"Soft" question on student loans

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dodecahedron
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Re: "Soft" question on student loans

Post by dodecahedron » Tue May 28, 2019 11:15 pm

Grt2bOutdoors wrote:
Tue May 28, 2019 6:58 pm
Greenman72 wrote:
Tue May 28, 2019 4:49 pm
However, once you pay money to a school, it is gone forever and ever, amen. We will only know many years from now whether or not it was a good "investment".
What is this really all about? Is it about parents and students OR is it really about the fact that the more parents pay for their kids college costs upfront, the less money you have to manage and the less you make in fees, is that it? "Once you pay money to a school, it is gone forever and ever" right? Less money for you to manage, less clients since now they have no money. Talking about majoring in Jazz Guitar and then making a huge stretch about lifestyle choices the student chooses really dilutes your claims about investing and use of student loans. I don't see the relevance of the major or school a person attends has to do with paying for college upfront or via a loan.
I was wondering along the same lines as Grt2bOutdoors. I am grateful that neither I nor my young adult daughters have any debt of any sort, no mortgages, no car loans, no student loans. But I can imagine that if we had a financial adviser charging AUM fees, it might have been in the adviser´s interest to suggest taking out loans.

There are lots of complicated emotional issues involved with family spending priorities, values, and choices about what, if anything, to go into debt for. I would definitely not welcome unsolicited advice from an investment adviser on this topic.

bltn
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Re: "Soft" question on student loans

Post by bltn » Wed May 29, 2019 4:14 am

I remember as a preteen hearing my parents talk about their main reason for saving money. They wanted to accumulate enough to send their kids to college. No talk of retirement. The idea of paying for college seemed daunting for our middle class family, but it was important to them. My father was the first in his family to go to college, during the depression, on scholarship. My mother always regretted that her family couldn't t afford to send her to college. Only after their kids were out of school, did my parents save for retirement. My father retired at 75. Great role model.

With that background of family values, I didn't consider not providing for college and graduate education for both of my children. Used 529 plans to cover part of the costs, and cash flowed the rest. Our sacrifice for this was much less than my parents.

OnTrack2020
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Re: "Soft" question on student loans

Post by OnTrack2020 » Wed May 29, 2019 5:14 am

Greenman72 wrote:
Tue May 28, 2019 9:20 am

First, why do you feel that your child (who has 25-30 more years than you have to accumulate assets) deserves your money more than you do?

Second, if you feel like they are more entitled to your assets than you are, then why do you feel they are entitled to it now? From a strictly economic point of view, wouldn't you be better off earning 7-8% on your money for the next ten years (until she is old enough to be out of the party stage), and then pay the student loans that are accumulating at 3.4%? Instead of giving several small "gifts" from age 18-22, why not just give her one big "gift" on her 30th birthday?

Third, why is student loan debt somehow more evil or oppressive than automobile debt or mortgage debt? Yes, the state can garnish wages. But cars and houses can also be repossessed. And when you die, student loan debt dies with you. Car debt and mortgage debt lives on.

Fourth, since when is teaching your kids financial discipline a bad thing? Why do you think that forcing your daughter to choose between beer & cigarettes and paying your student loan payment is a bad thing? I was young and stupid once. I had to make that decision. Sometimes I chose poorly. But I learned from it, and now that I'm almost 40, I can definitely see how that hardship helped shape character.

#1. We simply did not want our children to start their working life with a tremendous amount of debt given each of their respective personalities, behaviors, etc. Some of the money belongs to them, as it was given as gifts from grandparents, relatives, people who came to their graduation party. Not all of the money belongs to us.

#2. The money is due to the educational institution now, not 5, 10, or 15 years from now. Do you really want your child to take out federal student and private loans for $100,000+ over four years? And, please, don't go down the road of the child can work full-time and attend college part-time. I did that for many years. It is a set-back really.

#3. I've read too many horror stories about kids who are trying to start a life with tremendous student loan debt hanging over their head, and the vast majority do not necessarily have the income starting out to support the debt. With automobile debt and mortgage debt, both need proof of income/wages to support the debt. Most private loans do require a co-signer, so why not just pay versus signing for a loan?

