kid on campus working his butt off waiting tables or delivering pizza in that town.

Nikole

April 8th, 2009
10:11 am

I am in a ton of debt after choosing an expensive college, but I wouldn’t trade that experience for anything in the world. It’s just money, and some things in life are so much more important.

HS Teacher, Too

April 8th, 2009
10:15 am

I appreciate the financial considerations, but I have strong feelings on the benefits of going beyond “Grade 13,” and whether you like it or not, that is often what the State schools turn out to be. I understand the sentiment that college is — an education is — what you make it. But there is something important to be said for venturing beyond your backyard. Attending a far-away school, and a private school at that, offers opportunities to meet people you might not otherwise ever meet, live more truly “on your own,” forces the issue of meeting new people and considering other ways of life, and so much more. (Can you get those things staying home? Sure you can, but I think you have to more actively seek them out.) I just feel that the intangibles are extraordinary and ought be given more value than just “but Private School X costs more.” There are countless people who don’t share my view, and that’s fine, too. That is why this is such a personal decision.

So, are these tangible and intangible benefits worth $120,000 in loans? Perhaps not, but perhaps so; more importantly in the context of today’s discussion, it’s not entirely fair to assume that 100% of the burden will be through loans. For example, Tufts and Georgetown are not small schools with small endowments.

If I were this young lady’s mentor, I would advise her to set up a meeting/phone conference with the financial aid offices at each of these schools, to explain her circumstances, and to see what they can do for her. She should also put this in writing, to convey to the schools that she is quite serious and took the time do to more than pick up the phone.

In my experiences (both personally and through friends and students), schools will not typically set out a financial plan that includes more than just the general Stafford loans. Which is to say, a $35,000/year school won’t send home a plan that says “take your Stafford for $3,000, plus take out private loans for $32,000.” The schools often can find grants, scholarships, etc., to make affording the schools surprisingly almost as easy as attending state schools. Moreover, the schools often WILL find these sorts of things to help students afford attendance. As students who decline their acceptance offers thus free up possible aid money, when an accepted student comes to them and says “you are, in fact, my top choice, but you need to help me be able to afford you,” it can be surprising what private schools are able to do.

So, should the girl necessarily take out loans to attend a private school in another state? That’s a personal decision. But to rule it out just because it’s more expensive, especially without exhausting all possibilities to get funding, is perhaps penny-wise and pound-foolish, to use an old expression.

On a personal note, I did attend an out-of-state private school for nearly $40,000 a year. Did I take out student loans? Yes, but my parents would not let me take out more than the most basic Stafford loan. Did I graduate with debt? Yes, but not more than a car payment a month. I’ve occasionally been envious of my friends who graduated without debt, but I’ve been able to pay my debts; I’ve also learned quite young how to budget and save, and the simple fact is that I wouldn’t trade what I got for my money for anything. To me, it was worth it. But again — I wasn’t allowed to swim in debt. My parents allowed me to take out Stafford loans that would be manageable when I graduated, and that was a compromise that worked for our family.

T&Cmom

April 8th, 2009
10:22 am

DB you hit the nail on the head. Kids need to learn the value of money. And while waiting until they are starting college is a little late, better late than never. Talk to them and have them understand their options. I have a friend who’s daughter was gungho about a particular college out of state until she realized that her single working mom could not afford all of the fees. And since she decided not to make the stellar grades needed for an academic scholarship she would have to work to foot the rest of the bills, she decided to go to school in state. Funny how that works when kids realize they have to be responsible and work for things.

jim d

April 8th, 2009
10:35 am

Nikole…
So you went broke for some memories? What a nitwit!

Reality2

April 8th, 2009
11:36 am

The thing is, people like Nikole may say they wouldn’t trade the experiences at the expensive colleges for anything in the world (I would not say that of anything, but that’s a different issue), but they don’t know what their experiences might have been at a more affordable colleges.

I think if anyone can be admitted into one of those highly-regarded institutions are, as Gladwell noted in his book, smart enough, and they can be successful even if they attend less known colleges.

jim d

April 8th, 2009
12:31 pm

how nice,

imitation is the most sincere form of flatery.

However, the 10;35 post was not me.

jim d

April 8th, 2009
12:39 pm

Kids can be responsible aand even resilent when they want to find money to follow a dream. i encouarge every one of them to think their situation through, weigh their options and go for their dreams.

Mine went out of state to one of the top rated schools in the south and has found a way to make it happen without pop having to foot the entire bill. Allow me to mention military contracts to anyone wishing to consider that type of career upon graduation. Many of the top schools in the country have ROTC programs and can assist with getting a contract that can make some of the most expensive schools affordable.

GO ARMY!!

Reality 2

April 8th, 2009
12:43 pm

People like Nikole may say they would not exchange their experiences at expensive colleges for anything else (and they mean it), the truth is that they really don’t know what their experiences might have been at more affordable colleges. Those who are admitted to prestigious colleges are probably smart enough to succeed even if they go on to less prestigious schools (as Gladwell’s book suggests).

