Article: To succeed after college, avoid taking out student loans

[undertheradar]

Housing cost is the #1 reason we left Southern California. We want our children to live in a place they can afford to live on their own.

We will not qualify for any aid. We make too much money to qualify but too little to actually pay for private school.

I am NOT clueless at all and at this point we plan to offer our children the local 4 year college and living at home. Anything beyond that they will have to pay the difference.

CA state schools are some of the cheapest in the country BTW.

Dawn

You also are then familiar with the enrollment quotas used for the state schools. As for cost of living, you go where the work is. We have been trying to get to a lower cost area for 5 years and it isn't a good time to be trying to do it. Our son is at the local 4 year college and tuition is $31,000/year as a commuter.

 

[DawnM]

Ah, well, yes, if you can't find work elsewhere then you don't have a choice.

Truth be told, I miss CA terribly, but the rest of the family is happy here so I am not pushing it.

I have no idea where your child is going to school, but Cal State schools and UC schools still hold very low tuition, as far as I can see online (and I admit I haven't lived in SoCal for 5 years), it looks to still be under 10K per year for tuition.

Am I missing something?

Also, enrollment quotas? Are you talking about the racial stuff? This does upset me as my youngest is Asian and extremely bright.

Dawn

You also are then familiar with the enrollment quotas used for the state schools. As for cost of living, you go where the work is. We have been trying to get to a lower cost area for 5 years and it isn't a good time to be trying to do it. Our son is at the local 4 year college and tuition is $31,000/year as a commuter.

 

[disney fan 2013]

I'm not saying there shouldn't be loans...just that it isn't preposterous for people to pay for college for their kids. It is a doable thing - especially at an undergrad level.

I understand that, but I am just saying that I don't feel that my parents should have to hand all of their money over to me, my brother, and sister, because we want to pursue higher degrees. I am going to medical school, my sister is getting her Masters, and my brother is still in high school. Yes, they saved money for us, yes they helped us when they could, yes they would give up anything to help us succeed. My point is that I don't want my parents to have to give up everything for me. They paid off their own college loans - I don't expect them to put themselves and all three of us through college and not have any fun during their own lives because of it! I love my parents and appreciate everything they have done up to this point - medical school is an expense I would like to pay on my own and not burden them with.

 

[DawnM]

Yeah, you may not be able to avoid a loan.

My husband did a year round program for grad school and finished in 12 full months (3 semesters) instead of the 3 years it took me (I worked while I went to grad school), but his was far more intensive. We did take out a loan for him. It was a total of $30K. It seemed huge at the time, but it was worth it for many reasons (it was the top school on the West Coast for his major, he could finish in 12 months and get a JOB to pay for it, making it far more worthwhile in the long run, etc....)

I hear you too on the undergrad thing. For certain professions it really does make a difference where you go. When my boys get to college age and if they show great potential and desire to do something that might require a good school, we will re-evaluate how much we can help, but for now, they seem interested in things where it may not matter as much where they attend undergrad.

Since you won't be able to work while going, and you will have to pay for your living expenses, how much of a loan do you anticipate having to take out?

Dawn

For the field that I am going into, the closest one is in western CT, which is a 2.5 hour drive from my house. I have certainly thought about going there, but the 5 hr/day commute doesn't seem justifiable, with regard to the cost of gas around here and the time that would be taken away from when I could be working. I'm pretty sure I would have to buy a new car to get me through 6 years of doing that, as well (train would be double the cost of gas, plus I'd need to drive to the train station and pay to park in the garage.... The joys of living in rural RI). If I just lived in CT, the cost of living there is much higher than the cost of living in FL (where I am probably going, instead). Additionally, the FL school is year-round, so I will finish in 3 years rather than 6 at the CT school.... So when you look at the $25,000/year tuition in that sense, it is actually seems to cost less than the school you discussed.

The list of comparisons could go on forever, and I understand where you're coming from, but I just can't understand how some people can say that there is a way for everyone to avoid taking out loans....

I think the problem comes from making hasty decisions and not looking at every aspect of a situation. I went to my bottom-choice undergraduate school because it gave me a full scholarship. I work a lot (at jobs that are not fun, LOL) and rarely go out. I am coming away from undergrad with a small loan which I will pay off next month. I think I have done my best in looking at all sides of the situation when choosing the most financially-beneficial graduate school, but I would absolutely love if someone had some insight as to how to avoid the loan! I would not be afraid to admit that I am wrong if there is indeed a solution somewhere out there.

