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Post by Deleted on Mar 6, 2011 20:28:02 GMT -5
I'll say that the thing that startled me the most about YM was the number of posters who don't feel responsible for their kids' education. Some of that comes from me being a second generation college student and my own kids being third generation. My daughter paid for her professional degree, but we paid for undergraduate (with the help of scholarships).
I cannot imagine my grandkids not going to college. From the day I was born, it was "when" you go to college, not "if." My father died when I was five, and a trust fund was set up . . . to send us to college. It was actually our SS/VA benefits that paid for it because the trust was broken, but that tells you the mindset.
I knew to pay it forward.
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schildi
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Post by schildi on Mar 6, 2011 20:39:49 GMT -5
No, I would not do that. Our mortgage is almost paid off, and we have 10 more years until the first kid goes to college. With no mortgage, I hope we can help out by "paying as we go". But that's only plan B. Plan A is to get them a college education for free. :-)
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HappyLady
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Post by HappyLady on Mar 6, 2011 21:11:32 GMT -5
This message has been deleted.
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tractor
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Post by tractor on Mar 7, 2011 8:50:10 GMT -5
Maybe, our house will be paid off about two years before my oldest starts college. All things being equal, if we used our current mortgage payment, we could pay his way through college without having to borrow any money. My wife and I have a slight disagreement on this one. She worked hard, got good grades, and ended up with scholarships to cover all her college costs. I was a supported by a trust and didn't have to worry about college costs either. We both were able to graduate without any student loans, and I want my kids to have the same options available to them when they graduate so they can start their lives without being sattled with debt.
My wife wants them to have to work, get good grades, and generally earn their degrees. I think there's some merrit to that, but I also know that not having to worry about money all the time will make college less stressful.
Back to the original question. If I needed to use the house as collateral to help pay for my kids college, I would do it. However, we now have things in place that we shouldn't have to, and that would be plan "b".
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alabamagal
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Post by alabamagal on Mar 7, 2011 9:05:09 GMT -5
Isn't this the same group of people who look down on those who graduate with student loans, and yet very few seem to even want to help out their kids with college?
I have 2 in college, and no we are not mortgaging the house to pay for them. Since our kids went to private school for elementary/high school (although not one of the super expensive ones), we are used to paying some education costs. We continue to contribute about the same amount of money towards their college education. DD has full tuition to an out of state school. We contribute some to her living expenses, books, etc. We do get a $2000 pre year tax credit for books and fees (yes they total to about that), so we look at that as "free" money. She works some to help. She also has some small student loans, and will have to have a few more to cover summer expenses for her field of study. I expect her to have loans totaling $15k or so when she graduates. She is in a science field, so she should be in good shape. DS is freshman at state school, full tuition scholarship and is in pretty much the same situation financially. He is likely math major with focus on actuary science. Both kids have to maintain 3.0 GPA to keep their scholarships, and understand what happens if they don't. so far, this has not been a problem. I have one more to start college year after next.
So we are what I consider in between, no "blank check for college that causes me to mortgage my house", but no "you're on your own"
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upstatemom
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Post by upstatemom on Mar 7, 2011 10:15:36 GMT -5
No, our mortgage will be paid off when our oldest starts college. We do have a 529 and some taxable accounts that we have designated for their education but not 100% of it even if they chose a state school . I expect my kids to have some skin in the game for their education but do not want them to be overwhelmed by student loans.
I am reluctant to move more money to the 529 accounts, who knows what the college aid formulas will be when the kids start school. I think its good to keep some of the funds in my DH and mine names too.
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Post by Savoir Faire-Demogague in NJ on Mar 7, 2011 10:19:09 GMT -5
Phil, you're an engineer, so you're kinda being an idiot here. Of course an Engineering firm isn't going to hire someone with a Russian Literature degree. The world needs social workers too.......
Actually we do not need social workers. The need for these types of degreed graduates was engineered....
Sorry Swamp, I could not let that one go....LOL
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Urban Chicago
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Post by Urban Chicago on Mar 7, 2011 10:40:23 GMT -5
Yeah, but there's a huge difference between giving the kid everything and not giving them ANYTHING.
As some of you know, I work in College Aid. I have seen many parents do the home equity loan thing, and I have to say I would not consider it for my kids. However, that does not mean I wouldn't pay anything at all!
