Author Topic: Paying for College.  (Read 17073 times)

Simplicity

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Paying for College.
« on: August 04, 2013, 12:12:34 PM »
We have a daughter that has one more year of High School and then will be off to college. She is an excellent student and will likely be accepted in to some excellent schools. We are aware she could go the route of a community college and then transfer to a State University and then on to Graduate school or Law school. It is likely that we will attempt to find a way to send her to an Ivy league school or to a top LAC. We value that experience that much and would sacrifice considerably for her to have it.
We will not qualify for any needs based aid. We have about $250,000 in equity in our primary home, we own a 2 family home out right. The equity after paying for the written off depreciation in the 2 family is about $100,000. the 2 family produces about $10,000 a year in profit. We have about $50,000 saved specifically for education and can add approximately $20,000 to that annually from cash flow to go towards college expenses. So $32,500 annually to go toward what is going to be a $58,000 to $60,000 a year expense.
What maneuvering or strategy would you pursue to address these circumstances? We are adamant that our daughter will have no undergraduate debt.

capital

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Re: Paying for College.
« Reply #1 on: August 04, 2013, 04:26:20 PM »
Are you sure you wouldn't qualify for any financial aid from an Ivy League school? The well-endowed Ivies are pretty generous if you can get in. Harvard, for example, says:
"Beginning with the Class of 2016, families with incomes between $65,000 and $150,000 will contribute from zero to ten percent of income, and those with incomes above $150,000 will be asked to pay proportionately more than 10%, based on their individual circumstances. Families at all income levels who have significant assets will continue to pay more than those in less fortunate circumstances."
Considering your current home equity is barely more than a 20% down payment in a lot of the wealthiest metro areas (which send a lot of kids to the Ivy League), you probably don't have what they consider particularly "significant assets".

Likewise, not-quite-Ivy level private schools offer substantial merit scholarships to smart students. My sister and I both attended excellent private schools for about the cost of our flagship state school.

randymarsh

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Re: Paying for College.
« Reply #2 on: August 04, 2013, 04:48:08 PM »
Equity in the home you live in isn't considered on the FAFSA, just FYI.

Zamboni

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Re: Paying for College.
« Reply #3 on: August 04, 2013, 05:05:15 PM »
I admire your dedication to this, and I hope to do the same for my children.  Student loans are becoming a big problem for many people and your determination to have your daughter avoid them is laudable.

Definitely apply for financial aid and see what comes back from the schools she likes.  The earlier the FAFSA application is sent in, the more likely she will be awarded grants over just loans for the gap between what they determine you and she can pay and what it costs.   

You can also call the FA office of the school she sets her heart on doesn't have the best package or tries to make it loan heavy.  Sometimes they can move around the types of award, but the earlier you ask, the better.  My undergraduate institution came up with $3K extra dollars per year of academic scholarship money for me after my Mom called to say that I wouldn't be able to take out the loans they had put in the package (and that was back when the expensive schools had only $15K tuition, so it was a big bite.)  Remember, some religions have official objections to borrowing money ;-)

Irishmam

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Re: Paying for College.
« Reply #4 on: August 04, 2013, 05:16:16 PM »
Each college website has its own FA calculator, which is non-binding. You simply plug in your daughter's SAT/ACT score, her high school GPA and extra curricular subjects. The college will then generate a number based on their own institutional aid, which is separate from federal aid, that she would be eligible for based on her grades, i.e. merit. Knowing what potential merit she would receive before you even apply can help you to navigate this in a very mustachian manner.
As for strategy, I would suggest going over to college confidential dot com and having a good luck around the forums. There is a financial aid section and many, many topics to choose from. Good luck, senior year is not for the faint hearted :)

Simplicity

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Re: Paying for College.
« Reply #5 on: August 04, 2013, 06:27:25 PM »
Thank you for the responses. I have run NPC's at most all the schools our daughter has an interest in. We continuously come back with Expected Family Contributions that far exceed the annual cost of attendance.
She will make application to many more schools than we would ideally wish her to, the purpose being the pursuit of merit aid. She has excellent academic credentials so it does seem likely that she will receive merit aid from a number of schools. With the Ivies and top 20 LAC's I don't think it is at all likely we will receive any aid. All aid at these schools is needs based with very few exceptions.
We are tightening up financially in many area's but being able to get to $58,000 to $60,000 a year in savings is not within the realm of reality. I contribute about $15,000 a year to a Simple IRA in my business. I am considering suspending that contribution for four years to net another $10,000 toward the expense. That would get us to $42,500 per year.






Riceman

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Re: Paying for College.
« Reply #6 on: August 04, 2013, 07:30:01 PM »
I say lay out for her the choices that she has and what effects that will have on your financial situation.

I had the choice between one of the best public schools in the country and one of the lesser Ivies.  I preferred the Ivy.  My dad laid out the financial situation, part of which was him saying that he would retire two years later if I chose the Ivy.  He also made it clear that if I chose the public school, I would have a sizable (~40k) amount left from a grandparent's inheritance.

I chose the public school.  Maybe I missed something--it's hard to tell--but I'm happy where I end up.  Make sure your child agrees with what you are sacrificing for.

Simplicity

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Re: Paying for College.
« Reply #7 on: August 04, 2013, 07:57:00 PM »
Thank you Riceman. That is part of what is so difficult. She is an extremely considerate and kind  young woman and she has worked so hard to have the credentials she has. Basically she has done her part and then some. We want to find a way to do ours.

MustSam

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Re: Paying for College.
« Reply #8 on: August 04, 2013, 08:05:25 PM »
If she is Ivy-league or similar calibre, she should be able to get merit-based competitive scholarships. They generally require a well-written essay, good grades and some success in extra-curricular activities. If you and her are motivated enough after sending all those college apps, try to apply for as many of these as possible. Free money!

ichoosemyself

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Re: Paying for College.
« Reply #9 on: August 04, 2013, 08:49:56 PM »
I just want to provide the data point of my own experiences that may be helpful to you.

