Paying for Childrens' College When You Have No Savings

[prof61820]

I ran across this story on MSN Money this weekend (http://www.msn.com/en-us/money/careerandeducation/a-financial-aid-guide-for-families-who-have-saved-nothing/ar-BB9Grzj).

The short of it is is that the family has 5 children and no college savings.  The comments to the article primarily offer up criticism of the size of the family rather than advice on how to fund their kids education.

If we assume that each child has some talent for higher education, how would you advise that they get it done?

If the parents refuse to co-sign for student loans, can their children still borrow to attend college?

[wtjbatman]

If the parents refuse to co-sign for student loans, can their children still borrow to attend college?

I take it you didn't borrow your way through college like some of us? :) I "paid" 100% of my own way, my parents didn't contribute a dime or co-sign anything. My parents are/were poor and can barely make ends meet as it is.

Yes it's possible to attend college without your parents money or help. The government will give you grants for some of it and student loans for the rest.

[prof61820]

If the parents refuse to co-sign for student loans, can their children still borrow to attend college?

I take it you didn't borrow your way through college like some of us? :) I "paid" 100% of my own way, my parents didn't contribute a dime or co-sign anything. My parents are/were poor and can barely make ends meet as it is.

Yes it's possible to attend college without your parents money or help. The government will give you grants for some of it and student loans for the rest.

Sorry, maybe I should have given my educational background in the original post.   I started and paid for my first year of a state college in 1985 with a very small inheritance from my grandmother.  My parents could not afford to pay for the rest of my college because they were saving for retirement (as this site - and I - support as a best practice).  Because the federal government - without looking at retirement savings at the time or noting that my parents had accumulated more savings by living in a poorer part of town and saving - found that my parents made enough to pay for my education, I did not qualify for student grants or even loans.  My parents would not co-sign for a student loan.  They had not budgeted a penny for my higher education (even though I was taking Advanced Placement classes in high school) and the thought of the government expecting them to pay for my education was just something they would not even address as being remotely within their way of thinking about how to properly raise a child.  In their opinion, they needed their new found cash to save for their retirement.

At this point, I had two options: (a) quit school and work (you could pay for state college tuition and room and board with minimum wage jobs back then) or join the military, serve and collect a GI Bill.     I joined the military in 1986.  When I returned in 1988 (they had 2 year enlistments back then), the GI Bill was sufficient for me to attend a state school with no grant assistance or loans (and because of my military service I was now an "independent" student and the government did not look at my parents income or assets so I would have qualified for grants and loans if I chose to go to a more expensive college).  After I graduated college (with a double major in history and philosophy - another reason for not wanting loan debt but terrific prep for my future), I attended law school (on a partial academic scholarship) and incurred roughly $60,000 in SL debt that I paid off in full about 3 years ago.  My parents - because I was "independent" - were not required to co-sign for my law school SL debt.  Even though I had no income, I received little support via state and federal grants.

As an aside, I grew up with my first roommate in college.  He came from a single parent household and was able to fund his state college costs with grants and loans because of his family's low income.  We attended the same schools, shared similar experiences (we both took Honors classes, good GPA, decent test scores and played sports).  I was very frustrated by his "good fortune" as I shipped off for basic training and my military life.   The military, it turned out, was a terrific experience for me and dramatically improved my grades and discipline, which, in turn, helped me land great paying and interesting jobs.  My friend's mother didn't save anything for retirement and he's now partially supporting her because she only has social security.  He also did not finish college.  My parents are retired securely and have never asked (and hopefully never will need to ask) me for a dime.  Both have (private sector) pension income and neither had attended college (although my mother had been accepted to Northwestern but her parents couldn't afford it) so they did not value college the same way that families with a higher education tradition valued college.  At the time all this was happening, the scenarios and hurdles presented to me were very difficult to swallow (and it still doesn't seem fair, logical or the best way to get middle class students educated to their potential) but, and as the bard says, "all's well that ends well."

How did your parents avoid co-signing on your loans?  How much did you borrow?

Can a student - whose parents are saving for retirement/medical high deductibles, etc. and have other assets but choose not to deplete them to pay for college - get "emancipated' at 18 so they can get grants and loans to attend college or does the government still require families to spend their retirement and other savings on college before allowing for grants and loans?

Is the military the only option if you don't qualify for grants and loans because your parents have too many assets?  I have children now and I'm just trying to get a lay of the land on college funding options (we are saving but the rules are a bit murky).

Should the parents in the MSN Money article co-sign for their kids' student loans? If something goes wrong with the kids' repayment plan(s), their retirement savings (if they have any) would be certainly sunk.

[highcountry]

A student's financial aid is calculated based on the parent's income until the student is 24, unless they are emancipated. Unless I am mistaken, emancipation can be achieved early through the military, marriage, or if the student was a foster child or other circumstances where the child can prove in court that their parents are messed up enough that support is unrealistic. Consigning is a different issue, and only applies to a small minority of possible loans.

[Zikoris]

In Canada if you're living alone, working, and supporting yourself you're considered an independent adult and don't need to provide parental information for student loans. So the best option here if you have parents with assets who don't want to pay is to move out on your own and start taking care of yourself when you hit adulthood (which you should probably do anyway for other reasons).

[prof61820]

A student's financial aid is calculated based on the parent's income until the student is 24, unless they are emancipated. Unless I am mistaken, emancipation can be achieved early through the military, marriage, or if the student was a foster child or other circumstances where the child can prove in court that their parents are messed up enough that support is unrealistic. Consigning is a different issue, and only applies to a small minority of possible loans.

It seems that - given the parents income in the MSN article - that all 5 students would qualify for student aid (grants and loans).  If the 5 children need loans to attend college, could their parents avoid co-signing on all their student loans?

Do the Feds only look at parental "income" when determining whether a student qualifies for financial aid?  What about a students 529 plan savings?  What about other parental assets (retirement, health care or otherwise)?