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kimber45
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Post by kimber45 on Mar 7, 2011 11:05:31 GMT -5
Nope, did not and would not. DS took out loans, and worked part-time. We did help him out by paying his car insurance and cell phone, buying him food, etc. He has about $15k in loans.
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bean29
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Post by bean29 on Mar 7, 2011 11:21:44 GMT -5
We have been in current house a little over 5 years. Started out with at least 20% equity. It went up with the rise in value despite the fact that we took a homeequity loan for landscaping and dirveway. Recent sales seem to indicate a pretty steep decline in home values in my area. Not sure what my house is worth today, but suspect that they may decide I only have 15% equity. I will not be mortgaging my house. Will be seeking other financing and paying cash for as much as possible. DS is a Junior so College is not far off for us.
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Clifford
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Post by Clifford on Mar 7, 2011 11:42:35 GMT -5
We plan to pay off the mortgage early and cash flow the college expenses for our 2.
I have been thinking about how my employer managed my reimbursement. I am toying with the idea that I will pay for all classes for which they earn a "B" or higher. This could help with the motivation side of "Daddy's paying for it".
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Post by Savoir Faire-Demogague in NJ on Mar 7, 2011 11:53:44 GMT -5
We plan to pay off the mortgage early and cash flow the college expenses for our 2.
You'd be much better off just banking the cash you otherwise would be putting to the mortgage. It is easy to find liquid accounts paying 1.2% to 1.3%. You give yourselves many more options by not pre-paying the mortgage.
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thyme4change
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Post by thyme4change on Mar 7, 2011 14:22:52 GMT -5
Depends on the interest rate and how the rest of my investments are doing. Depends on our income and debt level, and how comfortable I will feel being leveraged at that time. I've got 10 years to decide, and I suspect so many things will change between now and then. I wouldn't go into hock to pay for their college - but I might evaluate all my leveraging options vs. paying cash. I believe there is a difference. (Maybe not, "going into hock" might be one of those terms that means different things to different people.)
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 7, 2011 14:38:45 GMT -5
Our standards regarding college for the kids are a little muddled right now. Luckily we still have a few years to get everything ironed out. On the one hand, the girls have already been told, repeatedly, that they're on their own in terms of paying for school. They better keep their grades up and get scholarships or they'll be enlisting to get the GI bill or something. That said, we do have some investments put away to help pay for school for them, and we'd be willing to help every month if we can. I've told them repeatedly that they can be anything they want, pursue any career they want, and some of them don't even require a college degree, but they do have to graduate with a bachelor of science from Stanford. Other than that one little thing though, anything they want. We have a standing deal that if they can get a full scholarship I'll pay for them to spend the summer between high school and college anywhere in the world they want to go. I'm really hoping that gets them excited, because a summer vacation is WAY cheaper than a degree.
No way we're mortgaging the house though. That one is totally off the table.
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sil
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Post by sil on Mar 7, 2011 15:03:20 GMT -5
I wouldnt mortgage the house either, but I am concerned with the advice of maximizing retirement savings before considering opening a 529.
We earn a decent (not great) income in a HCOLA, but we're still ramping up our retirement savings. I filled out a FAFSA estimator and it showed expected parental contributions of $34k annually - I cant imagine paying that much out of pocket. Our state schools have an all-in price of about $25k/yr, which is still quite a chunk of change to pay out of pocket. And Im guessing that the costs of higher education will go up at the same rate (or faster) than our incomes. So I really feel like we have to start saving for our kids education now, or else subject our kids to a predatory private lender market.
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 7, 2011 15:10:00 GMT -5
I don't know that I'd describe the student loan market as predatory. We're talking about people who loan up to six figures to 18-22 year old kids that have never worked a day in their lives in some cases. They'll loan them money to obtain degrees that in some cases pay less on average than blue collar jobs. The interest rates are usually super low, and the pay back periods are really long. A kid can absolutely shoot themselves in the foot by taking on way too much student loan debt for the career they want, but I wouldn't describe student loan lenders as predatory at all.
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Firebird
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Post by Firebird on Mar 7, 2011 15:23:00 GMT -5
I don't intend to pay for my kids to go to college. IF they want it bad enough then they will pay for it their selves. College does NOT equal a career or even a job. Once they turn 18, they are adults. Time to act like one and pay your own way. Amen. Karma for this post ;D
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Post by Savoir Faire-Demogague in NJ on Mar 7, 2011 15:24:51 GMT -5
I'll say that the thing that startled me the most about YM was the number of posters who don't feel responsible for their kids' education.