I had a lot of choices - one of the best Ivies, a flagship public (think Berkeley, Michigan, UVA), a partial scholarship at a lesser public , or a full scholarship with paid housing, books, and food AND A STIPEND at a very third-tier public

I chose the most expensive option, the Ivy. I wanted to leave the state and push myself. I could say I don't regret it, because I did make a lot of friends and really did widen my perspective a lot compared to my friends who didn't leave the state or our hometown...but I do. My parents paid full price (although when my sister enrolled a few years later, she got substantial need-based aid, because we used all our money up on me), and I really don't think it was worth it financially. But if I hadn't gone, I would've regretted it, too. At the time, it seemed in a once in a lifetime chance to leave my state and broaden my horizons, but I've learned now that nothing is really once-in-a-lifetime, because life is long, you make mistakes, and you can try again (except in in law, the profession I unfortunately chose later).

Then again, when I went to law school, I chose a slightly lower-ranked school (Top 10) instead of a more expensive higher-ranked school in a big city (Top 6). I ended up not getting a big firm job, so maybe that was penny-wise, pound-foolish. No way to know.

neoptolemus412

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Re: Paying for College.
« Reply #10 on: August 04, 2013, 11:17:46 PM »
The reality is you need to discuss with your daughter her goals: i.e. major, school, summer internship/job aspirations.  There is not much you can do to game a financial aid system for top tier schools.  I graduated from 2 ivy league schools for undergrad & masters degrees.  I took every scholarship, grant, workstudy opp, and internship I could.  The price for these places goes up roughly $2.5-$3K a year and youíre looking at a cost of $55-60K all-in before grants, scholarships, and the like.  So realize per your savings and cash flow estimates, somebody is taking out a loan in the form of a student loan or heloc to go to one of these places.  (Caveat, unless sheís a top athlete.  This may lead to some extra help, but Ivyís donít give Ďathletic scholarshipsí, only merit/need based.  This means, theyíll find extra money if she can bring All American honors/championships, but it will pale in comparison to what a state school would offer).

The truth is your undergraduate does not matter that much as long as you do well.  Most Ivy League schools are thought highly of for their graduate programs.  An MBA from Wharton means more than an undergrad.  Thus, it's better to go to a less rigorous school and do great than be mediocre at an Ivy League school in the eyes of the Masterís programs. 

Everything below is assuming she's a genius, extremely hard worker, who will graduate magna cum laude (3.7, A- or above at most Ivys) in a major that leads to $100K+ first year salary.  If there are any doubts about this, then DON'T GO TO AN IVY LEAGUE SCHOOL.

An Ivy undergrad is good for the following.  If she wants to do computer science, engineering, finance (wall street), or med school, go to an Ivy.  The reasons are the post-grad job opps are a world above schools not in the top 10.   I worked in admissions as a job during undergrad.  The top 50 employers killed themselves to recruit my peers and myself.  This does not happen at a state school or as heavily at other top public/private schools.

The Ivy League is about filtering talent.  Firms recruit there because the admissions process has filtered out the majority of those students who arenít serious.  Top companies have a quota for each top school.  Whether itís hard # or not, they know theyíll take on 2 or 5  or 12 from Harvard, Yale, or Penn.  They offer $20-30K summer internships, tuition reimbursement, vacations, and numerous other perks not found at lower tier schools.  This is why you pay a premium.  A top undergrad student gets a chance to sit in front of the top companies and literally gets an offer if they don't mess up.  This is not true of the majority of undergrad programs. 

Top firms and schools recruit directly from the top 10-15 undergraduate programs.  That's it.  Try breaking into Ibanking, consulting, private equity, or a top tech firm without an Ivy.  It's damn near impossible.  You may know a guy or 2, but Ivy League grads know dozens at these firms b/c thatís who they recruit.  Same for Google, facebook, and most places in Silicon Valley.  Or top consulting firms Bain, Mckinnsey, Boston Consulting group, ect.  I bring these places up b/c they are the reason you go to an Ivy.  These are highly competitive industries that care about name brand recognition. Your chances of landing a $100K+ job out of undergraduate go up exponentially with an Ivy League degree.  If sheís going after money and a leg up in starting a career in a competitive field, she should go to one of these schools and major in one of the aforementioned areas.   

Otherwise, she should just go to a state school with a large alumni base.  Penn state, ohio state, and similar schools will get her a job in tons of other fields.  If she excels there, she'll have an outside shot at a top job upon graduation and the coursework will be less rigorous.  She hopefully kills it grade-wise and can leverage this higher GPA amongst her peers into a good offer.  Hell, if sheís really that smart, she could get a job at a top place, but it will just be tougher.  However, starting out at $50K a year is better than $100K w/ $75K in debt. 

Also, the debt part is about you guys more than her.  If she wants to go to an Ivy League school and you can't afford it, let her know that she'll have to cover a portion.  At 22/23 when she graduates, she'll learn the lesson.  You think itís protecting her by not having debt.  It can be a teaching moment and also a life lesson.  You guys simply don't have enough saved and make too much to count on grants/aid to cover 4 years at a top university.  We accumulate debt by purchasing things we canít afford.  You guys canít afford an Ivy League degree without debt and this is true of the vast majority of the people attending such institutions. 

Again, an Ivy League school is a great investment if she wants to use it to catapult her career into high earning field that has difficult barriers of entry.  If she wants to just work in private industry, has no clue what to do, or enter a practitioner-minded field (accounting, lawyer, nursing) she should go to a reasonable state school that you can pay cash for. 

ichoosemyself

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Re: Paying for College.
« Reply #11 on: August 05, 2013, 02:36:28 AM »
Neoptolemus412, Great advice. I think the caveat should be that you can go to an Ivy League school, even the best ones (Harvard, Yale, Princeton) and fail to get the prestigious jobs or make anything out of yourself. I know a lot of people like that! Myself, too, if you look at my life right now.