[prof61820]

In Canada if you're living alone, working, and supporting yourself you're considered an independent adult and don't need to provide parental information for student loans. So the best option here if you have parents with assets who don't want to pay is to move out on your own and start taking care of yourself when you hit adulthood (which you should probably do anyway for other reasons).

Given the Unites States' 401K style retirement system, this way of analyzing an adult's income seems much more logical and fair for students that should and want to pursue higher education.

It seems like the US should be investing in the education of its talented youth but, at the same time, the parents of adult students should not be held accountable for any debt their adult children incur if they are saving for retirement, healthcare and other very real "only in the USA" expenses.

[Goldielocks]

Canadian Info.

I vaguely knew the Student Loan criteria for Canada, as we attempted to apply when my husband went back to school.  (Turned out to be marginal if he would qualify, and all that work and financial info shared caused me to rethink the application).

But, with a teenager now in Grade 10, it was good timing to look.

Canada Student loan applications are tied to Provincial applications.  Likewise, government grants, and many university bursaries and work study aid programs are all tied to that one single application.  Only a few private groups offer bursaries independently of the University applications offices in our area (like Insurance company or your employer company, and those tend to be scholarships, not bursaries)

Criteria to qualify for most private bursaries, grants, student loans and loan forgiveness grants (after the fact):

1)  Based on financial need.   Years educational cost (all in) - Ability to pay = net need
2) Ability to pay includes your income and assets like investments and RRSP's, (but not locked in RRSPs and pension funds which is a nice loop hole for government employees)
3) Student is assumed to be dependent on parents for first 48 months after high school graduation unless:  married, has a child, or has worked for 2 x 12 months consecutively (minimum 2 years of work, no school)
4) Spouse and parent assets are included in the ability to pay calculation.

Awarded bursaries and grants are based on need and funding availability, (some also have student work placement during studies) THEN Student loans are awarded for the remainder of need.   

If the calculation shows that parents or spouse have ability to meet the needs then :
Federal government policy states that "parents are expected to plan for and make adequate financial preparation in anticipation of the student's post-secondary education. It is expected that the funding of the student's education will be a priority for the family. Situations that arise due to a lack of preparation or due to the directing of resources towards priorities other than the student's education will not normally be considered."[/i]

So -- To be eligible for loans and grants, independent of parent's resources,  a student is expected to work for 2 years minimum, OR to wait 4 years after graduation before applying.

This is a large change from the 90's when a student only had to wait until THIRD YEAR  before being eligible to apply independently of the parental assets.

Currently, Tuition costs at university (excluding room / board / transportation) run to $6000 per year, because of government funding for in-country / in-province students.   So that is a good thing, too.

End game - our RRSP's (retirement) accounts will always be too high to allow our kids to qualify for student loans.
Therefore, as parents, we need to borrow from our RRSP's to pay (no 10% penalty here), or have kids wait an extra 2 years before completing so they can apply as independents.

[BlueHouse]

In Canada if you're living alone, working, and supporting yourself you're considered an independent adult and don't need to provide parental information for student loans. So the best option here if you have parents with assets who don't want to pay is to move out on your own and start taking care of yourself when you hit adulthood (which you should probably do anyway for other reasons).

Given the Unites States' 401K style retirement system, this way of analyzing an adult's income seems much more logical and fair for students that should and want to pursue higher education.

It seems like the US should be investing in the education of its talented youth but, at the same time, the parents of adult students should not be held accountable for any debt their adult children incur if they are saving for retirement, healthcare and other very real "only in the USA" expenses.

It's been a long time since I went through the financial aid process, but back in the day, in order for my parent's income not to be counted, they could not declare me as a dependent on their tax return.   

[Gimesalot]

I went to school from 2002-2006, so this info is a little outdated.  At the time I went to school, no, there was no way for me to go without my parents co signing on the loans. 

Every year, they had to fill out the FASFA.  Since my parents were considered "high income," I received no grants, and I was eligible for approximately, $3,000 a year in government loans.  My tuition was $5,000 a semester.  When I went to the financial aid office, they could only recommend private student loans.  I tried several companies, and all of them required a co-signer.  At first, my parents refused to co-sign.  In the end, they realized that I would be dropping out of college in two weeks, if they didn't. 

I finished with $28,000 in loans and a degree in Chemical Engineering.  I paid it a point to pay the loans they had cosigned first, and I always had enough life insurance to pay them off, if something happened.  I now have about $6000 left, but I am taking my time since I locked them in at 2.25%.

One more thing, my parents refusal on a yearly basis, to fill out the FAFSA and co-sign on my loans completely destroyed any hope of a good relationship.  I am still very angry about the situation.  I will add that part of this resentment is fueled by the fact that within months of me moving out, they bought a new big screen TV, a new excursion truck, and an RV.  All the while, they told me that they couldn't afford for me to go to college or to ruin their credit by co-signing on loans.  If you are a parent, I suggest that you really think about the implications of not supporting (not necessarily paying), your children's education.

[MoustacheDArgent]

Here's what I would do if they were my children.  I would have them take AP/CLEP exams for everything they could. That would probably get them enough credits for their first year or two without having to get loans.

[franklin w. dixon]

I went to school from 2002-2006, so this info is a little outdated.  At the time I went to school, no, there was no way for me to go without my parents co signing on the loans. 

Every year, they had to fill out the FASFA.  Since my parents were considered "high income," I received no grants, and I was eligible for approximately, $3,000 a year in government loans.  My tuition was $5,000 a semester.  When I went to the financial aid office, they could only recommend private student loans.  I tried several companies, and all of them required a co-signer.  At first, my parents refused to co-sign.  In the end, they realized that I would be dropping out of college in two weeks, if they didn't. 

