Wednesday, November 26, 2008

School tuition ruining your financial life?

I'm writing on this subject because in the past week, I've spoken with a couple of friends that I hadn't seen in some time. Their children are going to expensive (about $40,000 a year) colleges and they are footing the bill for their children. We didn't start out talking about school tuition, but their life circumstances (one of them is selling their home and moving into a very small townhome, the other is looking for fulltime employment) the subject of money came up. When I asked why they decided to downsize/go to work, it became apparent that they are in debt with student loans for their children.

I know I will not be the one taking out student loans for my children. If they choose a college out of state and that is that expensive, they will have to come up with the money. We live in Virginia, where state schools are some of the best in the country. Why pay $40,000 a year, when you can pay $15,000 and get the same, if not better, education?

We are paying for our daughter's education out of pocket. My oldest is done, and we are paying for my second daughter's. We are fortunate that we are able to do this. If we were not, then they would have to work extra hard to come up with the cash. They are responsible to pay for books, spending money, cell phone and car insurance. And if they couldn't afford it, they would have to go to school locally, and get a job.

I don't understand why parents would put their financial stability on the line for their children's college education. It is not a requirement that parents pay for their children's education, it is a gift, only if it can be afforded.

I paid for 1/2 my colllege education (When it was $3,000 a year to go! :)) and my parents paid for 1/2. It took me two years to pay off my student loan when I graduated.

My younger two now know that they may very well be spending the first two years of their college education at a local community college. If they do well there, they have their pick of the state schools to transfer to. This would, in essence, save $100,000.00 in tuition costs, as I'm assuming by the time they go to school, tuition, room and board will cost about $25,000 a year.

Are they happy about it? Nope. But we are not willing to sacrifice our financial security because of it.

Do you have any stories of parents in hoc over college tuition?


Grace. said...

I am so torn on this question. The truth is, MY parents DID go into debt to get my sister and I through college, though I also had scholarships. (In one of life's great ironies, my sister wasn't considered smart enough, and didn't have the grades to get financial aid--of course now she's the corporate executive with the six figure income!) As it turns out, my children are all late-bloomers or not college material, so my expenses have been at the trade school or community college level. But if life had been different for them? If Harvard beckoned? I think I would feel compelled to help them.

letters to elijah said...

This country is so over educated it's crazy! Sometimes you get the job because your resume was in the right pile strictly because of a degree. It doesn't make sense.

On another note: and I know most won't agree with this - not all girls/woman need to go into college right away - or full time. If your daughter is going to get married and be a stay at home Mom does she really need a full time college student loan to wear down a financial burden with her new husband ?

CT Mom said...

Hi Sharon - I paid my way through college and grad school. Undergrad took me 9 - yes, 9! - years to complete because I went parttime and worked full-time, taking advantage of my company's tuition reimbursement benefits. I went to a private university and graduated debt free. I wound up having $15K in law school debt, but still managed to pay $45k tuition by working full time, living cheaply and going at night. My husband got his degrees the same way.

We are saving some for our girls, but at best they may have enough for CT state schools, which are very good. Any more and they will have to find a way to pay. My best friend's daughter is going to a state university, and I know how relieved she was when that was her daughter's choice.

I want my girls to get the best education possible, but reality is we won't be able to afford an expensive private school. Most importantly, is what they do with the degrees once they graduate. Going to a private university doesn't guarantee success.

Anonymous said...

My son decided to go with his second choice school because they offered him a full academic scholarship. He realized it didn't make since to throw that money away. He works during the summer for his spending money. I pay for car insurance, contacts, and even give him money for trips since I have paid zero for his college. Even his books are included in the scholarship.

Anonymous said...

Sorry, I didn't answer your question. My nephew is the same age of my son and SIL and BIL took out a second mortgage on their house to pay first year tution. Don't know what they plan to do for the next 3 years.

Anonymous said...

i agree that going to an expensive school is unnecessary. there are so many good state schools, and a lot of scholarships and grants available. part-time is also not a bad thing.
but i'm disturbed by the comment from letters to elijah. it isn't that it's "wrong", but given how troubled marriages can be, shouldn't a girl be able to take care of herself (which often involves a college degree)?

i could also point out statistics that show how much better societies are when girls (specifically) are educated. we call it the "girl effect" and it's a phenomenal measure of how important it is to allow women the same opportunities as men.

all that being said, if a girl doesn't want to go to college, that's her call. but the same applies to boys. i'm all for equal opportunity debt. :)

Liz said...

I think it is so wrong to go into debt to pay for our children's college education. Not only does it put the parents at risk financially, but if any loans are taken out, the interest rate to repay those loans are horrific and can often take years and years to pay off, oftentimes doubling or tripling the cost of the initial loan. Just crazy.

I like what Ron Paul said once during one of his town meetings - one of the college aged kids asked him, "So if you don't recommend taking out a government loan to pay for college, then how does one go to college?" He smiled and said, "You work and pay for one class at a time - that's how we did it "back then"." I liked his answer.

Today everything is about instant gratification. We have failed to teach our kids the value of hard work and money -- saving for things, doing things the right way without relying on others to foot our bill....

I think you're definitely on the right track!