Albert

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Re: Paying for College.
« Reply #12 on: August 05, 2013, 03:28:31 AM »
I might add from my limited experience with US education system that if she is one of those rare people interested in science (physics, chemistry, biology, mathematics and all the interface disciplines) then the most economical approach is to go first to a sizeable state school with a solid research program (undergraduate research experience is increasingly important) and then follow it up with a top 10 program for a PhD. No one cares later were you went for undergrad, but the choice of the graduate school is extremely important as is the choice of the academic advisor. There is an enormous difference in job opportunities between a 2nd or 3rd tier school and an Ivy League (+ few others like MIT, Caltech, Stanford, UC Berkeley). You can virtually forget about a mid to top tier academic position without graduating from a top 10-15 program yourself.

By the way it's a decent approach to intellectually challenging and well paying career considering that grad school is for free. Starting salaries in big pharmaceutical or basic chemical companies, for example, were about 90-110k with generous benefits five years ago. Downside is that you'd have to live in certain areas of the country and moving from one job to another is more challenging than elsewhere.
« Last Edit: August 05, 2013, 03:44:14 AM by Albert »

Zamboni

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Re: Paying for College.
« Reply #13 on: August 05, 2013, 05:32:41 AM »
Quote
You can virtually forget about a mid to top tier academic position without graduating from a top 10-15 program yourself.

This is true, but mostly it applies to graduate school.  The source of a person's undergraduate degree becomes primarily important if it's a terminal degree in a field where the number of good jobs are fairly limited.

Quote
The truth is your undergraduate does not matter that much as long as you do well.  Most Ivy League schools are thought highly of for their graduate programs.  An MBA from Wharton means more than an undergrad.  Thus, it's better to go to a less rigorous school and do great than be mediocre at an Ivy League school in the eyes of the Masterís programs.

This is absolutely true.

Having worked at a big state school, a highly selective school (Ivy peer), and industry, I don't think that the undergrad experience or the job prospects of graduates from the state schools should be discounted at all.  The bigger places have terrific opportunities for students who are motivated to make the most of their experience, and they have a HUGE pool of alums who are now hiring managers.  I can tell you from being a manager in the microelectronics industry that it was probably a bigger advantage for BS-level applicants to be coming from somewhere like Ohio State than Dartmouth.

I'm torn about this.  I work at the highly selective school and can see that students here get more closely monitored advising, for example, quicker steering toward help if they are floundering, more encouragement to participate in highly structured study abroad programs and international summer experiences, and better "amenities."  At the same time, there were many more career pathway major choices at the big state school where I used to work, and many more opportunities for work-related paid internships or co-ops (despite what the little private schools like to think, the bigger schools are way ahead on this.) 

My dad went to a small but extremely prestigious place as an undergrad.  His advice to me was to go to a big school.  That's because he found a passion for something that his little school didn't offer; they were willing to let him "customize" a major for himself (an amenity at many small private schools), but a bigger school would have given him access to several people with real expertise in that field instead of zero.

I think you have lots of good advice in this thread.  Don't get too hung up on "brands."  I hope my children will apply to a variety of types of schools, then visit them all to make determinations for themselves about where they will have the best experience.  They should also do a cost-benefit analysis after they see the aid packages.

kh

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Re: Paying for College.
« Reply #14 on: August 05, 2013, 05:45:50 AM »
The comment on a science focus is true (go someplace where you can get undergrad research experience, and assume you'll have to go to grad school). However, I disagree that big state schools are where that research experience will come from. I went to a top 10 LAC, and a top 10 flagship public in my field for grad school. Small liberal arts schools were over-represented among the grad students, and virtually none of the undergrads saw any of the beautiful multimillion dollar lab facilities. Big state schools get more direct employer recruitment, but for fields that require grad school, a LAC can be a huge leg up.

Just thought I'd throw that out there given all the public flagship vs. Ivy comparisons... There are other options. It's true that to tier LACs give only need, not merit aid though.

MrsPete

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Re: Paying for College.
« Reply #15 on: August 05, 2013, 07:29:45 AM »
Search for some books on how to pay for college without going broke.  Most of the advice you'll find will be aimed at parents of younger kids, and the biggest piece of advice will be SAVE (duh, like you couldn't figure that out on your own), but you'll also learn some things. 

One thing I'd ask right away is, Do you have other children?  If so, I'd caution you to be sure to reserve a portion of your college savings for them.  I know a number of families who've spent lots on their oldest child, even borrowed for them, and then they've had little or nothing left for the younger children. 

She's about to begin her senior year?  So her college applications will probably be available September 1st.  She should apply to a wide range of schools.  You mentioned Ivies.  Apply, but realize that few, few, few people actually end up attending those few schools.  Also apply to at least one state flagship.  Also apply to a couple mid-tier state schools and a couple private schools.  Having covered all your bases, you're opening yourself to the widest possible chance for success.  With everything -- applications, scholarships, housing, orientation -- pay attention to deadlines.  In high school, exceptions are made even when students have no good reason; not so in college. 

Most of the big-deal scholarship applications are available in the fall.  In the spring, smaller scholarships will open up.  Full-rides are almost a thing of the past these days (except for military).  Schools have decided they'd rather give tuition-only scholarships to 20 kids instead of full-rides to 4, and since they're giving those scholarships to attract the best and brightest to their schools, I can't say that's a bad business plan! 

Apply for everything for which your daughter qualifies.  You'll have to sift through loads of options that aren't for her (for example, you'll find scholarships aimed at business majors, scholarships for kids who reside in a certain county, scholarships for kids whose parents are military or law enforcement), but you'll find plenty for her too.  My college sophomore is also a top notch student, and she applied to 40-45 scholarships as a senior; she received 2.  You could say that's a horrible rate of success, or you could say, "Wow, she has 50% of her education paid!"  The thing about scholarships is that your kid isn't the only promising student out there. 