I finished with $28,000 in loans and a degree in Chemical Engineering.  I paid it a point to pay the loans they had cosigned first, and I always had enough life insurance to pay them off, if something happened.  I now have about $6000 left, but I am taking my time since I locked them in at 2.25%.

One more thing, my parents refusal on a yearly basis, to fill out the FAFSA and co-sign on my loans completely destroyed any hope of a good relationship.  I am still very angry about the situation.  I will add that part of this resentment is fueled by the fact that within months of me moving out, they bought a new big screen TV, a new excursion truck, and an RV.  All the while, they told me that they couldn't afford for me to go to college or to ruin their credit by co-signing on loans.  If you are a parent, I suggest that you really think about the implications of not supporting (not necessarily paying), your children's education.

The weird American "fuck my own flesh and blood" attitude that says well you're 18 so get the fuck out and eat shit forever is so weird. Why even have kids in the first place if you're gonna act like that??

[sarah8001]

I worked full time as a nurse's aide and paid for my own college out of pocket. I also had 16,000 from an insurance settlement for a disfiguring facial injury that I elected to spend on my brain instead of repairing my face, but I could have made it without that money if I'd had a roommate and cut some corners (not taken so many expensive extra science courses). The only assistance I recieved from my parents was a cheap, used computer from my dad, a car older than me from my mom, and about 100 in groceries every month or two. I lived in my own apartment, I volunteered, and I was exceedingly happy. I felt so frickin proud. Now my fiance and I are paying for his college out of pocket. We've paid for 6 quarters completely out of pocket so far, and it looks like we'll make it all the way through the two more needed for this degree. The next degree is tougher, but he shouldn't be making minimum wage then.
For my kids, I plan to allow them to live at home, with paid utilities, health insurance, and cell phones, as long as they are in school. I expect them to work at least twenty hours a week (preferably not for minimum wage) and exhaust all funding options including scholarships, internships, and military service before I'm paying for their schooling. The reserves are an option I intend to push pretty hard.
College gets reeaaaal expensive when you want complainypants options like not having to work at the same time, taking your first two years at a four year school (community colleges are way cheaper, cheaper lifestyle, and you can always transfer), partying, independent lifestyle without independent finances, etc.

[prof61820]

I went to school from 2002-2006, so this info is a little outdated.  At the time I went to school, no, there was no way for me to go without my parents co signing on the loans. 

Every year, they had to fill out the FASFA.  Since my parents were considered "high income," I received no grants, and I was eligible for approximately, $3,000 a year in government loans.  My tuition was $5,000 a semester.  When I went to the financial aid office, they could only recommend private student loans.  I tried several companies, and all of them required a co-signer.  At first, my parents refused to co-sign.  In the end, they realized that I would be dropping out of college in two weeks, if they didn't. 

I finished with $28,000 in loans and a degree in Chemical Engineering.  I paid it a point to pay the loans they had cosigned first, and I always had enough life insurance to pay them off, if something happened.  I now have about $6000 left, but I am taking my time since I locked them in at 2.25%.

One more thing, my parents refusal on a yearly basis, to fill out the FAFSA and co-sign on my loans completely destroyed any hope of a good relationship.  I am still very angry about the situation.  I will add that part of this resentment is fueled by the fact that within months of me moving out, they bought a new big screen TV, a new excursion truck, and an RV.  All the while, they told me that they couldn't afford for me to go to college or to ruin their credit by co-signing on loans.  If you are a parent, I suggest that you really think about the implications of not supporting (not necessarily paying), your children's education.

The weird American "fuck my own flesh and blood" attitude that says well you're 18 so get the fuck out and eat shit forever is so weird. Why even have kids in the first place if you're gonna act like that??

Given the very high cost of college, it seems like a parent - by refusing to co-sign for loans - as recommended on this and other sites - could easily prevent or at least thwart for a few years their adult (18-24 year olds) children from obtaining a higher education.

The sad thing is that the United States government knows that this attitude exists, generally ignores it and, as a result, fuels conflict between parents and adult children.  The same government treats the same 18-24 year old adult children as adults in EVERY other context so why do they treat them differently for higher education?  The US government also exacerbates the problem by operating an outdated system that does not recognize the need for the vast majority of parents - who no longer have pensions - to save for their own retirements so they don't burden their children later in life.  It's a real mess and unfair, and if like in Canada, the US looks at non-pension retirement assets when determining financial aid.  There really should be some carve out or recognition that a parent saving (or worse, making up for not saving earlier) in a 401K or other retirement vehicle might not be able to put kids through college AND obtain a secure retirement.

[prof61820]

I went to school from 2002-2006, so this info is a little outdated.  At the time I went to school, no, there was no way for me to go without my parents co signing on the loans. 

Every year, they had to fill out the FASFA.  Since my parents were considered "high income," I received no grants, and I was eligible for approximately, $3,000 a year in government loans.  My tuition was $5,000 a semester.  When I went to the financial aid office, they could only recommend private student loans.  I tried several companies, and all of them required a co-signer.  At first, my parents refused to co-sign.  In the end, they realized that I would be dropping out of college in two weeks, if they didn't. 

I finished with $28,000 in loans and a degree in Chemical Engineering.  I paid it a point to pay the loans they had cosigned first, and I always had enough life insurance to pay them off, if something happened.  I now have about $6000 left, but I am taking my time since I locked them in at 2.25%.

One more thing, my parents refusal on a yearly basis, to fill out the FAFSA and co-sign on my loans completely destroyed any hope of a good relationship.  I am still very angry about the situation.  I will add that part of this resentment is fueled by the fact that within months of me moving out, they bought a new big screen TV, a new excursion truck, and an RV.  All the while, they told me that they couldn't afford for me to go to college or to ruin their credit by co-signing on loans.  If you are a parent, I suggest that you really think about the implications of not supporting (not necessarily paying), your children's education.

I feel your pain.  What would have happened if your parents just refused to complete and file the FAFSA each year?