#4. No one is saying that teaching kids financial discipline is a bad thing.

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unclescrooge
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Re: "Soft" question on student loans

Post by unclescrooge » Wed May 29, 2019 5:40 am

NYCPete wrote:
Tue May 28, 2019 11:01 am
Greenman72 wrote:
Tue May 28, 2019 9:20 am

Third, why is student loan debt somehow more evil or oppressive than automobile debt or mortgage debt? Yes, the state can garnish wages. But cars and houses can also be repossessed. And when you die, student loan debt dies with you. Car debt and mortgage debt lives on.
For me, you've mostly answered your own question here. You literally have to die to get out of paying it if you can't afford it. One can't get out from under student loan debt in any other way. It's not bankrupt-able.

Here's what I've said on this subject in the past. I still feel it's true today:
Here's what a student loan really is: debt that, if you can't afford to pay it, will never go away unless you die, can't be bankrupted, can't be refinanced (as of a recent law change), and lenders will never, ever do an "offer in compromise" or similar negotiated deal and accept a reduced amount upfront to wipe away the debt (something even the IRS does if they know someone can't afford to pay back taxes). Think about that last part for a moment. Even the IRS is more forgiving than student loans... :shock:
Reasonable people can have reasonable disagreements on how parents should teach their children about finances. But student loan debt is definitely not the same as a mortgage or car loan.

Best,
Peter
I don't think student loans are as onerous as people make them out to be.

When I went to b-school, I was offered $120k in student loans, which I didn't need. I paid $54k in tuition from my savings, and offset my living expenses through work. Although I pulled out $30-$40k to invest in the stock market in Q4 2009, and use as a buffer in case I couldn't find a job after graduation.

I applied for forbearance for 6 months, but then paid it off within 6 years.

Income based repayment can lower your payment to next to nothing if your income is below a certain level. And after 25 years, all balances are forgiven.

Of course, I'm good with my money. I live below my means, invest well, and constantly check my financial health.

Most people do not prioritize their personal finances.

I read an article about young students fleeing the US to avoid their student loans. The cases cited were ludicrous. The students had less than $50k in loans and their payment on IBR would have been between zero and $86/mo even on minimum wage jobs.

That is the real travesty of education. College graduates being unable to understand their situation nor optimize it to their benefit. Maybe some kids are better off not going to college.

And maybe colleges should spend less on sports stadiums and 5 star dorms, and more on personal finance classes.

NotWhoYouThink
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Re: "Soft" question on student loans

Post by NotWhoYouThink » Wed May 29, 2019 6:49 am

Greenman72 wrote:
Tue May 28, 2019 4:49 pm
Doom&Gloom wrote:
Tue May 28, 2019 12:05 pm
There is no single correct formula for "financial parenting." Perhaps you are trying to impose your non-financial values upon clients who do not share the same values and that is frustrating you?
This is possible. But it's less about "values" and more about "fungibility" and behavioral finance.

Are student loans more or less "fungible"?
Are they fundamentally the same as a car loan? Or a mortgage? Or a short fixed-income position?
Does it make sense to borrow at 3.4% (or higher, as you say) if you are long government bonds at 2.4%? And does your answer change if your money is held in a retirement account?

Generally speaking, I see all dollars as the same shade of green. And once you open the floodgates, you cannot tell the water where to go. If you pay for your child's school and the child goes 2,000 miles away to NYU to major in Jazz Guitar, all while drinking, drugging, and fornicating, you can never get that money back.

Knowing that, if I choose to pay for my child's school, I have foregone the use of my money. I have voided any options that I may have had. Whereas, had I held on to it, I could simply have paid off the loan at graduation. (Assuming that he actually graduates.) And as noted, many of these loans do not accrue interest until several months after graduation.