In my experience (and I've taught high school seniors for 21 years, so I've dealt with a wide range of students) MOST scholarship money comes from organizations, not individual schools; so most scholarships can be applied to any school she chooses. 

Do keep in mind that, as a high school teacher, I know plenty of excellent students who end up with nothing at all in the way of scholarships, and it's not because they didn't try.  My daughter did well for a couple reasons:  She's studying nursing, which is a big-scholarship field.  I suspect my other daughter, whose interests are in business /economics won't get as much scholarship money simply because that field doesn't garner as much financial help.  She had LOADS of community service and extracurriculars; the students who have top grades and nothing else don't tend to stand out to the scholarship committees.  She had lots of AP classes, a top GPA and SAT, and volunteer work in a pre-nursing field. 

You mentioned law school.  I suggest you read the thread that's on this board right now about a two-lawyer couple who's under-employed and deeply in debt.  I personally think this is a very poor time to go into law.  Many, if not most, lucrative careers deal with science and math.  If your daughter excels in those fields, I'd encourage her to look into what she could do with those degrees.

The hard thing about college and money is that you're forced to make decisions without all the facts in hand, and you're forced to juggle so many possibilities:  If you go to school 1, you'll have these opportunities, but it'll be expensive -- and it's so far away that coming home'll be expensive.  If you choose school 2, it'll cost less, but it's so small.  School 3's offered X amount in merit money, but it started out with such a high pricetag that it's still more expensive than the state school -- but if I get that other scholarship, and I won't know 'til May, then it'll be do-able.  You get the idea.  At some point, you'll just have to say, "DECIDE NOW based upon what we think to be true."  That drop-dead choice date will probably be May 1st. 

Finally, as a parent actually paying for college right now, it's been easier than I expected.  We saved.  Our daughter chose a moderately-priced school.  We still have income coming in.  Yes, we're watching our pennies, and it's a big bite out of our financial resources, but it's not as horrible for us as people have described. 


Simplicity

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Re: Paying for College.
« Reply #16 on: August 05, 2013, 08:04:03 AM »
Thank you MrsPete,
Your description seems incredibly accurate to me. Trying to come to conclusions while so many variables are unknown is not pleasant! Our daughter is quite strong across the board. GPA, ACT, EC's etc. I hope the strength of this balance is appreciated and acknowledged by admissions office's both in regard to acceptances and merit aid.

unpolloloco

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Re: Paying for College.
« Reply #17 on: August 05, 2013, 08:55:37 AM »
Ivy-league-material students often can get merit-based scholarships to schools that are in the next tier down (so top-50 instead of top-10, for example).  Especially at colleges with large endowments and smaller student populations (this list might be helpful: http://en.wikipedia.org/wiki/List_of_colleges_and_universities_in_the_United_States_by_endowment).

I'd advocate offering your daughter $XX,XXX per year for 4 years, independent of where she goes to college (and any excess then goes to her in the form of grad school or downpayment or something like that).  That way, it puts ownership on her to figure out where she wants to go and how she wants to pay for it (and to graduate in 4 years!).  Guide her through that process, but put the ownership of that decision on her, not you.  It'll make her more appreciative and engaged.

Albert

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Re: Paying for College.
« Reply #18 on: August 05, 2013, 09:40:42 AM »
The comment on a science focus is true (go someplace where you can get undergrad research experience, and assume you'll have to go to grad school). However, I disagree that big state schools are where that research experience will come from. I went to a top 10 LAC, and a top 10 flagship public in my field for grad school. Small liberal arts schools were over-represented among the grad students, and virtually none of the undergrads saw any of the beautiful multimillion dollar lab facilities. Big state schools get more direct employer recruitment, but for fields that require grad school, a LAC can be a huge leg up.

Just thought I'd throw that out there given all the public flagship vs. Ivy comparisons... There are other options. It's true that to tier LACs give only need, not merit aid though.

Could be, but my comment was about the most economical way to do it. You can most certainly get there from a big state school, but perhaps more self motivation and discipline would be needed. I got my PhD from a midlevel state school and there were several undergraduate students doing research in our group while I was here. The thing is that they were not constantly pushed to do it, but had to show a initiative (catch a professor, convince him that you are good enough and then work hard when given an opportunity). On guy in particular stood out. His family came to US from Eastern Europe just before his last year in high school, without any savings for a college or knowledge where to apply and how. He took some classes in the local community college, was outstanding there and transferred to the closest decent state school as soon as he could. Straight A's there in everything including part of the graduate program just for fun, two years of intensive undergraduate research, then in his senior year 95+% percentile in GRE math and science sections. Was accepted pretty much everywhere for grad school, chose Harvard, did very well there and is now an assistant professor in a top 20 program. Among the smartest men I've ever met and I have met many...

Albert

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Re: Paying for College.
« Reply #19 on: August 05, 2013, 09:53:46 AM »
Most important for her is to decide and if possible relatively early what it is she would like to do for living and then choose a college and the major accordingly. Don't push her to study law, for example, if that kind of work doesn't appeal to her. It's possible to make a decent living in most fields for which college education is required.

Simplicity

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Re: Paying for College.
« Reply #20 on: August 05, 2013, 11:19:12 AM »
Her intended major is International Relations. She has expressed an interest in going to Law school afterwards but she seems to be wavering a bit on the Law school piece now. She is a very strong language student (currently, Spanish and French) she would like to study either Arabic or Chinese in college. Coming from a place of fear I would like her to pursue Computer Science or Engineering but I want her to follow her passion. She is a practical kid and knows that she will be well known in the career services office. She has a quiet tenacity that has served her well and I don't anticipate that will change.
I am going to post the list of schools that she will be applying to for everyone's interest and comments.
1) Princeton 2) Harvard 3) Brown 4) Cornell 5) Middlebury 6) Williams 7) Georgetown 8) University of Richmond 9) American University 10) George Washington University 11) Lafayette 12) Hobart & William Smith 13) SUNY Geneseo 14) SUNY Binghamton.
The SUNY's are Flagships and comfortably affordable. It is anticipated that Merit Aid will be offered by numbers 8 through 12. Hopefully they will be generous. We shall see!