[prof61820]

Canadian Info.

2) Ability to pay includes your income and assets like investments and RRSP's, (but not locked in RRSPs and pension funds which is a nice loop hole for government employees)

If the calculation shows that parents or spouse have ability to meet the needs then:

Federal government policy states that "parents are expected to plan for and make adequate financial preparation in anticipation of the student's post-secondary education. It is expected that the funding of the student's education will be a priority for the family. Situations that arise due to a lack of preparation or due to the directing of resources towards priorities other than the student's education will not normally be considered."[/i]

Thanks for posting.  Does anyone know how the US currently calculates need?  Is it based solely on income or do they look at assets and retirement assets?

Does the FAFSA or other US fed aid have an explicit requirement that parents plan for paying 6 years of higher education for their adult children?

[TomTX]

The US government also exacerbates the problem by operating an outdated system that does not recognize the need for the vast majority of parents - who no longer have pensions - to save for their own retirements so they don't burden their children later in life.  It's a real mess and unfair, and if like in Canada, the US looks at non-pension retirement assets when determining financial aid.  There really should be some carve out or recognition that a parent saving (or worse, making up for not saving earlier) in a 401K or other retirement vehicle might not be able to put kids through college AND obtain a secure retirement.

You are wrong.

The FAFSA eligibility is based on Adjusted Gross Income. Putting money in a 401(k) or tIRA reduces AGI.

The FAFSA family contribution does not "count" retirement accounts like a 401(k) or IRA as an asset.

So, stuff money into tax deferred retirement accounts, get AGI below $50k, and get Fed assistance.

Yes, the Fed actually encourages retirement savings with the FAFSA formula.

The Cost of Attending is calculated by your school and should include all tuition, room & board, books, etc.

[prof61820]

I found an interesting post that summarizes the US's current attitude on paying for an adult child's higher education.  It seems somewhat unrealistic to me because it does not recognize a parents' need to save for a secure retirement as a legitimate reason why a child should be declared "independent."  It seems like this should be discussed between financial aid administrators, parents and students at minimum.  It is hard not to note that most of the bureaucrats making the financial award determinations will also be receiving a government pension (well before turning 67 in most cases) so they may not be in the same boat as most Americans living in 401K land when it comes to spending their current income and assets on higher education.

To go back to the original post - it looks like the parents of the 5 children will need to co-sign for student loan debt (with a mid range 5 figure annual income) if they want to send their children to college on a "normal" path.

http://www.collegebound.net/content/article/what-do-i-do-if-my-parents-refuse-to-fill-out-the-fafsa-/19114/

Home / College Financial Aid / What do I do if my parents refuse to fill out the FAFSA?
What do I do if my parents refuse to fill out the FAFSA?

The scenario is more common than you think. It happens a lot, for different reasons, experts say.

But a recent change to the FAFSA (Free Application for Federal Student Aid) form may make it easier for students who are in this situation. Students now are allowed to submit the form without their parents' income information, instead of having no option, in the past, if parents refused to fill out the FAFSA.

"The student can go through the process so that some of the financial information will be seen," says Cheryl Maplethorpe, director of the Student Financial Aid Division for the Minnesota Office of Higher Education. "It will let that information go to the financial aid office of the school, but it will be marked in such a way that the financial aid administrator knows that he or she needs to talk to that student about the situation."

Here's a look at cases in which parents may not agree to fill out the FAFSA and want to do if it happens to you.

1.    You Are Responsible for Paying

One common reason is that parents are telling their children they're not going to pay for college, says Marcia E. Weston, director of College Goal Sunday, a YMCA of the USA volunteer program that provides free information and assistance to students and families who are applying for financial aid for post-secondary education.

Either they paid for college themselves, or maybe they don't think college is worthwhile and they're not going to spend their money on your college education. The issue is that families don't recognize the premise behind the FAFSA and how it can help pay for higher education expenses, she says.

Parents think if they give their information and sign the FAFSA that they are committing to or promising to support their child in college, Maplethorpe says. She's heard that some parents have even been concerned that if they go through the process of applying for federal financial aid, some amount will be taken out of their paycheck in the form of taxes to go to college expenses.

"They're just giving information so the students' financial situation can be evaluated. They're not signing up for additional taxes," she says.


2. You Don't Talk to Your Parents

We're not talking about being upset at mom and dad and giving them the silent treatment, or vice versa, but the situations in which students are homeless or in foster care or even living with a friend's family and have zero contact with parents.

"Students who are in bad family situations don't necessarily want all their friends to know that and don't want their teachers to know it. They want to pretend their normal and that everything is just hunky-dory," Maplethorpe says. "The student wants to go to college. If he doesn't explain something to the financial aid administrator, he won't be able to go to college. The ones that are too shy about this are the ones that do not go to college until perhaps later, until they're 24 and can be technically independent."


3.    Your Parents Don't Want Their Income Disclosed

People are reluctant these days to share financial information, especially online, because of concerns about identify theft and other factors. Some parents don't want to disclose their income because they're worried that it won't be kept private, Maplethorpe says.

"They're thinking that if they put their income and the details of their financial life into the Internet that somehow other people would be able to see that," she says. The information is kept private.

 
WHAT TO DO

Be encouraged because many financial aid administrators say that once they talk to the parents and answer their questions, the parents are wiling to complete the form, Maplethorpe says.

For that to happen, students need to talk to someone, either a high school guidance counselor, a teacher or a college financial aid administrator.

 "The financial aid administrator and student now, to actually get the money in the account, they have to talk to each other," Maplethorpe says.

If there are dire circumstances, expect to be asked to find someone, like another family member or a friend of the family, who will verify the severity of your situation in writing. That will help the financial aid administrator to make you independent, which means your parents' information will not be required on the FAFSA.