DB

April 8th, 2009
1:04 pm

All of this comes under the category of educating your children in personal finance. Frankly, I’d recommend the college talk at the beginning of 9th grade. I know that a lot of people feel that is too early and too much pressure on 9th graders, but there are a lot of kids who wished they had realized that if they had worked just a little harder, they would have had their pick of scholarships instead of their pick of student loans. I don’t mean sit down and scare them to death. Just lay out the facts of life — take a few schools that they might like, such as UGA, Tech, Emory, Duke, UNC, Wake Forest, University of Miami, Auburn, Furman, Samford, etc., do a spreadsheet of the costs (the schools have pretty good financial aid disclosures on their websites) and then discuss the cold hard facts. Many colleges are committed to making sure that you have the means to attend if you are accepted, through some combination of grants, waivers, and student loans, but the better you are academically, the more grants and waivers, and the fewer student loans.

My child’s econ teacher recently had them do a project that was quite an eye opener for a lot of the kids in their class. There were three income levels: $200,000 K salary, both parents working professionals, with two kids, 8 & 3, in a private school. Another was $90K, both parents working, two children same age, public school. The last was $40K a year for a single mom with the same kids. Each child drew a scenario out of a hat, and they had to come up with a budget that included rent/mortgage, car, insurance, groceries, school/child care costs, savings (including mutual funds, CDs, etc.), etc. And they had to have real-life example of each — be able to explain a mutual fund, have ads for CDs, apartment rentals, stubs from eating in restaurants, etc. My child drew “single mother”, and was stunned when I cheerfully kept throwing out different expenses she would have to account for. (”OK, you’ve got your car payment — but hmm, you haven’t increased your gas budget to account for the additional commuting time since you moved out to a cheaper apartment.”) She ended up getting an A+ on the project, but it would have been nice if they had done this a couple of years earlier, instead of a month before they graduate! It’s not like she’s not aware of our own family’s financial picture, but there’s a lot to be said for going through it yourself.

jim d

April 8th, 2009
1:10 pm

Clark Howard live on School Choice!

http://clarkhoward.com/

streaming audio

shiwamski, phd

April 8th, 2009
1:43 pm

G Man, you are writing so many blogs (you are into pure quantity now) that your quality has sharply diminished (especially the spelling). You’ve always been somewhat pedantic, but the shear quantity now seems to indicate that your blogoholism is spinning out of control. Get out of the house and take a stroll through Southlake Mall. Tutor some of these kids who are trying to get into college. The encyclopedic nature of a lot of your blogging is truly amazing. Occasionally, you get detoured and go on a rant against Dr. Trotter. John Trotter seems to drive you crazy! Watching this is better than watching Smackdown. John Trotter has always been a great “heel” (bad guy). But, like Dusty Rhodes, this perennial heel can often morph into a Baby Face. I agree with one of your personalities who suggested that the experiences of going away to college are worth the debt incurred. The students have almost the rest of their lives to pay back the loans. The friends made in college are often friends for life. What kind of price tag can we put on this? Heedabeeda Hoo Hoo! Go Holyoke! How ‘Bout Them DAWGS! Go, You War D_mn Eagles! Hold Dat Tiger! Roll Tide! Rocky Top, You’ll Always Be Home Sweet Home To Me…Good Ole Rocky Top, Rocky Top Tennessee! Bring’em Down, Sippery Rock, Bring’em Down! Newberry College All The Way! U. of Phoenix In Every Office Park In America! Troy…The University Where The Sun Never Sets!

Rev. Jimmy Jack Bourbon

April 8th, 2009
1:59 pm

Our eldest son, Henry Dickel Bourbon, chose to stay at home (I presume this is a compliment to his mom and me) and attend Clayton State University which is a superb institution with the likes of Dr. Gene Hatfield (about to retire) and Dr. Rice having taught their for many years in the History Department. Both of these gentlemen, along with their friend Bo Bolander, have been a great credit to the university and to the Clayco Community. Henry made a great decision, but we would have supported him if he had also chosen Yale where he was also accepted. He tells us that he wants to go to law school, and hopefully will be accepted there. Then he can become a Connecticutt Yankee. Go Lakers, Go Go Go Go!

Ernest

April 8th, 2009
3:27 pm

Good points you raise, DB. We actually created spreadsheets, comparing his colleges using a variety of criteria. Cost was included but I go back again to being in love…… :) Things are different when you no longer use OPM (Other Peoples Money).

In fairness, I should mention ROTC as a consideration for possibly getting funding. Thanks JimD for reminding me of that. My stance now is to ‘try’ to keep my opinions to myself and be helpful with the process. In fairness, he is in a pretty good position with respect to his options.

BTW JimD, how is the first year at the Citadel going?

Rev. B.

April 8th, 2009
4:48 pm

Our eldest son, Henry Dickel Bourbon, chose to stay at home (I presume this is a compliment to his mom and me) and attend Clayton State University which is a superb institution with the likes of Dr. Gene Hatfield (about to retire) and Dr. Rice having taught their for many years in the History Department. Both of these gentlemen, along with their friend Bo Bolander, have been a great credit to the university and to the Clayco Community. Henry made a great decision, but we would have supported him if he had also chosen Yale where he was also accepted. He tells us that he wants to go to law school, and hopefully will be accepted there. Then he can become a Connecticutt Yankee. Go Lakers, Go Go Go Go!