Albert

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Re: Paying for College.
« Reply #21 on: August 05, 2013, 11:46:55 AM »
Just out of curiosity what do people do with a degree in international relationships assuming they don't follow it up with a graduate degree? There are plenty of places where a generic degree is just fine, but I can't think of too many places which would ask for exactly this one.

teen persuasion

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Re: Paying for College.
« Reply #22 on: August 05, 2013, 01:45:20 PM »
It might help you to see the actual FAFSA formulas, so that you can see what weighs most heavily in calculating the EFC.

http://ifap.ed.gov/efcformulaguide/attachments/091312EFCFormulaGuide1314.pdf

I'm always amazed at the discrepancies in the charts.  Why as 47 yo married parents do we get $38k in savings protected, while a similar age single parent only gets $11.3k protected?  Why in 2010 were the figures for the same age $48.9k and $19.1k?

Simplicity

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Re: Paying for College.
« Reply #23 on: August 05, 2013, 02:29:30 PM »
Yes Albert, Graduate school or Law School or the ambition and creativity of the person pursuing employment with an Undergraduate degree.
Teen Persuasion, I know that our EFC has consistently come back in the 80's and 90's when we do NPC's. We have not yet done a FASFA. We own a Two family investment property and I am a partner (Executive Officer of a subchapter S corporation) in a business. These effect NPC's with the Common Application (I believe).
I am a saver and live quite simply. There are four area's that we hold significant equity. Our home, our 2 family Investment property, The value of my business, and our retirement savings. I don't see how to get to the $60,000 a year range of college expense without tapping in to something aside from $50,000 of liquid savings and cash flow.

teen persuasion

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Re: Paying for College.
« Reply #24 on: August 05, 2013, 02:51:06 PM »
Retirement savings are not looked at in FAFSA calculations, nor the value of your primary home.  You do not need to "do" the FAFSA - just work thru the appropriate worksheets in the link.  Filing the FAFSA, you just give them the financial info and they do the hand-waving and give you back that EFC number.  I like to figure things out for myself, so I want the actual formulas.  Maybe your "business net worth" is the culprit in the high EFC, maybe it is your AGI or your wages, or investment income.  Start at page 9.

I had to google a bit to figure out what NPC was, and I've got kid #3 starting in a few weeks (another SUNY).  The net price is padded and includes all sorts of things beyond tuition, fees, and R&B.  Some of that you are presumably already covering for your child, such as personal expenses (HBA, etc.), and it is not really an additional expense.  My kids have been pretty good at funding college, some merit scholarships, some grants, some need-based aid, some loans, a little work study. 

Worsted Skeins

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Re: Paying for College.
« Reply #25 on: August 05, 2013, 03:02:24 PM »
While FAFSA may not look at home equity or retirement, the CSS Profile (required by the Ivies and many of the "elite" schools) does.  It is my understanding that parents who own businesses may benefit from the Profile over FAFSA.  In our case, the EFC (Expected Family Contribution) was similar from both.
« Last Edit: August 05, 2013, 03:07:18 PM by Worsted Skeins »

Riceman

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Re: Paying for College.
« Reply #26 on: August 05, 2013, 08:40:48 PM »
If she wants to join the Foreign Service, Ivy League is completely unnecessary.  We have officers from all kinds of schools, and her school would only be relevant on a miniscule portion of the very long process.  No one on my interview panel had likely even heard of the school where I got my Master's degree...

If she wants to learn Chinese or Arabic, it's almost entirely based on motivation--she can learn just as easily at a community college. I self taught myself Chinese while earning an unrelated master's degree...in Japan.  I just studied in my free time, got language partners, and traveled took one on one classes in China during a holiday.  If she wants to learn a language, save the money and send her for a year to live and study in that country before she even begins school.

Simplicity

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Re: Paying for College.
« Reply #27 on: August 06, 2013, 08:20:33 AM »
I am appreciative of all the replies! I don't believe anyone has made any suggestions relating to our finances and what may be the best avenue to take. Perhaps not nearly enough of our Financial information is known?

teen persuasion

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Re: Paying for College.
« Reply #28 on: August 06, 2013, 09:49:36 AM »
It is difficult to make suggestions without knowing details, and without knowing what rules will apply (FAFSA vs CSS), especially since the rules change a bit each year - I know I am waiting for the next FAFSA formulas to come out to see if we can possibly again qualify for automatic EFC = 0.

There is also uncertainty even after getting a "good" EFC; schools can gap you.  When my oldest was applying, her first choice school gapped her $16k, even though we had an EFC of zero.  She appealed, and they simply told her that maybe another school would be better for her.  Her second choice (same price range, ~$50k/yr in 2008) was excellent, and she was very happy there.

There is also some leeway in aid packages.  When DS2 was deciding where to attend, his second choice school offered more grants/scholarships than his first choice.  He brought this up to financial aid, they asked for a copy of the competitor's package, and decided to beat it.  We were very pleased.  To some degree, it comes down to which school really wants your student, and is willing to win them.