When somebody says, "I paid for my daughter's school because she can only save $100/month, whereas I can save $2,500 per month!!!" That's great! Then pay off her $100/month loan for her after she graduates. Now she has $100/month of cash flow. Or give her $25,000 that will spin off $100/month of cash flow, which she can then use to pay her loan. Or invest $12,000 in some sort of account with a 10% expected annual return, which should give you $100 per month of appreciation/dividends. (That would entail investing in a taxable account. Oh, the horror!!!)

Or "Because I paid for my son's school, he can now save more in a Roth IRA." No, he can't. Roth eligibility has nothing to do with indebtedness. If you want your son to put more in his Roth IRA, then give him money to put in his Roth IRA. But again--you have control over the money. If you decide not to give him money, you just stop giving him money.

However, once you pay money to a school, it is gone forever and ever, amen. We will only know many years from now whether or not it was a good "investment".
Ok, then, you've changed your question.

Paying for college or not, vs. taking out loans or not.

As a financial advisor, you should be able to calculate that these are expensive loans, so that if parents have already decided to pay for college, it's probably best to pay out of savings and current income than to take out loans. That is the kind of math you should be able to do.

As to whether or not to pay, that's the same as whether or not to make any spending decision - do your clients ask your advice before buying a $2M house?

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FlyAF
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Re: "Soft" question on student loans

Post by FlyAF » Wed May 29, 2019 7:35 am

Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.

bubbadog
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Re: "Soft" question on student loans

Post by bubbadog » Wed May 29, 2019 7:50 am

cshell2 wrote:
Tue May 28, 2019 8:00 pm
Greenman72 wrote:
Tue May 28, 2019 9:20 am


First, why do you feel that your child (who has 25-30 more years than you have to accumulate assets) deserves your money more than you do?


If you want to keep all your money to yourself, having kids at all is kind of a bad idea.

I personally don't feel that my job in raising them to adults ends at 18 and I believe an education is important. I've saved for it and it makes me just as happy to spend my money this way as anything on myself...more actually... so why not? So I can have more money for myself? Yeah, no. Don't care. I'm definitely a saver, but I don't feel I need to save/invest everything my entire life.
Agree with cshell2 100%!

cshell2
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Re: "Soft" question on student loans

Post by cshell2 » Wed May 29, 2019 7:59 am

Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
If senior collegiate state schools cost $26K per year in your home state and going out of state is not an option for you for a multitude of reasons, then the cost over four years is more than $100K. Is it an ego thing if that is what it costs? The 4 year state schools in my region actually cost $26K per year. The community college costs $11,500 per year. If you want to go private, it will cost you alot more than that. Ego thing, please! :oops:

You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
As a single mom with limited means for paying for college, I'll say that they're out there if you're willing to take the time to hunt them down and if you have a kid that gets decent grades/test scores. Here are a few I lined up for my son.

- Live at home and attend the local university. 9K/year tuition and fees approx 1K books tacked on to that - 40K total for 4 years.

- We ran the net price calculator and talked to admission counselors at over 20 schools in our state. One offered him a 6K/year scholarship (tuition is normally 8K), so Tuition and living expenses 11K/year - Total 44K.

- University of Alabama Huntsville. 100% tuition scholarship (even for out of state) for over 30 ACT and 3.5 ACT. Just pay room and board and travel. R&B is $9603, and figure another 2K for travel. Total about 44K.

Keep in mind, your kid is going to have living expenses no matter if he goes to college or not, so it's not really fair to 100% figure in R&B as a cost of college. Almost every school in my state has tuition less than 13K (MN). Most are in the 8-10K range.

smitcat
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Re: "Soft" question on student loans

Post by smitcat » Wed May 29, 2019 8:49 am

FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.

stoptothink
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Re: "Soft" question on student loans

Post by stoptothink » Wed May 29, 2019 8:58 am

smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
Maybe I am some outlier, but I attended 4 universities, put my ex-wife through 2, and my current wife is finishing undergrad; COL has always been significantly less than estimates (like <1/2). Those estimates always include dorms, the best meal plans, and ridiculous transportation estimates. Specific to UT, my wife went there for undergrad and I cash-flowed it, so I have a pretty decent idea about how room & board can be way less.