 

[eliza61]

I've always found it strange that so many people need student loans - or so much in loans. There are eighteen years between birth and college to save. The average student loan debt is $30k or so. That's about $1700 a year that you need to set aside to fund college.

Yes, for a lot of people, $1700 a year is impossible to come up with. But for a lot of people, it simply means making a few sacrifices. Driving a cheaper car. Taking fewer vacations. Skipping the new furniture for the living room. Going out to dinner less often. Saying "no" to expensive sports/dance/etc. And, of course the sacrifices of choosing a college you and your kid can afford - which might mean two years of community college and/or living at home.

It isn't like college costs should come as a surprise.

LOL. not laughing at you Crisi, it's just up until this recession hit and people were literally FORCED to start saving, we were not exactly burning down any bridges in the savings department.
People were maxing out credit cards to take a vacation, so saving for college probably wasn't high on the list.

The ability to say "NO" really is not a strong characteristic of people now.

 

[monarchsfan16]

Graduating without loans can be done. I'll actually be graduating in 2011 after 6 years straight of school (undergrad and grad) with NO debt. That being said, my sister will graduate in 2012 with a small amount of debt (probably in the $10k ballpark).

My parents did save for college (and retirement). They also live well below their means, so they were able to use some of their income and liquid savings. Neither one of us were EVER guaranteed money for college, so both of us did what we could to save some (but not nearly enough) but when the time came they realized they could afford approximately the cost (tuition, room and board) of our instate school. They told us we were free to apply to whatever schools we wanted, but they could afford X amount, so we had to figure out how to make things work and our solution could not include significant amounts of loans.

Every school I applied to gave me enough in merit scholarships to bring the cost down to within a few grand of the state school. My parents told me to pick whichever one, because the costs were in their ballpark. I ended up choosing the state school (which only gave me $1000 in merit scholarship each year). I was fortunate; despite several financial obstacles they were WILLING AND ABLE to pay my way through undergrad. I paid for my textbooks and spending money with a part-time school break job. I graduated with money in the bank a year ago.

My field requires a master's degree. I got into every school I applied to, and was offered money by 3 of the 5, but in the end I stayed here, as it remained the cheapest (and it was HELL making that decision). I have had an assistantship this year, which provided me with tuition waivers and a stipend that (because I chose a VERY inexpensive living situation) is double my living expenses. I've had about $2k in out of pocket "mandatory fees" to pay to the school. Nothing major. Next year, because of the nature of the program, the assistantship (and consequently the tuition waivers) ends, but I applied for (and was accepted for) a training grant, and will receive a stipend that will nearly cover my tuition. Again I'm anticipating approximately $2k in out of pocket expenses to the school. I'll live at home next year, and commute the 45 minutes, because, while I can swing it, I can't justify the expense of living alone. I'll hopefully graduate with more money in the bank than I finished undergrad with, because I've been banking what hasn't been needed of my stipend for living expenses, and I'm hoping to work a little bit at the job I've held an on call position at since freshman year to cover the bulk of my fuel expenses.

My sister chose a different path. She was also given the same parameters for affordability. But she did NOT want to go to the instate school, and was not offered scholarships by her choice school. She is at an expensive out of state public school, and chose to go there knowing a small amount of debt would be in her future. My parents managed to pay all but $1000 (which came from my sister's savings) her first year, but did have her take out the subsidized stafford loan this year. They think they'll continue this arrangement for the remainder of school, so she'll graduate with about $10k in debt. Given that her choice school costs about $10k more per year than mine did, that's pretty good.

My parents DID make sacrifices. They're divorced, so they've realistically had less ability to save over the years. They cut back on eating out a bit. My dad's shiny car habit seems to have died down. Mom was sort of forced to quit taking big vacations, because she doesn't want to go without us, but our schedules don't match hers. THat savings went to school. But neither of them regret their choices. They're both very proud to have gotten us through with so little debt, and dad is getting the biggest thrill out of seeing me start to think about buying a condo in a couple of years, something that wouldn't be possible if things hadn't turned out the way they did. THey're nervous about what my sister will face, but we know her, and have no doubt she'll overcome the debt quickly.

 

[disney fan 2013]

Yeah, you may not be able to avoid a loan.

My husband did a year round program for grad school and finished in 12 full months (3 semesters) instead of the 3 years it took me (I worked while I went to grad school), but his was far more intensive. We did take out a loan for him. It was a total of $30K. It seemed huge at the time, but it was worth it for many reasons (it was the top school on the West Coast for his major, he could finish in 12 months and get a JOB to pay for it, making it far more worthwhile in the long run, etc....)