Clifford

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Re: Paying for College.
« Reply #29 on: August 06, 2013, 10:36:07 AM »
Have you considered making up the difference after graduation?  Both parents could gift money to the child in the form of payments on deferred loans. This could be another $25k or so per year after graduation to pay down the loans without tripping the gift tax. I also think that the interest on the loans would be deductible by the child even if you made the payments (please confirm before implementing).
This all depends on your cash flow after her graduation.

neoptolemus412

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Re: Paying for College.
« Reply #30 on: August 06, 2013, 11:50:04 AM »
I am appreciative of all the replies! I don't believe anyone has made any suggestions relating to our finances and what may be the best avenue to take. Perhaps not nearly enough of our Financial information is known?

I don't think financial information is the problem.  There's not much gaming of the financial aid system.  The biggest packages are from schools that top level students don't want to go to.  Princeton offers tons of grants, but it's tiered for low income families.  Most students get a little grant money, but still have to take out loans.  If you light a fire under her and have her apply to every scholarship out there, it most likely won't cover your costs anyway.  It will help, but scholarships lean towards STEM programs, research, minorities, and business schools.  Most of the schools mentioned offer aid/grants, but per your financial situation it's reasonable to think you will be responsible for $30-35K+ a year of her costs.

Per your information, you own 2 properties, run a business, and have substantial savings for college.  Her aid package will be different depending upon the institution.  Princeton gives out grants that don't require repayment.  Many other schools may require workstudy options, if she qualifies.  However, the schools you're looking at will require  substantial cash outlay to cover all expenses (this includes living, room, board, tuition, books, amenities, ect.)  This money is coming from somewhere, so a loan is the most likely option.  Your savings are more inline to cover a state school than a top Ivy.  This is just a fact.  If you really want cash, you could sell a property, use the capital gain exemption and use this to fund her undergraduate (this is not advisable, but an easy solution). 

The main problem you face is actually having a hard talk with her about the realities of life.  IR graduates are more likely to be unemployed/underemployed upon graduation than quantitative majors.  The job market is flooded with liberal arts majors.  Can she get a job? Yes.  Would she need a Princeton degree for it?  Most likely not.  Thus, you would pay a premium for the Princeton name without the career benefits.  If her graduating debt free is your goal, you either need to liquidate some assets to pay cash, take out a loan, or push her to less costly schools.  I would gamble with such schools if she was a comp. science major, as I know tons of coders who make $200K within 3 years of graduation.  I don't know one liberal arts major making this in the workforce, unless they started their own business, which doesn't require a degree. If I were you, I would focus less upon her 4 year undergrad & push her towards a major in demand w/ a minor in IR. 

She's not doing herself any favors going to an Ivy unless she is a top student.  I would say the pressure to attain a 3.7+ is nothing like hs, where your family and school all want you to succeed.  Undergrad at a top 5 school is a different game and being anything but in the top 10% will hurt you.   Thus, you should have real conversations with her about costs and what she would like to study/do after school.  Doing great at a top 50 school in a major that's recruited is 10X better than being middle of the road at an Ivy. 

An undergrad is a necessity for 99% of the professional career track jobs out there.  Ivys graduate literally thousands each year.  Unless she's into finance, comp science, engineering, or STEM majors, I'd say go for 2nd tier schools that cost less.  If IR is her passion, she'll have to get a graduate degree to stay competitive anyway.  Thus, it's better to go to a less rigorous school & kill it, rather than pay a premium at Harvard, Princeton, ect. to get the same job opps as someone coming from a state school.

Simplicity

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Re: Paying for College.
« Reply #31 on: August 06, 2013, 12:20:24 PM »
Have you considered making up the difference after graduation?  Both parents could gift money to the child in the form of payments on deferred loans. This could be another $25k or so per year after graduation to pay down the loans without tripping the gift tax. I also think that the interest on the loans would be deductible by the child even if you made the payments (please confirm before implementing).
This all depends on your cash flow after her graduation.

Thank you Clifford,
I hadn't and I don't know that I completely understand what you are referring to? Having our daughter take out loans that we would pay back after she graduates? I am quite debt averse and wouldn't relish the thought of that if that is what you are referring to. I don't like spending money in the future when I don't know necessarily what our financial circumstances will be at that time. The cheapest source of money would be a refinance of our primary home, and I don't much enjoy the thought of that either. We are about 5 years from owning it out right. I may have totally misinterpreted what you were suggesting, and I am interested in hearing further.

Numbers Man

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Re: Paying for College.
« Reply #32 on: August 06, 2013, 12:25:13 PM »
My back of the envelope calculation is that your nut is going to be approximately about $40 to $45k a year at a private school with a $60k COA. It all boils down to your EFC (Expected Family Contribution) that is calculated by FAFSA.

teen persuasion

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Re: Paying for College.
« Reply #33 on: August 06, 2013, 12:40:21 PM »

Teen Persuasion, I know that our EFC has consistently come back in the 80's and 90's when we do NPC's. We have not yet done a FASFA. We own a Two family investment property and I am a partner (Executive Officer of a subchapter S corporation) in a business. These effect NPC's with the Common Application (I believe).
I am a saver and live quite simply. There are four area's that we hold significant equity. Our home, our 2 family Investment property, The value of my business, and our retirement savings. I don't see how to get to the $60,000 a year range of college expense without tapping in to something aside from $50,000 of liquid savings and cash flow.
I've been playing with the FAFSA formulas a bit and trying to reverse engineer a scenario to get an EFC in the range of 80-90k.  This requires an AAI (available income + 12% of available assets) of over 200k.  I had to make some wild assumptions: 2 100k salaries, 250k investments, which gave a business value of over 900k.

Simplicity

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Re: Paying for College.
« Reply #34 on: August 06, 2013, 12:51:44 PM »
Thank you neop......,
I appreciate the time and effort you have put into your post and understand completely the points you have made. We will have a lot to examine upon receiving her admission packages from the various schools that she applies to if she is accepted.
It is hard to speculate as to how she will do should she attend an Ivy. She will finish either number one or number two in a class size of approximately 150 kids, a weighted average of 99.7, an ACT score of 33 with an 11 on the writing portion, her EC's are exceptional with a lot of very strong principled leadership positions and responsibilities. I am biased of course but to meet her solidifies all of her other strong characteristics. She is sincere, humble and kind.
I am way less concerned with where she will be admitted (respecting the extreme odds of Ivy admissions) versus the how we will make it happen financially piece. There likely will be tradeoffs to be made, we are just looking to be as intelligent as we can be with what they may be. We will do without to have her have particular opportunities.