Rev. B.

April 8th, 2009
4:50 pm

jim d, aren’t you and your “brothers” and “sisters” tired of blogging?

Tony

April 8th, 2009
4:52 pm

One of the payoffs of better colleges is better paychecks. This is how a person is able to pay off the college loans. I graduated from my university of choice, a private institution with an excellent reputation for academics. This has paid off for me. The loans were paid within five years of graduation.

The costs for college were completely my responsibility. My family’s income was above the cut for financial aid and I knew I would have to shoulder the tuition myself. I’m glad I did! Good luck to your protege.

Earl of Ft. Liquordale

April 8th, 2009
5:02 pm

Hey, Reverend, I thought the AJC Weenies were trying big time to keep you off their anemic blogs. Rev., they can’t stop you! Tell’em all that you will take up a big Tithes & Offerings at the Hosea Williams Merorial Church of World Peace and Reconciliation Beginning in Clayco and pay for all of the youngins to go to college. We’re heading up there next week, and Abe and Eli and I want to buy you lunch at Butch’s.

Anemic Blogger

April 8th, 2009
5:04 pm

The AJC Weenies will let my anemic blog on now. No wonder the paper is dying.

Herr Gunnistein

April 8th, 2009
5:11 pm

Pleae let me, Laura Diamond, be the only one who gets to blog on your site.

Earlie

April 8th, 2009
5:16 pm

Hey Jemmie Jackson, try changing the way you spell your name, and you might be able slip some of your pearls of wisdom onto the AJC blogs. These little AJC Babies are worst than the Clayton News Daily one were. J. J., you’re just too much for them, Mr. Berrbon! Ha! Ha!

jim d

April 8th, 2009
5:35 pm

Ernest,

16 days and a wake up til rec day should say it all.

Earlie

April 8th, 2009
5:49 pm

Lee

April 8th, 2009
8:02 pm

I suppose there are some firms that place an emphasis on where you got your degree, but I’m willing to wager not many. Speaking from experience as someone who works for a Fortune 500 company and has sat on numerous employee selection committees, where you got your degree rarely gets more than a casual glance… and I’ve hired folks from Duke and Vanderbilt to some of the most podunk little schools you can imagine. After you have been in the work force, it gets even less and less important.

The HOPE Scholarship has made Georgia colleges and universities one of the best values around. My oldest went to UGA and all we had to pay was living expenses and incrementals. Not bad.

If you’ve just gotta go out of state, do your homework. There are plenty of programs out there to help defray the cost.

Pope Earnest T. Bass IX

April 8th, 2009
11:51 pm

Hey, “Lee” (one of your 100 or so fake monikers), you ain’t hired anyone. You teach in DeKalb County…English, so quit murdering the King’s English.

Buddy

April 9th, 2009
2:06 am

Laura, you are a doll baby. Thanks for caring some much for our Bourbon vanilla beans and our children.

wilma d. durell

April 9th, 2009
2:15 am

i know who is doing all (well nearly all) of your blogs. I teach with this fellow. I know that the parents are complaining that he blogs all day long in his class. The students are complaining too! If he really cared about the children, he would teach the students instead of blogging all day during class. Giving students a bunch of busy work is not teaching them.

catlady

April 9th, 2009
9:38 am

My experience with 3 kids in private colleges was that they made it affordable (I guess because they wanted my kids?). As a single mom with a fair income, they each qualified for maximum federal aid (which really isn’t all that much compared with over $30,000 per year) and then the college made up the difference with grants and work-study. I had little to pay until the last child’s senior year (when my income had gone up and my dependents had gone down) and then still the amount was a reasonable stretch.

Some colleges guarantee to meet full need (as determined by the FAFSA–watch out about what they consider your ability to pay. It may not fit your definition) and others do not. Check that out. Your mentee should be sure the colleges know of her changed financial situation re the unemployed father. They may be able to sweeten the pot.

Isn’t it early to know of the financial aid awards? As I recall, they did not come out until the early summer?

She should wait until she has the award letters in hand, if possible, to decide. Of course, some colleges demand an answer and a deposit BEFORE they give the final award letter. Some will give you an estimated award letter.

All my children graduated with significant debt. None would take back their experiences. They certainly know the cost of their opportunities.

My impression is that many Georgia private colleges are a little more generous due to HOPE competition for top students. She might want to think about that.

Pope Earnest T. Bass IX

April 9th, 2009
10:18 am

Catlady (DeKalb Male Teacher): You have NEVER filled out a FAFSA form because you have NO children Sorry, Charley, but the truth has to be told because so many times you nastily attack others (especially Dr. John Trotter) on these blogs. You have to be esposed. Calling yourself a mother of three kids in private school does not make it so. I can call myself the Pope but I am still just Earnest T. Bass.

Pope Earnest T. Bass IX

April 9th, 2009
11:02 am

Have you now banned the Pope?