I hear you too on the undergrad thing. For certain professions it really does make a difference where you go. When my boys get to college age and if they show great potential and desire to do something that might require a good school, we will re-evaluate how much we can help, but for now, they seem interested in things where it may not matter as much where they attend undergrad.

Since you won't be able to work while going, and you will have to pay for your living expenses, how much of a loan do you anticipate having to take out?

Dawn

I am planning on working during school, just not 60+ hours/week. Somewhere around 20 would be good, probably, but I will have to feel it out when it starts up. With the 7 months I'm taking off from school, added to what I already have saved up, I will have about $20,000 going into it, which I will put towards living expenses. Assuming that during grad school I make about $500/month after taxes (which seems soooo small ), I should only need to borrow tuition. "Only" $90,000 - scary, but from talking to doctors who went through this school previously, they had no trouble paying it off and have rewarding jobs and comfortable lifestyles (and many of them had undergraduate debt of $30k+, as well - I have none).

I am also very, very lucky that DBF got a great job out of college and is an extremely frugal spender! Basically every penny, with the exceptions of car insurance and very low rent, is going towards the purchase of a house. He will have $65,000 "extra" saved up by the end of the year for a down payment. We don't spend money on anything "extra" (clothes, DVDs, going out, other fun things people our age tend to do) - we go see the discounted $6 movie once/week and eat together at one of our house's. However, in the long run, I can expect to make approximately 3x more than him per year.

Basically, what I'm attempting to say is that we are trying really, really hard. I think investment in medical school is a huge thing, and we sacrifice a lot of things that other people our age enjoy doing and seem to do regardless of the cost. I am mortified by the amount of credit card debt most of my friends have, for example. DBF and I both have $0 of credit car debt (although we use them frequently, just pay them off every month), and $0 student loan debt from undergraduate school. I think buying a house is a good investment, rather than renting, if DBF has the financial means to do so.

But I am still open to suggestions about avoiding the whole loan thing altogether, lol .

 

[Crystal824]

Many people have said that saving for college is doable. It probably is for many families. However, it wasn't for my family. My mom was a single mom without a college education; she wasn't excatly pulling in the big bucks. We never took vacations and rarely went out to eat.

I did take out student loans for both undergrad and law school and will be paying them back for years to come. Yes, between my DH and I it takes a huge chunck of our salaries, but it was what we had to do if we wanted to go to lawschool. We are paying them back. Yes, we put off getting married until we were 27. We didn't buy our first home until recently, we are now 30. Our first child is on her way and we are 31. Would we have liked to accomplish these life goals a little sooner, probably. That is the price you pay. I will start a 529 plan for our child when she is born. I don't have any goals of paying for her entire education. We will save what we can, but because of our own student loans, she will likely pay for some of her education.

We do have a better standard of living than my family did growing up and so will my child, but it isn't possible for every family to save for their children's education. Should I have just not gone to college or opted for a different field because my family did not have the means to send me to school? That doesn't sound fair. It that was the case, how do families get lifted out of the cycle of poverty. For me, it was student loans or not going to school. I choose the loans and would do it again.

 

[disney fan 2013]

I have had an assistantship this year, which provided me with tuition waivers and a stipend that (because I chose a VERY inexpensive living situation) is double my living expenses. I've had about $2k in out of pocket "mandatory fees" to pay to the school. Nothing major. Next year, because of the nature of the program, the assistantship (and consequently the tuition waivers) ends, but I applied for (and was accepted for) a training grant, and will receive a stipend that will nearly cover my tuition. Again I'm anticipating approximately $2k in out of pocket expenses to the school.

I so wish there was an opportunity like this available at any school that would grant my degree! This is exactly what I would need - even just having the tuition waiver would be so much more than I could ask for; I have enough saved up for the living expenses so I could care less about the stipend. I am extremely jealous of your opportunity!

And BTW, my younger sister is like your sister, but chose an out-of-state private school, for which I feel she will be getting the same degree as what she could have gotten at our in-state public school. Just goes to show that having the same exact upbringing and opportunities in life can lead to completely different outcomes - I'm graduating undergrad with $0 in debt and I'm too scared to ask her how much she'll have....

 

[magik]

• Be careful with picking a major. This is not to say that your major solely determines your career path, but if you spend 4 years getting a liberal arts degree without intending to go right to grad school, then you are in for a rude awakening when you enter the job market. I have several friends that picked a major because they were "interested in it" without looking at the earning potential. It is important to be happy in your career, but you also need to pay the bills.