smitcat
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Re: "Soft" question on student loans

Post by smitcat » Wed May 29, 2019 9:21 am

stoptothink wrote:
Wed May 29, 2019 8:58 am
smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
Maybe I am some outlier, but I attended 4 universities, put my ex-wife through 2, and my current wife is finishing undergrad; COL has always been significantly less than estimates (like <1/2). Those estimates always include dorms, the best meal plans, and ridiculous transportation estimates. Specific to UT, my wife went there for undergrad and I cash-flowed it, so I have a pretty decent idea about how room & board can be way less.
That is great but the bills need to be paid and they are often larger in many other areas.
Many degrees require extra fees and travel as well as extra class time as well - it varies.

cshell2
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Re: "Soft" question on student loans

Post by cshell2 » Wed May 29, 2019 9:22 am

smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
I'm assuming he meant just tuition/fees and books. The direct costs of college. If you don't attend school you still need to live somewhere and eat.

smitcat
Posts: 3579
Joined: Mon Nov 07, 2016 10:51 am

Re: "Soft" question on student loans

Post by smitcat » Wed May 29, 2019 9:25 am

cshell2 wrote:
Wed May 29, 2019 9:22 am
smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
FlyAF wrote:
Tue May 28, 2019 9:45 am
People are loco, that's all there is to it. Just read threads on this site about how much money people are willing to spend on college for their kids (100k+), it's absolute insanity. I went to a great school, less than a decade ago, for under 40k.

I honestly think it's an ego thing. The more it costs me, the better it must be.
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
I'm assuming he meant just tuition/fees and books. The direct costs of college. If you don't attend school you still need to live somewhere and eat.
OK, that is fine, as long as all of the conversations are only speaking about tuition.
Comparing just tuition likely has value to many folks here.
In my case I needed to live, eat and have a car as well - so they were directly related to college in that case.

stoptothink
Posts: 5757
Joined: Fri Dec 31, 2010 9:53 am

Re: "Soft" question on student loans

Post by stoptothink » Wed May 29, 2019 9:29 am

smitcat wrote:
Wed May 29, 2019 9:21 am
stoptothink wrote:
Wed May 29, 2019 8:58 am
smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
Maybe I am some outlier, but I attended 4 universities, put my ex-wife through 2, and my current wife is finishing undergrad; COL has always been significantly less than estimates (like <1/2). Those estimates always include dorms, the best meal plans, and ridiculous transportation estimates. Specific to UT, my wife went there for undergrad and I cash-flowed it, so I have a pretty decent idea about how room & board can be way less.
That is great but the bills need to be paid and they are often larger in many other areas.
Many degrees require extra fees and travel as well as extra class time as well - it varies.
Yes, I understand it varies; that is my entire point. Half of the "cost" isn't fixed. There is probably $5k/yr (20%) in wiggle room in the estimate specifically for UT (and more or less other places). Whether that $5k/yr is important to you or your child - not my concern - but it certainly was to me when I was a poor student funding it myself.

smitcat
Posts: 3579
Joined: Mon Nov 07, 2016 10:51 am

Re: "Soft" question on student loans

Post by smitcat » Wed May 29, 2019 9:42 am

stoptothink wrote:
Wed May 29, 2019 9:29 am
smitcat wrote:
Wed May 29, 2019 9:21 am
stoptothink wrote:
Wed May 29, 2019 8:58 am
smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
Maybe I am some outlier, but I attended 4 universities, put my ex-wife through 2, and my current wife is finishing undergrad; COL has always been significantly less than estimates (like <1/2). Those estimates always include dorms, the best meal plans, and ridiculous transportation estimates. Specific to UT, my wife went there for undergrad and I cash-flowed it, so I have a pretty decent idea about how room & board can be way less.
That is great but the bills need to be paid and they are often larger in many other areas.
Many degrees require extra fees and travel as well as extra class time as well - it varies.
Yes, I understand it varies; that is my entire point. Half of the "cost" isn't fixed. There is probably $5k/yr (20%) in wiggle room in the estimate specifically for UT (and more or less other places). Whether that $5k/yr is important to you or your child - not my concern - but it certainly was to me when I was a poor student funding it myself.
Your posts often seem anecdotal in nature so I am not sure how to read them.
When we go to state college here the tuition is fixed for most. If you do not happen to live close to the school the rest of the costs are likely very real. You cannot live off campus the 1st year and you cannot avoid most of the costs.
If that is different in Texas than great , just not attributable to many of the other readers.

