When Parents Can't Afford College
College confidential is one of my favorite online forums. That's because I have two teenagers, both interested in furthering their education.
Many of my preconceived notions about college, and the admissions process, were dashed when, a couple of years ago, I first began reading some of the posts. Most enlightening was the information on paying for college.
Somehow, even though my own children were already high school, I was extremely naïve about the matter of financing an education. I had assumed it would all work out. If your family income was low, but your child was bright, the institute would help your child attend.
This used to be the case, for the most part. That was back when financial aid was more plentiful. Now, though, with endowments sagging, scholarships and grants are harder to come by. Loans, however, are readily given out to both parents and students.
Sometimes even the loans are not enough. The sad reality is that, if you don't have the money, your child may not be able to attend a particular school, no matter how much he or she wants to go.
The Spring Awakening
Each spring, a new group of students and parents stumble upon College Confidential, moderated by a woman named Sally Rubenstone. As a former admissions counselor at an elite private school, she is very knowledgeable about the college admissions process and she is extremely generous with her time and recommendations. Many of the long-time parents who frequent her forum give excellent advice as well.
If someone cannot afford to go to a particular school, these forum veterans tell it like it is. No four-year degree, they say, is worth taking on $100,000 or more of debt. Some students may have landed a good package at a particular institute. But they might like another college much better, even if it will cost them tens of thousands of dollars more every year. They are typically steered these teenagers to the institute where they can graduate with the fewest loans.
There are frequent posts from students accepted to a number of colleges. However, there isn't one on the list that they can afford. In this case, they are either steered to a community college or told to either take a gap year and then apply to a wide range of schools next year, while retaining their freshmen status.
Parents Who Now Need to Say "No"
Until recently, most parents assumed they'd be paying for their children's college education. If not in full, then at least for a large chunk of it. However, unabated tuition increases have destroyed that model for many families. With the price of a four-year degree at many colleges now exceeding $240,000, this has become impossible.
Even though we often hear that this is only the "sticker price," and that schools give discounts, even a 50 percent reduction in the tuition bill isn't enough to make it affordable. Most families still can't pay $120,000 for a degree, for each of their children.
Some of the students who ask for advice have very sad stories. One student posted that his mother couldn't afford to pay the amount she owed on this year's taxes. He wasn't sure what would happen to his financial aid.
Unless this person is a stellar student, it's apparent that no amount of financial aid is going to be enough to cover the cost of college.
Another soon-to-be community college graduate was thinking of transferring to complete a degree. However, this was coupled with the stark realization that his parents couldn't help him out. So, going anywhere was not a possibility.
A Glossary of College Common Terms
Expected Family Contribution
Federal Student Loans
Parent PLUS Loans
Often called EFC, for short, this is the amount the federal government has determined you can afford for a child's college tuition.
These are government loans issued to students. Families who qualify, based in income, can receive "subsidized" loans that don't accrue interest until after graduation.
These are federal loans issued to parents to meet the costs of tuition, room and board.
What is an Expected Family Contribution?
The Expected Family Contribution, or EFC, is the amount the government believes you should be able to pay each year for education. This figure drops accordingly, if you have multiple children in college. But it isn't halved for each child. Many parents find they'll have grave difficulty even meeting this figure.
There is also a widespread misconception that a school won't charge more than you can afford. Some colleges do claim to meet "full need," and only expect you to pay the EFC, or less. Most other schools, though, don't reduce the bill so it's more in line with what you can afford.
At this point, if you decide to proceed with your plans to attend this institute, you'll need to come up with additional funding. If you don't have the cash, you may have to tap into your retirement account or your home equity line. You may also be able to take out what's known as a Parent PLUS loan, although these are risky because credit limits are very flexible, and you may be given much more money than what you can realistically pay back.
Talking About it Beforehand Can Prevent Disappointment Later
Preventing this Scenario
A growing number of parents seem to be having talks with their children beforehand about what they can affordfor college. Some students are being given a set sum of money and told to spend it wisely. (This is what we are doing with our children.)
So, if a child chooses a very expensive college, he or she will have to find a way to make it possible to attend. Just getting accepted today isn't enough. The financial aid package also has to be in line with a family's financial status.
It must be heartbreaking for a parent whose child has worked hard in high school, and to then have gained admittance to an elite university, to have to say, "no," we can't afford to send you there. Of, even worse, having the child attend, but not being able to stay to complete the degree.
Having a talk with your child beforehand can prevent a lot of the unrealistic expectations and inevitable disappointment.
How Much Can Students Borrow?
Students are eligible to borrow Federal Student loans. But there is a cap. Freshman can borrow $5,500, a sophomore can borrow $6,500 and juniors and seniors may borrow up to $7,500 a year. Private lenders will usually not approve student loans unless a parent or another financially stable adult will cosign.
Defaulting on a student loan is serious business. If your name is on the loan, you are responsible, even if your child has promised to repay the entire amount. Student loan debt cannot be discharged in bankruptcy court. Even if you default, the interest will continue to grow.
This is a debt that will never go away and the lenders will always attempt to be repaid, even if it means garnishing your wages, tax returns or your Social Security check.
PBS Documentary on the Student Loan Crisis
Make Sure You Have a Safety School
Because of the uncertainties about how to pay for college, many experts recommend applying to at least two safety schoolsthat are highly likely to accept you. For most people, this is a state college they can commute to, if they don't receive enough financial aid that allows them to attend another school and live on campus.
Many students every year neglect to do this. Then, when they realize how much they have to pay to attend the school of their choice, they are left without any other options, aside from their local community college.
One of our best jobs as parents is to teach our children responsibility. Signing up for something that has little chance of being paid back is very irresponsible.
A College Education is Increasingly Expensive
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