I kind of disagree with this. I did exactly that; I majored in something with an eye towards earning potential, not towards what most interested me, and I have regretted it ever since. I majored in computer science, and yes, I found a nice job after graduation, and yes, I make more money now than most of my peers, but I am miserable in my job, and completely uninterested in working in this industry anymore.

I am taking steps to change that by going back to school to get a different degree and teaching certification. Yes, I am spending tens of thousands of dollars to go back to school to get a degree that will hopefully result in me taking a job in which I make far less than what I make now because I'm more interested in that kind of work than what I'm doing now. I consider it money well spent if the end result is me working in a job that makes me happy rather than a job that makes me miserable.

I really wish now that I had majored in art history or English or anything else than computer science because then I wouldn't have wasted credits and time taking classes that bored me out of my mind just because the degree was more marketable.

I think as long as a student thinks ahead, does internships, and is realistic about their job prospects, they should feel free to major in whatever interests them.

 

[crisi]

Crystal, it does sound like you are the case where it isn't possible. And there are PLENTY of people like that. My husband had student loan debt. There is no way his single mother could afford college for her kids - and his Dad was absent.

I'm not really talking about grad school. I'm talking about a Bachelors. For middle class people. The ones with yearly trips in their signature files here who are saying "but I can't afford college for my kids." No, those folks are CHOOSING not to afford college for their kids. Which is fine - no one is obligated to pay for college for their kids, but recognize you or your kids are ending up with loans - or larger loans, because of the choices you are making.

There are only a handful of people who can afford college if they don't save for it. And not many who can afford private college or grad school without loans even if they save for it. But many of us here can afford a four year degree from a public school - IF we save for it.

 

[disney fan 2013]

Crystal, it does sound like you are the case where it isn't possible. And there are PLENTY of people like that. My husband had student loan debt. There is no way his single mother could afford college for her kids - and his Dad was absent.

I'm not really talking about grad school. I'm talking about a Bachelors. For middle class people. The ones with yearly trips in their signature files here who are saying "but I can't afford college for my kids." No, those folks are CHOOSING not to afford college for their kids. Which is fine - no one is obligated to pay for college for their kids, but recognize you or your kids are ending up with loans - or larger loans, because of the choices you are making.

There are only a handful of people who can afford college if they don't save for it. And not many who can afford private college or grad school without loans even if they save for it. But many of us here can afford a four year degree from a public school - IF we save for it.

I'd say 90% of my college friends' families fit this description. And beyond that - It is very difficult to find a job around here, but I'm even fortunate enough to be the hiring manager at one of my jobs and my friends STILL do not take the job! 10 hours/week = $75 at minimum wage, which is enough to pay for AT LEAST food and gas for a week for a college student. I mean, I know working at a fast food restaurant isn't exactly glamorous, but instead they are paying for these things with loan money! A $10 dinner at Applebee's, bought with loan money, will probably more than double! I wish they had gas prices, grocery prices, and restaurant prices listed that accounted for interest on everyone's loans around here .

 

[crisi]

I'd say 90% of my college friends' families fit this description.

Its 90% of my coworkers, too. They have boats and nice cars and go on vacations - the moment a bonus arrives they spend it redoing the kitchen or going to Vegas. Their kids play hockey and spent $5k a year on ice time and have iPhones - and they stand by the coffee maker with "I'm not sure where I'm supposed to come up with $10k that the college says is my contribution! That's so expensive. "

 

[dawnball]

I've always found it strange that so many people need student loans - or so much in loans. There are eighteen years between birth and college to save. The average student loan debt is $30k or so. That's about $1700 a year that you need to set aside to fund college.


It isn't like college costs should come as a surprise.

The school my husband attended is 52K/year right now. Plus inflation. Looking at inflation over the last 18 years brings you up to $81K/year. That's 27K/year to save.

Does it still seem so easy? For more than one child? $54K/year?

It isn't that people can't or don't save for their children's educations. It's that with all of the things we -do- save for (education, retirement, emergencies, home repairs, etc) it's difficult to save enough. Especially when you don't know what "enough" will be. Remember in 2003-2004 when tution was going up 10+% a year?

Likewise, if your student has a bad semester and needs to make up some courses? Or has a change of degree? Or just can't do things quite fast enough to get everything done in 4 years? That's money you weren't expecting to spend. You can't go back to when you thought that 240K was enough to save and save another 20K (just $1100/year!) to make up the difference.

I believe in the intrinsic worth of a quality education, not that it is a strict cost-benefit analysis of future earning potential. At the same time, willingness to accept and pay off their own student loans is an excellent sign that my child is becoming an adult and placing value on their own education. "Where is the money coming from? How will I pay off any loans I need?" is a conversation that I believe every child ought to have before they make a final decision on which school to attend.