stoptothink
Posts: 5757
Joined: Fri Dec 31, 2010 9:53 am

Re: "Soft" question on student loans

Post by stoptothink » Wed May 29, 2019 10:03 am

smitcat wrote:
Wed May 29, 2019 9:42 am
stoptothink wrote:
Wed May 29, 2019 9:29 am
smitcat wrote:
Wed May 29, 2019 9:21 am
stoptothink wrote:
Wed May 29, 2019 8:58 am
smitcat wrote:
Wed May 29, 2019 8:49 am


From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
Maybe I am some outlier, but I attended 4 universities, put my ex-wife through 2, and my current wife is finishing undergrad; COL has always been significantly less than estimates (like <1/2). Those estimates always include dorms, the best meal plans, and ridiculous transportation estimates. Specific to UT, my wife went there for undergrad and I cash-flowed it, so I have a pretty decent idea about how room & board can be way less.
That is great but the bills need to be paid and they are often larger in many other areas.
Many degrees require extra fees and travel as well as extra class time as well - it varies.
Yes, I understand it varies; that is my entire point. Half of the "cost" isn't fixed. There is probably $5k/yr (20%) in wiggle room in the estimate specifically for UT (and more or less other places). Whether that $5k/yr is important to you or your child - not my concern - but it certainly was to me when I was a poor student funding it myself.
Your posts often seem anecdotal in nature so I am not sure how to read them.
When we go to state college here the tuition is fixed for most. If you do not happen to live close to the school the rest of the costs are likely very real. You cannot live off campus the 1st year and you cannot avoid most of the costs.
If that is different in Texas than great , just not attributable to many of the other readers.
I've paid for 7 different universities in 4 different states (California, Arizona, Texas, and Utah). Some universities require freshman to live on campus (2 of the 7 I paid for did) and purchase a meal plan, other than that the majority of the COL estimate costs are variable. No university is forcing you to eat their food if you live off campus, to drive (parking passes at UCLA were $1k+/yr, let alone gas/insurance/maintenance - good thing I never needed a car), to travel, etc. but those things are built into that estimate. I'm not sure what you are getting at by suggesting there is no wiggle room. If that is what you think, it's your money; to some others the savings can be significant. On a board where people will post every time their savings account raises its rates .05%, it is bizarre to me that some will just accept an "estimate" as fixed cost instead of spending a little research to save (possibly) thousands a year in college costs for their children.

And even then, if you are somehow convinced that what I say is purely anecdotal, and I've just managed to choose the 7 universities in the country where the estimated room & board isn't fixed: well, fellow Bogleheads who are concerned about college costs, I have 7 schools you should consider.

smitcat
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Joined: Mon Nov 07, 2016 10:51 am

Re: "Soft" question on student loans

Post by smitcat » Wed May 29, 2019 10:25 am

stoptothink wrote:
Wed May 29, 2019 10:03 am
smitcat wrote:
Wed May 29, 2019 9:42 am
stoptothink wrote:
Wed May 29, 2019 9:29 am
smitcat wrote:
Wed May 29, 2019 9:21 am
stoptothink wrote:
Wed May 29, 2019 8:58 am