Simplicity

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Re: Paying for College.
« Reply #35 on: August 06, 2013, 01:13:08 PM »
I am going to have to spend time with the FASFA application in the link Teen Persuasion provided. TP's numbers in total are not far off.
« Last Edit: August 06, 2013, 01:19:17 PM by Simplicity »

pbkmaine

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Re: Paying for College.
« Reply #36 on: August 06, 2013, 02:03:24 PM »
If you are in New York State, Cornell University offers you the unique ability to get an Ivy degree at a state school price. For International Relations, consider the ILR school (Industrial and Labor Relations) or the Agriculture School for Agricultural Economics.

Simplicity

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Re: Paying for College.
« Reply #37 on: August 06, 2013, 02:17:34 PM »
Thank you pbkmaine,
Yes, Cornell has 7 schools some of which are endowed or land grant schools. (I may have that some what wrong) The Industrial and Labor Relations School is considerably less expensive than other Ivies at a COA of $43,000 to $45,000 ish. Not quite State School prices though at COA's of $18,000 to $20,000 ish.
I appreciate the suggestion very much and the ILR program is one that she will be applying to. $45,000 beats the heck out of $60,000 and is a lot more within the realm of what we could handle.

ZiziPB

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Re: Paying for College.
« Reply #38 on: August 06, 2013, 03:17:20 PM »
Has your daughter considered any schools outside of the US?  I don't know where you live but McGill in Montreal is a great option that is significantly less expensive than comparable US universities.  If you are in New England or NYS, it's not that difficult to get to.  Also, St Andrews University in Scotland has a world famous IR program and is significantly less expensive than any Ivy, even with added travel costs.

tomsang

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Re: Paying for College.
« Reply #39 on: August 06, 2013, 03:59:44 PM »
I had the same concerns about my son over the past several years.  He was consistently getting a 4 point while taking all honors.  We were concerned about paying for his education if he was going to a top-tier school, so we decided to invest in buying him the coolest video game that all of his friends were playinng.  Now he has a strong 3.9, which will get him into the top rated in-state public school.  I figure for $80, it saved us $100k.  YMMV

Good luck! Let us know how it turns out.  Our oldest is going to college in 2 years, then we have three others going over the next five years.  We have $200k+ saved up to cover their tuition, books, and fees, they can cover room and board.  He will graduate with 1.5 years completed if he passes all of his IB tests. The college savings through the IB program will provide some relief on our 529 GET plan, which will carry over to cover the other kids.

Simplicity

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Re: Paying for College.
« Reply #40 on: August 06, 2013, 07:01:06 PM »
Izeve, thank you, yes we have researched McGill and it is not on the radar but may come back on. COA of low 30's, lots of positives. The objection was the size of the school and as a result some of the class sizes of the courses.
St Andrews while intriguing is just to far away. We are a close family and would like to see her with some regularity and with reasonable convenience.
I appreciate the recommendations though, pulling all these variables together is far from easy.

Simplicity

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Re: Paying for College.
« Reply #41 on: August 06, 2013, 07:11:19 PM »
Thank you Tomsang. Best wishes to you and your family! I'm freaking out with attempting to figure it out with one child. There is this persistent message going on in my head, she has done the work, she deserves the best opportunity etc..
We didn't plan as well as we should have. Between the loss of a job and close to a six figure income and a significant illness we were derailed. We are all healthy now and we have much to be thankful for so no complaints.

Clifford

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Re: Paying for College.
« Reply #42 on: August 07, 2013, 10:34:25 AM »
Have you considered making up the difference after graduation?  Both parents could gift money to the child in the form of payments on deferred loans. This could be another $25k or so per year after graduation to pay down the loans without tripping the gift tax. I also think that the interest on the loans would be deductible by the child even if you made the payments (please confirm before implementing).
This all depends on your cash flow after her graduation.

Thank you Clifford,
I hadn't and I don't know that I completely understand what you are referring to? Having our daughter take out loans that we would pay back after she graduates? I am quite debt averse and wouldn't relish the thought of that if that is what you are referring to. I don't like spending money in the future when I don't know necessarily what our financial circumstances will be at that time. The cheapest source of money would be a refinance of our primary home, and I don't much enjoy the thought of that either. We are about 5 years from owning it out right. I may have totally misinterpreted what you were suggesting, and I am interested in hearing further.

You indicated through savings and cash flow (cash flow of about $20k/yr) you could provide $X per year.  Assuming 4 years of study, if the available cash flow remains post graduation you could pay the balance in years 5-8 if necessary. The predicted shortfall ($60k/yr minus $45k /yr available, so $15k short/yr) would be less than the gift tax threshold if done over 4 years. Often, the loans can be deferred interest free for a short time. If interest is applied, it is tax deductible, so overall a low rate.
My point was that if you want to pay for your child's college so they have no debt, then you don't necessarily have to pay for all of it in 4 years, just pay whatever is left of their loans after 4 years for them.  There wouldn't be a tax penalty if the annual amount is low, and there may be little to no interest if paid soon.

Rebecca Stapler

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Re: Paying for College.
« Reply #43 on: August 07, 2013, 02:57:16 PM »
In addition to scholarships, she can also start as a Resident Advisor in her sophomore year, and get free room and board.

Consider whether she would be eligible for subsidized federal loans -- they do not accrue interest until after she graduates. By the time they enter repayment, you should have another years' earnings to pay them off. But if you're completely debt averse, then don't take out more than you could feasibly pay back that first year. 