 

[DawnM]

HA! Yes, I see this too.

DH's coworker spent $4K for a week of vacation and then said she wouldn't help her daughter with college expenses.



Meanwhile, DH's boss (who has much more $$) is living in a modest home, driving an older car, and helping his 2 kids with college.

Dawn

Its 90% of my coworkers, too. They have boats and nice cars and go on vacations - the moment a bonus arrives they spend it redoing the kitchen or going to Vegas. Their kids play hockey and spent $5k a year on ice time and have iPhones - and they stand by the coffee maker with "I'm not sure where I'm supposed to come up with $10k that the college says is my contribution! That's so expensive. "

 

[DawnM]

90% or more of the careers out there do not require a school with tuition of 54K per year!

That is like saying that all my children will never get into college if I don't send them to the local prep school that is almost 20K per year per child.

There are alternatives for MOST fields of study.

Dawn

The school my husband attended is 52K/year right now. Plus inflation. Looking at inflation over the last 18 years brings you up to $81K/year. That's 27K/year to save.

Does it still seem so easy? For more than one child? $54K/year?

It isn't that people can't or don't save for their children's educations. It's that with all of the things we -do- save for (education, retirement, emergencies, home repairs, etc) it's difficult to save enough. Especially when you don't know what "enough" will be. Remember in 2003-2004 when tution was going up 10+% a year?

Likewise, if your student has a bad semester and needs to make up some courses? Or has a change of degree? Or just can't do things quite fast enough to get everything done in 4 years? That's money you weren't expecting to spend. You can't go back to when you thought that 240K was enough to save and save another 20K (just $1100/year!) to make up the difference.

I believe in the intrinsic worth of a quality education, not that it is a strict cost-benefit analysis of future earning potential. At the same time, willingness to accept and pay off their own student loans is an excellent sign that my child is becoming an adult and placing value on their own education. "Where is the money coming from? How will I pay off any loans I need?" is a conversation that I believe every child ought to have before they make a final decision on which school to attend.

 

[dawnball]

90% or more of the careers out there do not require a school with tuition of 54K per year!

That is like saying that all my children will never get into college if I don't send them to the local prep school that is almost 20K per year per child.

There are alternatives for MOST fields of study.

Dawn

Of course there are. And for some fields there aren't. And if you can't afford the school, or you can't the afford loans then you do something else. There's nothing wrong with that.

There's also nothing wrong with saying "My parents saved the $XXX,XXX that an average college education was projected to cost. I value the difference in educational quality between program X and program Y enough to want my first choice even if I have to take out a loan."

There's no more virtue to graduating college without debt than there is to buying a house without a mortgage. They're both what I would consider "good" debt. You don't want an overwhelming amount of it, you don't want it if you don't need it - but it's not the end of the world either. Better $30K of debt from a college degree than $30K of debt from a wedding in my book!

 

[minnie1928]

I can see how you can walk out with a degree and no debt. When I went to college I worked FT and went to school FT. That entitled me to benefits, including my employer paying for classes pertaining to my job. Seeing how I was working in a bank and I was going for an accounting degree...many of my classes fit the criteria. I also discovered CLEP (a little too late to make a real difference). At the time it cost me $75 to take a CLEP and a little more to have the credit transferred. Much cheaper than taking a class.

My parents saved nothing for my college education. They did however provide me with free room & board while I was in school. I took advantage of that for 2 years until I got married. I paid for all my books, fees & tuition at a private college and walked out with only $10,000 in student loans. And honestly, if I would have tried harder...I wouldn't have needed that much.

I am saving for my kids college, but I do not plan on paying for the whole thing. I think they need to be invested in their degree too. I saw a lot of kids in college who were just there to party because mom & dad were picking up the tab and that left an impression on me.

 

[crisi]

The school my husband attended is 52K/year right now. Plus inflation. Looking at inflation over the last 18 years brings you up to $81K/year. That's 27K/year to save. .

And are you clipping the "and go to a reasonably priced school" part of why it should be possible to pay for your child's education for a reason? Sure, if you go to a $50k a year school, its going to be rare to be able to afford that. Or go to grad school - again, as I said upthread.

 

[undertheradar]

DawnM,

Yes, the CA state schools do have racial quotas. While I am sure those quotas are great for those that qualify, it lessens the chances for others to attend. Many of my son's classmates have started the community college route and they complain about how few class choices they have. While the costs are much cheaper, most of these kids are finding that it will take 3-4 years to get core courses in. Due to all of the budget cuts, many of the state schools have a waitlist for transfers.