Maybe I am some outlier, but I attended 4 universities, put my ex-wife through 2, and my current wife is finishing undergrad; COL has always been significantly less than estimates (like <1/2). Those estimates always include dorms, the best meal plans, and ridiculous transportation estimates. Specific to UT, my wife went there for undergrad and I cash-flowed it, so I have a pretty decent idea about how room & board can be way less.
That is great but the bills need to be paid and they are often larger in many other areas.
Many degrees require extra fees and travel as well as extra class time as well - it varies.
Yes, I understand it varies; that is my entire point. Half of the "cost" isn't fixed. There is probably $5k/yr (20%) in wiggle room in the estimate specifically for UT (and more or less other places). Whether that $5k/yr is important to you or your child - not my concern - but it certainly was to me when I was a poor student funding it myself.
Your posts often seem anecdotal in nature so I am not sure how to read them.
When we go to state college here the tuition is fixed for most. If you do not happen to live close to the school the rest of the costs are likely very real. You cannot live off campus the 1st year and you cannot avoid most of the costs.
If that is different in Texas than great , just not attributable to many of the other readers.
I've paid for 6 different universities in 4 different states (California, Arizona, Texas, and Utah). Some universities require freshman to live on campus (2 of the 6 I paid for did) and purchase a meal plan, other than that the majority of the COL estimate costs are variable. No university is forcing you to eat their food if you live off campus, to drive (parking passes at UCLA were $1k+/yr, let alone gas/insurance/maintenance - good thing I never needed a car), to travel, etc. but those things are built into that estimate. I'm not sure what you are getting at by suggesting there is no wiggle room. If that is what you think, it's your money; to some others the savings can be significant. On a board where people will post every time their savings account raises its rates .05%, it is bizarre to me that some will just accept an "estimate" as fixed cost instead of spending a little research to save (possibly) thousands a year in college costs for their children.

And, even then, if you are somehow convinced that what I say is purely anecdotal, and I've just managed to choose the 6 universities in the country where this is possible: well, fellow Bogleheads who are concerned about college costs, I have 6 schools you should consider.
"No university is forcing you to eat their food if you live off campus, to drive (parking passes at UCLA were $1k+/yr, let alone gas/insurance/maintenance - good thing I never needed a car), to travel, etc."
Yes - I agree after the 1st year its very possible to live off campus and save money. Its also possible to live on campus and save money as well. It is possible to be within walking distance of a state school and sometimes not. Often it is possible to be without a car but other times that is not possible either - perhaps if you are working. The costs can be variable and you are correct that they can be very variable. But the costs are never just the tuition in the way I look at college vs no college.

"And, even then, if you are somehow convinced that what I say is purely anecdotal"
I said that many of your posts seem anecdotal as they do not add up numerically.

stoptothink
Posts: 5757
Joined: Fri Dec 31, 2010 9:53 am

Re: "Soft" question on student loans

Post by stoptothink » Wed May 29, 2019 10:40 am

smitcat wrote:
Wed May 29, 2019 10:25 am
stoptothink wrote:
Wed May 29, 2019 10:03 am
smitcat wrote:
Wed May 29, 2019 9:42 am
stoptothink wrote:
Wed May 29, 2019 9:29 am
smitcat wrote:
Wed May 29, 2019 9:21 am


That is great but the bills need to be paid and they are often larger in many other areas.
Many degrees require extra fees and travel as well as extra class time as well - it varies.
Yes, I understand it varies; that is my entire point. Half of the "cost" isn't fixed. There is probably $5k/yr (20%) in wiggle room in the estimate specifically for UT (and more or less other places). Whether that $5k/yr is important to you or your child - not my concern - but it certainly was to me when I was a poor student funding it myself.
Your posts often seem anecdotal in nature so I am not sure how to read them.
When we go to state college here the tuition is fixed for most. If you do not happen to live close to the school the rest of the costs are likely very real. You cannot live off campus the 1st year and you cannot avoid most of the costs.
If that is different in Texas than great , just not attributable to many of the other readers.
I've paid for 6 different universities in 4 different states (California, Arizona, Texas, and Utah). Some universities require freshman to live on campus (2 of the 6 I paid for did) and purchase a meal plan, other than that the majority of the COL estimate costs are variable. No university is forcing you to eat their food if you live off campus, to drive (parking passes at UCLA were $1k+/yr, let alone gas/insurance/maintenance - good thing I never needed a car), to travel, etc. but those things are built into that estimate. I'm not sure what you are getting at by suggesting there is no wiggle room. If that is what you think, it's your money; to some others the savings can be significant. On a board where people will post every time their savings account raises its rates .05%, it is bizarre to me that some will just accept an "estimate" as fixed cost instead of spending a little research to save (possibly) thousands a year in college costs for their children.