1) Princeton 2) Harvard 3) Brown 4) Cornell 5) Middlebury 6) Williams 7) Georgetown 8) University of Richmond 9) American University 10) George Washington University 11) Lafayette 12) Hobart & William Smith 13) SUNY Geneseo 14) SUNY Binghamton.
The SUNY's are Flagships and comfortably affordable. It is anticipated that Merit Aid will be offered by numbers 8 through 12. Hopefully they will be generous. We shall see!

If she is interested in upstate NY, I highly recommend the University of Rochester. It has a big endowment so it gives generous merit scholarships (I know someone who got $10k/year just for a certain SAT score), is moderately sized so it has a lot of opportunities (including a great engineering school, in case she changes her mind!), and is on par with University of Richmond, at least the last time I checked.

Given that she wants to go to law school, or any graduate program, I think that the brand name of the school is really important, unless it's a sleeper school that has a highly regarded speciality in the area she's pursuing. Lawyers can be school snobs!

Simplicity

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Re: Paying for College.
« Reply #44 on: August 08, 2013, 05:06:46 AM »
Thank you Clifford and Stan. We have already had the discussion about her pursuing an RA position as a 2nd year student. Hopefully she will be able to do that.
We are aware of University of Rochesters fine reputation, I wasn't aware of their generosity with merit aid. We will explore that further.

teen persuasion

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Re: Paying for College.
« Reply #45 on: August 08, 2013, 08:15:36 PM »
In addition to scholarships, she can also start as a Resident Advisor in her sophomore year, and get free room and board.

Consider whether she would be eligible for subsidized federal loans -- they do not accrue interest until after she graduates. By the time they enter repayment, you should have another years' earnings to pay them off. But if you're completely debt averse, then don't take out more than you could feasibly pay back that first year. 

1) Princeton 2) Harvard 3) Brown 4) Cornell 5) Middlebury 6) Williams 7) Georgetown 8) University of Richmond 9) American University 10) George Washington University 11) Lafayette 12) Hobart & William Smith 13) SUNY Geneseo 14) SUNY Binghamton.
The SUNY's are Flagships and comfortably affordable. It is anticipated that Merit Aid will be offered by numbers 8 through 12. Hopefully they will be generous. We shall see!

If she is interested in upstate NY, I highly recommend the University of Rochester. It has a big endowment so it gives generous merit scholarships (I know someone who got $10k/year just for a certain SAT score), is moderately sized so it has a lot of opportunities (including a great engineering school, in case she changes her mind!), and is on par with University of Richmond, at least the last time I checked.

Given that she wants to go to law school, or any graduate program, I think that the brand name of the school is really important, unless it's a sleeper school that has a highly regarded speciality in the area she's pursuing. Lawyers can be school snobs!

+1 on UofR - DD1 was in Optics there.

Another pro to attending UofR, if your child is at all musical, is that the Eastman School of Music is a part of the University, and students in non-music majors have the ability to take music classes at Eastman.  That was definitely a perk DD1 made use of.

Zamboni

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Re: Paying for College.
« Reply #46 on: August 09, 2013, 09:23:41 PM »
Quote
He will graduate with 1.5 years completed if he passes all of his IB tests. The college savings through the IB program will provide some relief on our 529 GET plan, which will carry over to cover the other kids.

This is a great plan, using AP or IB credits to decrease money spent on college, but be cautioned:  not every school will count all of those classes toward graduation! 

In fact, my college only allows undergraduates to count 2 total classes from AP, IB, or even pre-matriculation college credits towards graduation.  This means that a BA or BS will still require 4 full semesters of enrollment at my college for every student regardless of how they tried to get ahead prior to enrolling here.  You will find similar policies at some of the schools on Simplicity's list.  State schools seem more likely to count all of these, allowing first year students to formally be sophomores because of pre-matriculation course credits awarded.  So, just be careful in asking about this in detail at each school prior to your child making a final school selection. 

Many of our students (and undoubtedly their parents) are surprised that they can't count hard earned AP/IB credits towards the total number of courses needed to earn a degree from our school (we do let students use all of them for placing out of the more basic courses in an effort to encourage them to explore a more advanced program of study.)  You need to clarify if ALL of the IB credits will be counted as course credits toward a degree at the school in question, or if they will only be used for placement, which is not the same thing.

Irishmam

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Re: Paying for College.
« Reply #47 on: August 09, 2013, 09:50:09 PM »
Excellent point Zamboni! We did not realize that all AP courses did not automatically count for college credit and my DS only got credit for 2 AP's at his college.
 
DS also had pretty good stats with an ACT of 32, but financial aid was all over the place. His dream college gave him no money and we ended up choosing the college that gave him the most merit money.
For OP, I think you should consider applying Tier 2 also, i.e. more than just the Ivies, and see what kind of merit package she gets. You will have some time between early action offers (Dec) and regular offers (Mar) to apply to more schools / refine the list a little. Some early action offers come with a merit offer and, even if it isn't her first choice, you can use this as leverage at some of the other schools.

The college app process is more of a marathon than a race. Good luck!

Simplicity

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Re: Paying for College.
« Reply #48 on: August 11, 2013, 05:57:55 AM »
Thank you, we are doing our best to identify a couple of second tier schools that fit the bill from a program perspective and also geographically.

Dee18

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Re: Paying for College.
« Reply #49 on: August 11, 2013, 10:18:59 AM »
If you were sure she wanted to go to law school, I would advise saving the money for law school and going to a state school undergrad.  Law schools base admissions largely on GPS and LSAT scores, with very little adjustment to the gap because of the quality of the undergrad.  I had a full ride to the major university in my state, where it was easy to get good grades.  I went to a top 10 law school and have had a fun career, first in practice in DC and now for many years as a law professor.  Lawyers are focused on law school attended, but not on undergraduate institution.