"Financial aid administrators are hesitant to do that," Maplethorpe says. "The reason is that basically they don't want to transfer the burden of funding the student over to the taxpayers just because the parent doesn't want to contribute. If the parent has some financial resources, they should be contributing to their child's education before the taxpayers should be picking that up. It's got to be an actual broken family situation before they will do that."
- See more at: http://www.collegebound.net/content/article/what-do-i-do-if-my-parents-refuse-to-fill-out-the-fafsa-/19114/#sthash.iIAIuDvU.dpuf

[prof61820]

The US government also exacerbates the problem by operating an outdated system that does not recognize the need for the vast majority of parents - who no longer have pensions - to save for their own retirements so they don't burden their children later in life.  It's a real mess and unfair, and if like in Canada, the US looks at non-pension retirement assets when determining financial aid.  There really should be some carve out or recognition that a parent saving (or worse, making up for not saving earlier) in a 401K or other retirement vehicle might not be able to put kids through college AND obtain a secure retirement.

You are wrong.

The FAFSA eligibility is based on Adjusted Gross Income. Putting money in a 401(k) or tIRA reduces AGI.

The FAFSA family contribution does not "count" retirement accounts like a 401(k) or IRA as an asset.

So, stuff money into tax deferred retirement accounts, get AGI below $50k, and get Fed assistance.

Yes, the Fed actually encourages retirement savings with the FAFSA formula.

The Cost of Attending is calculated by your school and should include all tuition, room & board, books, etc.

Thanks - so I guess this is another reason to FIRE?

Do the Feds look at equity in your home or business?

[TomTX]

Thanks for posting.  Does anyone know how the US currently calculates need?  Is it based solely on income or do they look at assets and retirement assets?

Does the FAFSA or other US fed aid have an explicit requirement that parents plan for paying 6 years of higher education for their adult children?

They look at income as AGI, and most assets - but NOT retirement assets to calculate the "Expected Family Contribution". Get AGI below $24k (Hm, a familiar Mustachian number there....) and EFC defaults to ZERO.

[FoundPeace]

I knew going into college that I couldn't expect money from my parents to help me out (poor). I wasn't interested in going to an expensive school and I carefully considered the total cost of studying before I decided where to go (my siblings did the same). I looked at a list like this to help me know what schools to apply for: http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/best-value

I managed to go to school without going into debt and got a job after graduation (graduated a little over a year ago). I may help my children a bit when they go to school, but the main way I will help them will be by teaching them about money.

This is why I don't understand why some people save up $100k's for their children's education, but I also don't understand abandoning your kids either. There needs to be some kind of balance.

Can anyone explain why they are saving so much for school, even though there are less expensive avenues to get an education?

[teen persuasion]

Here are the EFC formula calculations: http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf

Retirement account balances are not included in asset tests on the FAFSA (but may be looked at by the institution's formula), but current year contributions are added back to AGI on the income side of the FAFSA calculations.  However, it does seem that getting your AGI below the $24k threshold for Auto EFC=0 sidesteps the add-back.  Getting your AGI below $50k and you may qualify for the Simplified Needs Test, which ignores assets altogether.  To qualify for either of these, you must also meet at least one condition: qualify for free/reduced lunch/SNAP/WIC/SSI, qualify to file 1040A or EZ, etc.

Speaking from experience, if this family's income is around $50k, and they contribute to retirement accounts, their children will qualify for aid.  We have 5 children, and currently kids 2 and 3 are in college, kid 1 is graduated.  They get TAP, Pell, grants, scholarships, WS, and federal subsidized and unsub loans.  We have not co-signed for any private loans or parent loans, and we give them minimal cash. 

Now, different schools award differing amounts of aid - they should apply to a variety of schools and see what is offered.  DD1's first choice school gapped her $16000 (our EFC = 0); she appealed, and they suggested parent loans.  When we rejected that option, they suggested she go elsewhere.  She was very happy at her 2nd choice school (similar price and reputation) which did not gap her.

DS2 got a slightly better offer from his second choice, and he let his first choice know.  After they compared the offers, they met and exceeded the other school's FA offer to keep him. 

[teen persuasion]

The FAFSA formulas and charts are constantly changing, and generally growing more restrictive with time.  When DD1 began college (2008), the auto EFC = 0 threshold was $29k, and gradually rose to $32k, at which point it was suddenly and retroactively cut to $23k.  The asset allowance chart's numbers have gotten lower each year; that is, while inflation would suggest that the chart's values should climb with time, instead the assets "protected" are shrinking.  Thus more of a parent's assets are expected to be used to fund college.

Compare: assets protected for a 50yo parent (2008) $49k (2014) $34.6k

[fa]

With one kid in college, we went through the FAFSA process.  At first I refused to fill it out because I knew my income was way too high for any support, and I had set money aside to pay for my kids entire education out of pocket.  As it turns out, we qualified for nothing other than the small unsubsidized Stafford loan, in other words we got nothing.

I find it interesting that the child is supposedly a full adult, so parents don't hear anything from the school about anything.  Except when we are talking money.... then the parents are the parents again.  I find the double standard bizarre.  The child is an adult ecept when we're talking money.

I am glad that I saved all the money my kids need for college, but I am perturbed that they are taking it easy.  No worries about scholarships and any working income gets spent on hobbies and the like.  I think I may have been too generous.

[prof61820]

The FAFSA formulas and charts are constantly changing, and generally growing more restrictive with time.  When DD1 began college (2008), the auto EFC = 0 threshold was $29k, and gradually rose to $32k, at which point it was suddenly and retroactively cut to $23k.  The asset allowance chart's numbers have gotten lower each year; that is, while inflation would suggest that the chart's values should climb with time, instead the assets "protected" are shrinking.  Thus more of a parent's assets are expected to be used to fund college.

Compare: assets protected for a 50yo parent (2008) $49k (2014) $34.6k

This trend would seem to favor parents with pensions rather than those with 401K/IRA retirements savings.