And, even then, if you are somehow convinced that what I say is purely anecdotal, and I've just managed to choose the 6 universities in the country where this is possible: well, fellow Bogleheads who are concerned about college costs, I have 6 schools you should consider.
"No university is forcing you to eat their food if you live off campus, to drive (parking passes at UCLA were $1k+/yr, let alone gas/insurance/maintenance - good thing I never needed a car), to travel, etc."
Yes - I agree after the 1st year its very possible to live off campus and save money. Its also possible to live on campus and save money as well. It is possible to be within walking distance of a state school and sometimes not. Often it is possible to be without a car but other times that is not possible either - perhaps if you are working. The costs can be variable and you are correct that they can be very variable. But the costs are never just the tuition in the way I look at college vs no college.

"And, even then, if you are somehow convinced that what I say is purely anecdotal"
I said that many of your posts seem anecdotal as they do not add up numerically.
Again, I have no idea what you are disputing or what your overall point is, and I recall playing this same circular game in other threads. I have never said that tuition is the only cost. Housing, food, transportation, travel costs are generally not fixed (this is a very easily researched fact), but when I say it, it is just anecdotal? All these considerations you mention are choices: you don't have to attend a university where a car is necessary, you don't have to choose a school which requires freshman live in dorms and buy meal plans, you can share a room and save hundreds a month in rent, you can spend $1000/month on a top end food plan or eat for a fraction of that... The university advertises the limited edition model with all the options, you are free to just buy the base model. Sure, a lot of people may not be able (or willing) to spend as little as I have (and I don't even expect my own kids to be as frugal as I was as a student), but there are savings everywhere if you care enough. That's my only point, and it's a fact.

Grt2bOutdoors
Posts: 20765
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Soft" question on student loans

Post by Grt2bOutdoors » Wed May 29, 2019 3:05 pm

smitcat wrote:
Wed May 29, 2019 9:25 am
cshell2 wrote:
Wed May 29, 2019 9:22 am
smitcat wrote:
Wed May 29, 2019 8:49 am
FlyAF wrote:
Wed May 29, 2019 7:35 am
Grt2bOutdoors wrote:
Tue May 28, 2019 6:47 pm
You went to a great school? Congratulations - if the school is so great and it costs less than $100K why not broadcast it loud and clear?, make it known, here is a great school and you know what you don't have to spend $100K to go there.
University of Texas, I think it's up to about 12k per year now.
From the website...
Residents of Texas pay an annual total price of $25,440 to attend The University of Texas at Austin on a full time basis. This fee is comprised of $10,398 for tuition, $10,070 room and board, $662 for books and supplies and $0 for other fees.
I'm assuming he meant just tuition/fees and books. The direct costs of college. If you don't attend school you still need to live somewhere and eat.
OK, that is fine, as long as all of the conversations are only speaking about tuition.
Comparing just tuition likely has value to many folks here.
In my case I needed to live, eat and have a car as well - so they were directly related to college in that case.
Yup, when I was talking about school costing $26K to attend, I was including room and board in that figure. You need somewhere to live.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Normchad
Posts: 41
Joined: Thu Mar 03, 2011 7:20 am

Re: "Soft" question on student loans

Post by Normchad » Wed May 29, 2019 5:38 pm

There is a lot to unravel here.....

We saved diligently for college while our child was growing up. We felt that it was our responsibility to raise them and get them to a point where they’d be a contributing member of society. For us, that included a college education. There are other ways to do it, but that was our vision.

We read now so much about people being crippled by this debt. As another posted said, it’s so much easier for me to make that money, or pay that bill, than it is for them. My wife and I have work d hard, and accumulated money. And we both think our educations were instrumental to all that.