Many of us paid for our own college education by working our way through college. What is startling is that many people will not bat an eye lash over forking over $50,000 for a kid to attend college.
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Firebird
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Post by Firebird on Mar 7, 2011 15:27:59 GMT -5
I'll say that the thing that startled me the most about YM was the number of posters who don't feel responsible for their kids' education.Many of us paid for our own college education by working our way through college. What is startling is that many people will not bat an eye lash over forking over $50,000 for a kid to attend college. Would give karma for this post too, but my powers are down at present. I'll save for my kids, but I'm sure as heck not giving them a free ride to do whatever they want and produce whatever results they want. Mom & Dad's money will go only this far, no further; if you want more / better / different after that, you pay for it yourself.
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973beachbum
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Post by 973beachbum on Mar 7, 2011 15:29:30 GMT -5
I don't know that I'd describe the student loan market as predatory. We're talking about people who loan up to six figures to 18-22 year old kids that have never worked a day in their lives in some cases. They'll loan them money to obtain degrees that in some cases pay less on average than blue collar jobs. The interest rates are usually super low, and the pay back periods are really long. A kid can absolutely shoot themselves in the foot by taking on way too much student loan debt for the career they want, but I wouldn't describe student loan lenders as predatory at all. Dark, they loan those amounts knowing that if the student defaults the US gov will make good on the loan. They also protections in place that short of death you arn't getting out of that loan. And the interest rates are from 6.8% to 8.6% even with those securities. Sounds like a good biz to be in. Maybe it isn't exactly predatory but it really is a stacked deck. Other than the Fed Gov I wouldn't want to deal with most of those companies.
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sil
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Post by sil on Mar 7, 2011 15:35:59 GMT -5
I threw that word "predatory" out there to describe private student loans, and I hate that word.
But I am really concerned about having my kids sign up for these. They are not always low interest loans. That's really a function of the going interest rates at the time you take out the loan. With Federal loans, if you sign up at a ridiculous time, at least you have the option to consolidate down the road once rates decline.
Secondly, like all SL's these private loans will follow a student throughout the life of the loan. I know we're all well-versed on this - you cannot ditch these loans in bankruptcy, yada yada yada.
Can a child at least get unsubsidized Stafford loans if the parents dont pay the full parental expected contribution?
If not, I would feel obligated to my children to pay either the total cost of in-state tuition or the total expected parental contribution, whichever is smaller. However, I would not feel obligated to pay for room/board or books/fees. they can live at home and get a part time job or a small loan to cover these expenses.
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Post by Savoir Faire-Demogague in NJ on Mar 7, 2011 15:46:08 GMT -5
Dark, they loan those amounts knowing that if the student defaults the US gov will make good on the loan. They also protections in place that short of death you arn't getting out of that loan. And the interest rates are from 6.8% to 8.6% even with those securities. Sounds like a good biz to be in.
The real problem is the unchecked escalation of the cost of higher education...fueled of course by 100s of billions in govt grants, needs based aid and other federal boondoggles. These fed the never ending expansion of colleges to attract more students, which in turn increased demand for more and more federal aid. It is the govt causing all this, not student loan lenders.
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973beachbum
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Post by 973beachbum on Mar 7, 2011 15:55:59 GMT -5
SF I agree with some of that. I would argue that if you looked at the stats that the for profit colleges, AKA Univ Phoenix etc. account for a HUGE percent of the college tuition upticks we have been seeing. They also have a larger percent of students paying for college using SL's as their total payment. Not for profit colleges do offer aid. For profit colleges almost never. Yet their tuition exactly matches the amount of SL's students can get. See a pattern? And seriously who here considers a loan that is totally guaranteed but still charges 8.6% low? Maybe it isn't predatory but the cards are clearly stacked in their favor.