[prof61820]

Here are the EFC formula calculations: http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf

Thanks for posting.  Below is the current definition of an "independent" student.  It doesn't seem like the Expected Family Contribution (EFC) bureaucrats are willing to take into consideration "retirement security" or a belief of the parents that a child should not be handed everything as a reason for declaring a child independent.

With college costs soaring (and pensions outisde of government ending), it's getting harder and harder for most of the middle class to save or pay for their childrens' education.  It seems like the EFC calculations need to get adjusted to reflect new realities in the US.

What is the definition of an independent student?
Because the EFC formula for a dependent student uses parental data and the two formulas for
independent students do not, the first step in calculating a student’s EFC is to determine his or
her dependency status. For the 2014–2015 Award Year, a student is automatically determined to
be independent for federal student aid if he or she meets one or more of the following criteria:
• The student was born before January 1, 1991.
• The student is married or separated (but not divorced) as of the date of the application.
• At the beginning of the 2014–2015 school year, the student will be enrolled in a master’s or
doctoral degree program (such as MA, MBA, MD, JD, PhD, EdD, or graduate certificate,
etc.).
• The student is currently serving on active duty in the U.S. Armed Forces or is a National
Guard or Reserves enlistee called into federal active duty for purposes other than training.
• The student is a veteran of the U.S. Armed Forces (see the definition in the box on page 4).
• The student has or will have one or more children who receive more than half of their support
from him or her between July 1, 2014 and June 30, 2015.
• The student has dependent(s) (other than children or spouse) who live with him or her and
who receive more than half of their support from the student, now and through June 30, 2015.
• At any time since the student turned age 13, both of the student’s parents were deceased, the
student was in foster care, or a dependent or ward of the court.
• As determined by a court in the student’s state of legal residence, the student is now or was
upon reaching the age of majority, an emancipated minor (released from control by his or her
parent or guardian).
• As determined by a court in the student’s state of legal residence, the student is now or was
upon reaching the age of majority, in legal guardianship.
• On or after July 1, 2013, the student was determined by a high school or school district homeless
liaison to be an unaccompanied youth who was homeless or was self-supporting and at risk
of being homeless.
• On or after July 1, 2013, the student was determined by the director of an emergency shelter
or transitional housing program funded by the U.S. Department of Housing and Urban
Development to be an unaccompanied youth who was homeless or was self-supporting and at
risk of being homeless.
• At any time on or after July 1, 2013, the student was determined by a director of a runaway or
homeless youth basic center or transitional living program to be an unaccompanied youth
who was homeless or was self-supporting and at risk of being homeless.
• The student was determined by the college financial aid administrator to be an
unaccompanied youth who is homeless or is self-supporting and at risk of being homeless.
For students who do not meet any of the above criteria but who have documented unusual
circumstances, an FAA can override their dependency status from dependent to independent.

[ImCheap]

The US government also exacerbates the problem by operating an outdated system that does not recognize the need for the vast majority of parents - who no longer have pensions - to save for their own retirements so they don't burden their children later in life.  It's a real mess and unfair, and if like in Canada, the US looks at non-pension retirement assets when determining financial aid.  There really should be some carve out or recognition that a parent saving (or worse, making up for not saving earlier) in a 401K or other retirement vehicle might not be able to put kids through college AND obtain a secure retirement.

You are wrong.

The FAFSA eligibility is based on Adjusted Gross Income. Putting money in a 401(k) or tIRA reduces AGI.

I don't think this is correct, form my understanding they add your 401K, IRA, etc. contributions back in as if they never happened. The only thing that helps to reduce your AGI for the FAFSA calculations are above the line deductions.

About the only thing that's going to help is being self employed as you can take Business Expenses, as a side note the following link is a good read to understating the above and below tax line.
http://fas.org/sgp/crs/misc/R42872.pdf

[Gimesalot]

I feel your pain.  What would have happened if your parents just refused to complete and file the FAFSA each year?

I would have dropped out.  In fact, I did drop out for a semester due to an inability to get a loan.

Just to be clear, my parents had paid for a few college courses at the community college during my first year.  I had taken 18 credit hours a semester while working part time.  Also, I knew I was going to be a chemical engineer in second grade, so I don't think they had any reason to be skeptical regarding my ability to finish a degree.  I didn't expect them to pay anything since it was so expensive, but I also didn't expect them to bring me to the verge of dropping out every single year.

[teen persuasion]

The FAFSA formulas and charts are constantly changing, and generally growing more restrictive with time.  When DD1 began college (2008), the auto EFC = 0 threshold was $29k, and gradually rose to $32k, at which point it was suddenly and retroactively cut to $23k.  The asset allowance chart's numbers have gotten lower each year; that is, while inflation would suggest that the chart's values should climb with time, instead the assets "protected" are shrinking.  Thus more of a parent's assets are expected to be used to fund college.

Compare: assets protected for a 50yo parent (2008) $49k (2014) $34.6k

This trend would seem to favor parents with pensions rather than those with 401K/IRA retirements savings.

The FAFSA does NOT consider assets in retirement accounts.  However, taxable accounts are included.

[teen persuasion]

The US government also exacerbates the problem by operating an outdated system that does not recognize the need for the vast majority of parents - who no longer have pensions - to save for their own retirements so they don't burden their children later in life.  It's a real mess and unfair, and if like in Canada, the US looks at non-pension retirement assets when determining financial aid.  There really should be some carve out or recognition that a parent saving (or worse, making up for not saving earlier) in a 401K or other retirement vehicle might not be able to put kids through college AND obtain a secure retirement.

You are wrong.

The FAFSA eligibility is based on Adjusted Gross Income. Putting money in a 401(k) or tIRA reduces AGI.

I don't think this is correct, form my understanding they add your 401K, IRA, etc. contributions back in as if they never happened. The only thing that helps to reduce your AGI for the FAFSA calculations are above the line deductions.