So now that we’ve got the cash, something has to happen with it, right? I can’t think of a better thing to do with it than help a family member become successful and independent.

I know a lot of people aren’t in a position to do this. But for those that can, I can’t imagine *not doing* it.

annebert
Posts: 49
Joined: Fri Jul 20, 2018 5:39 pm

Re: "Soft" question on student loans

Post by annebert » Wed May 29, 2019 6:00 pm

I have serious concerns about children who are raised to believe that mom and dad will buy me a car and pay for my college and my $100/month cell phone. I don't think you are doing your child a favor by not pushing them to be as self-sufficient as possible. Being frugal while in college is one way to reduce student loan debt and develop good habits for life.

Normchad
Posts: 41
Joined: Thu Mar 03, 2011 7:20 am

Re: "Soft" question on student loans

Post by Normchad » Wed May 29, 2019 6:16 pm

Another thing to bear in mind, the financial math regarding college has changed dramatically since we were undergrads as well.

When I did this in the late 80s, my total cost for everything, for 4 years was around $24K. I could pay a big part of that bill with summer work and a. coop job, even at $8/hr. So working 500 hours year could cover most of that.

But now, with the bills often running $20k each year, the kids just can’t make much of a dent in that. I know many will disagree, but they really can’t. Simply put, the price has risen more than 4 fold, but burger flipping wages have not. So there is a big gap there.

Nobody wants to raise ungrateful kids, or lazy unmotivated kids. I think a lot of that is set in place before they get to college. I could choose to not help the kid. She might work 20 hours a week in school, take a lot of loans, stress out. Probably learn less with less hours to study, etc. that’s not a guaranteed formula for making kids appreciative and successful either. Money doesn’t control everything.

Even if you pay, they can still be frugal. If you raised frugal kids, they’ll probably still be frugal in school.

I’m glad my kid can enjoy school. And enjoy the social aspects of it. And have the ability to study very long hours instead of covering shifts at Jimmie Johns.

I guess I’d rather pay $100K for school than just give it to her in cash and watch her buy a Ferrari. :)

cshell2
Posts: 112
Joined: Thu May 09, 2019 10:29 am

Re: "Soft" question on student loans

Post by cshell2 » Wed May 29, 2019 7:04 pm

Normchad wrote:
Wed May 29, 2019 6:16 pm
Another thing to bear in mind, the financial math regarding college has changed dramatically since we were undergrads as well.

When I did this in the late 80s, my total cost for everything, for 4 years was around $24K. I could pay a big part of that bill with summer work and a. coop job, even at $8/hr. So working 500 hours year could cover most of that.

But now, with the bills often running $20k each year, the kids just can’t make much of a dent in that. I know many will disagree, but they really can’t. Simply put, the price has risen more than 4 fold, but burger flipping wages have not. So there is a big gap there.

Nobody wants to raise ungrateful kids, or lazy unmotivated kids. I think a lot of that is set in place before they get to college. I could choose to not help the kid. She might work 20 hours a week in school, take a lot of loans, stress out. Probably learn less with less hours to study, etc. that’s not a guaranteed formula for making kids appreciative and successful either. Money doesn’t control everything.

Even if you pay, they can still be frugal. If you raised frugal kids, they’ll probably still be frugal in school.

I’m glad my kid can enjoy school. And enjoy the social aspects of it. And have the ability to study very long hours instead of covering shifts at Jimmie Johns.

I guess I’d rather pay $100K for school than just give it to her in cash and watch her buy a Ferrari. :)
+1

Paying for college doesn't make for ungrateful a**hole kids. If they are they were like that for a long time already. My son knows he has X amount of dollars to spend/year on whatever college he wants. He chose the cheapest option out there that had the programs he was interested in. I've even tried to talk him into checking out other places, but he is not interested in paying any more than necessary...even though he's not paying for it. He has zero interest in prestige or where his friends are going. It's "show me the bottom line" with him.

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