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 7, 2011 16:37:52 GMT -5
And seriously who here considers a loan that is totally guaranteed but still charges 8.6% low? When the loan is made to an 18 year old kid that's never worked a day in their life, yeah that's super low. Would you be willing to fork over $50k of your retirement money to an 18 year old Xbox addict with no work history who says he'll pay you back after graduation at less than 8.6%? I sure as hell wouldn't.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Mar 7, 2011 16:44:43 GMT -5
Can a child at least get unsubsidized Stafford loans if the parents dont pay the full parental expected contribution? It depends. I had to go ask for them to file for one for me after my aid package was figured and then it is bound by the same limitations as Subsidized Staffords. I could only get $5500 in unsub loans and $5k in sub loans by my junior/senior year. At least I did not get them automatically. I had to show further need to get the Unsubs and I never qualified enough for a Perkins. I did just fine with no private loans by transferring and I even transfered to a fancy pants private school. There are ways to avoid them and also you never have to agree to the original finanical aid package as is, you can ALWAYS negociate it. The problem is people see "Ohh I qualify for $100k!" and sign the dotted line. No one stops to question do you NEED $100k in student loans and how about we recalculate. Just like a mortage just because you qualify for $X doesn't mean you should accept it. People don't know how to think or negociate anymore, that's the problem. While I don't expect every 18 year old to be able to negociate a contract, for pete's sake you should be able to grasp that $100k is A LOT of money and it's spelled out pretty clear that you need to DIE before they are discharged. What part of DIE don't people understand?
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Urban Chicago
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Post by Urban Chicago on Mar 7, 2011 16:50:47 GMT -5
Loan eligibility (in fact, any federal aid eligibility) has no relation to the whether or not you pay your Expected Contribution.
The problem you might see is that Stafford loans are generally not going to be enough to pay for school, as they have low annual limits.
For the rest, you have the options of Federal or State Grants(generally only for needy students) Working (rarely something a student can do and actually earn the cost of tuition) Funding from the school(depending on the school, based on merit or need. amounts will vary widely) Outside scholarships(almost all merit based but limited in amount) or parent borrowing. Parent borrowing does not have to be from the home equity.
Most of our students have a combination of all the above, and it still isn't enough. That's why I shudder when people say they won't contribute to the kid's education and they can work while going part-time, etc... Most of that is based on when the parents were college aged, and a lot has changed since then.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Mar 7, 2011 16:54:57 GMT -5
I was so pissed when they changed the requirements for the Pell Grant. Mine went "poof!" because now it wasn't based solely on my EC, it was based like the Staffords on mine AND my parents EC and they "made too much" Personally I'd rather pay for DD's college than take out a loan for it. I've heard too many horror stories of parents being stuck on the hook for loans after the kid dropped out/flunked out. My nephew flunked out and his parents are stuck with the loan since it is in their name. I'd be pissed to lose money I put in, but at least it is a one shot deal and I won't be paying on it for years to come. In an ideal situation she takes out loans and when she graduates I'd pay off the loans, but I don't know how realistic that will be in 18 years.
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sil
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Post by sil on Mar 7, 2011 17:57:28 GMT -5
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happytraveler
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Post by happytraveler on Mar 7, 2011 18:21:13 GMT -5
We plan to pay off the mortgage early and cash flow the college expenses for our 2. You'd be much better off just banking the cash you otherwise would be putting to the mortgage. It is easy to find liquid accounts paying 1.2% to 1.3%. You give yourselves many more options by not pre-paying the mortgage. For what it is worth, we did what the earlier poster suggested--paid off our mortgage early to help free up cash flow (if needed) to pay for the kids' college. We have been very happy with that decision---bascially having the luxury of reducing one of our major fixed expenses (housing) at the same time another new expense began (tuition). So far this has worked out well for us.
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happytraveler
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Post by happytraveler on Mar 7, 2011 18:25:27 GMT -5
I'll say that the thing that startled me the most about YM was the number of posters who don't feel responsible for their kids' education.Many of us paid for our own college education by working our way through college. What is startling is that many people will not bat an eye lash over forking over $50,000 for a kid to attend college. I am not sure how old you are, but I think comparing paying for college when I went to school (1980-84) vs paying for it now are two totally different animals. Since 1986, the ovrall rate of inflation has been about 110%; since that same time the rate of inflation for tuition has increased about 470% (http://www.inflationdata.com/inflation/Inflation_Articles/Education_Inflation.asp). It was a whol lot easier for kids to get a part time job and pay for some, most, or all of their college tuition 20+ years ago than it is now.
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