About the only thing that's going to help is being self employed as you can take Business Expenses, as a side note the following link is a good read to understating the above and below tax line.
http://fas.org/sgp/crs/misc/R42872.pdf

It is complex.  They do look at AGI, for the simplified needs test (> $50k AGI) and for the auto EFC = 0 (>$24 AGI).  Then they add back retirement contributions and other untaxed income like child support, untaxed IRA distributions (but not rollovers), untaxed pension distributions, Housing allowances, etc.  Then they subtract things, like AOG credits to parents, child support paid, parent work study, combat pay, etc.  This is your "total income".  Then they subract more things: fed tax paid, state taxes (percentage of "total income" based on state),  SS of parents (not actual $ paid, but based on taxable income??), income protection amount (based on family size and # in college), employment expense allowance (up to $4k depending on # employed and marital status).  The remainder is your available income.  That plus some portion of assets is your adjusted available income, and a percentage of that is your EFC.

[dude]

A student's financial aid is calculated based on the parent's income until the student is 24, unless they are emancipated. Unless I am mistaken, emancipation can be achieved early through the military, marriage, or if the student was a foster child or other circumstances where the child can prove in court that their parents are messed up enough that support is unrealistic. Consigning is a different issue, and only applies to a small minority of possible loans.

I can tell you from first-hand experience that at my law school (Georgetown), this was not the case -- I was 29 years old heading into law school, after 6 years in the military and 4 years at undergrad, so hadn't lived with my parents for over 10 years -- and I was STILL required to submit their financials to the school in order to be considered for financial aid! I was pretty fucking pissed about it at the time.  At any rate, their incomes were quite modest, and I ended up getting about 1/3 of law school paid for with grants, with the other 2/3 being student loans (Stafford and Perkins).

[ImCheap]

A student's financial aid is calculated based on the parent's income until the student is 24, unless they are emancipated. Unless I am mistaken, emancipation can be achieved early through the military, marriage, or if the student was a foster child or other circumstances where the child can prove in court that their parents are messed up enough that support is unrealistic. Consigning is a different issue, and only applies to a small minority of possible loans.

I can tell you from first-hand experience that at my law school (Georgetown), this was not the case -- I was 29 years old heading into law school, after 6 years in the military and 4 years at undergrad, so hadn't lived with my parents for over 10 years -- and I was STILL required to submit their financials to the school in order to be considered for financial aid! I was pretty fucking pissed about it at the time.  At any rate, their incomes were quite modest, and I ended up getting about 1/3 of law school paid for with grants, with the other 2/3 being student loans (Stafford and Perkins).

So you are still not an adult at 29 even after being in the military, what a kick in the shorts that had to be, I don't get these higher education systems at times. No wonder why our colleges are so fubar,  would make me want to vote with my checkbook.

[partgypsy]

Dude, I don't think that is typical for all graduate work. I was around 24 years old when applying for grad school, never was asked that information (not that I would have given it to them anyways, as I was an independent adult). 

[prof61820]

A student's financial aid is calculated based on the parent's income until the student is 24, unless they are emancipated. Unless I am mistaken, emancipation can be achieved early through the military, marriage, or if the student was a foster child or other circumstances where the child can prove in court that their parents are messed up enough that support is unrealistic. Consigning is a different issue, and only applies to a small minority of possible loans.

I can tell you from first-hand experience that at my law school (Georgetown), this was not the case -- I was 29 years old heading into law school, after 6 years in the military and 4 years at undergrad, so hadn't lived with my parents for over 10 years -- and I was STILL required to submit their financials to the school in order to be considered for financial aid! I was pretty fucking pissed about it at the time.  At any rate, their incomes were quite modest, and I ended up getting about 1/3 of law school paid for with grants, with the other 2/3 being student loans (Stafford and Perkins).

Dude - your story is a little shocking and, as veteran myself, very insulting.  Did Georgetown ever explain the rationale behind their policy or at what age the expectation for a parent paying for an adult child's education ends?  Did you push back and tell them that your parents would not respond?  I can't even imagine how I would have reacted if someone at my law school told me my parents needed to kick in $5-15K AFTER I had served my country and been living on my own for 6 years and putting myself through college.  It seems like the whole FAFSA sytem is placing a huge squeeze on the middle class that's caught in the middle of being able to afford to pay for some portion of a college expense but at the risk of taking away from retirement savings.

[prof61820]

Dude, I don't think that is typical for all graduate work. I was around 24 years old when applying for grad school, never was asked that information (not that I would have given it to them anyways, as I was an independent adult).

I think Dude was presented with this choice by a private University (with a large endowment to make grants) not the federal government.  I don't think the government required his parents financial info. 

The point of this discussion is that if you were 22 or 23 when you went to grad school, you may have been required to submit your parents financial info or risk being denied all financial aid - irrespective of how independent a life your were living at the time.

[MrsPete]

One more thing, my parents refusal on a yearly basis, to fill out the FAFSA and co-sign on my loans completely destroyed any hope of a good relationship.  I am still very angry about the situation.  I will add that part of this resentment is fueled by the fact that within months of me moving out, they bought a new big screen TV, a new excursion truck, and an RV.  All the while, they told me that they couldn't afford for me to go to college or to ruin their credit by co-signing on loans.  If you are a parent, I suggest that you really think about the implications of not supporting (not necessarily paying), your children's education.

My parents filled out the FAFSA some years, but not every year.  They were entirely deaf to my explanations of WHY I needed this form so badly.  Today we have a good relationship, but while I may have forgiven . . . I've not forgotten.  I won't let them go hungry or without medical care, but they won't be living with me in their old age.

Here's what I would do if they were my children.  I would have them take AP/CLEP exams for everything they could. That would probably get them enough credits for their first year or two without having to get loans.

This is an oft-suggested item, but not every student can handle AP classes, and I personally don't know any who've managed to get two years of college credits.  Only the most exceptional students manage to get a full year of college credits before high school graduation. 

[prof61820]

One more thing, my parents refusal on a yearly basis, to fill out the FAFSA and co-sign on my loans completely destroyed any hope of a good relationship.  I am still very angry about the situation.  I will add that part of this resentment is fueled by the fact that within months of me moving out, they bought a new big screen TV, a new excursion truck, and an RV.  All the while, they told me that they couldn't afford for me to go to college or to ruin their credit by co-signing on loans.  If you are a parent, I suggest that you really think about the implications of not supporting (not necessarily paying), your children's education.

My parents filled out the FAFSA some years, but not every year.  They were entirely deaf to my explanations of WHY I needed this form so badly.  Today we have a good relationship, but while I may have forgiven . . . I've not forgotten.  I won't let them go hungry or without medical care, but they won't be living with me in their old age.

I feel your pain as well.  It is very frustrating to get caught in the middle like that when you're right out of High School and see friends move forward with their lives because their parents are helping by either by paying or filling out the FAFSA form and qualifying the student for aid.  I suggest that you try to take your frustrations out on your competitors, both academically and then in the business world, rather than your parents who likely feel that they're doing the right thing.  The best revenge truly is good living.

I get the whole fraud thing but it's hard to fathom why, at minimum, Federal loans wouldn't be an option if an adult child - who qualifies academically - signs for the loan and their parents certify that they will not assist their children financially.  I really think in that scenario, the adult child's net worth and income should be their own - and not their family's.  If the family commits federal student aid fraud, the money can (and should) be clawed back from both the student and the parents.

[Undecided]

Thanks for posting.  Below is the current definition of an "independent" student.  It doesn't seem like the Expected Family Contribution (EFC) bureaucrats are willing to take into consideration "retirement security" or a belief of the parents that a child should not be handed everything as a reason for declaring a child independent.

Without even getting into the specifics of individual situations, no doubt financial "need" can be defined based on some broad range of principles. But what you're suggesting is that a given family's priorities should be trump cards in the determination of need. While in the big picture I'd rather have a university education system that was very different from the current U.S. "system," I don't see a workable solution buried in your complaint. Aside from the rare student who has significant financial resources independent of his or her parents, wouldn't you create a system where every parent would say they didn't believe children "should be handed everything"?

With college costs soaring (and pensions outisde of government ending), it's getting harder and harder for most of the middle class to save or pay for their childrens' education.  It seems like the EFC calculations need to get adjusted to reflect new realities in the US.

I don't understand the interplay of these two sentences, at least not in the context of the rest of your post. Are you suggesting that a solution to college being too expensive for most of the middle class to readily afford is to relieve them of any obligation to pay, by declaring their children independent? Does this boil down to saying that college should be cheaper or there should be more financial aid?

[darkadams00]

The motto of "Everyone needs a college education to be competitive/successful in today's society" accompanied by the desire for kids to have "the college experience" has become a major drain. But the requirement of a college education for success is a myth--see Stanley's Millionaire Next Door. But having college-educated kids has become as much a status symbol as a BMW and one that even Mustachians often defend because it's "for the good of the kids." In reality, parents want to be viewed positively in the break room when coworkers ask where their child is going after graduation--even if the parent's own success had little to do with the educational path he's promoting to his children.

Making good financial choices from early adulthood will prevent the problems that median income or higher parents face when Johnny turns 18 and wants to go to college. Saving for both retirement and the possibility of college from Johnny's infancy from the first x% of income annually and then living frugally off the rest would guarantee that most families had enough to escort Johnny through the post-secondary ceiling without worry. Johnny might not get to go to a private college, he might not get to go to school without working part-time, he might have to forego some personal pleasures, conveniences, and luxuries, but he would be able to go to college after high school and without the need for student loans.

Unfortunately, adults--even new Mustachians--found out too late that Johnny grew up while they vacationed at Disney World, ate out four times a week, bought extraneous stuff, took out heavy mortgages, and leased vehicles. Now they have to be honest with Johnny--"We've screwed up with a thousand bad choices during your childhood, and we're broke. We're coming out of the hole and starting to save, but we just don't have the money to help you through school. Sign here to mortgage your future, get your education, and hopefully get a decent paying job when you're finished." For my dad, when he only knew a handful of fellow grads who went to college, going to college meant he had to work for a few years (3) after high school, save and live like a miser, and pay his own way--no loans. He was married with a kid (me) when he went to college. A few of his friends were finishing when he started. Others weren't willing to work and save, so they never went to college, finding a career of some sort in another line of work. 

Poor kids can go to college on their own--both my mom and dad did. Middle class kids can go to college on their own--my wife and I did. Middle class kids can go to college with a bit of support--both my sons are (half support). Loans for education can be argued from multiple perspectives, but really they're just substitutes for the lack of saving over time. Kids don't need student loans. They need good financial advice, a solid work ethic, and some big boy pants.

Also, as an aside--how many folks are trying hard to save for early retirement but are telling their kids they don't have any money to help with college? To me, a parent who is pushing Johnny away so he can boost his savings rate for early retirement is little better than a parent who is spending all of his money frivolously. Early retirement is a purchase--a purchase of time. A parent shouldn't be buying time at Johnny's expense while pushing him towards student loans. That's a backwards proposition that doesn't speak well of the parent. Be honest. Tell Johnny your free time is more important. Tell him to go to work. Tell him to save for himself. Then see how that relationship works out. Student loans are a parental band-aid to help parents avoid having that hard discussion.

[prof61820]

With college costs soaring (and pensions outisde of government ending), it's getting harder and harder for most of the middle class to save or pay for their childrens' education.  It seems like the EFC calculations need to get adjusted to reflect new realities in the US.

I don't understand the interplay of these two sentences, at least not in the context of the rest of your post. Are you suggesting that a solution to college being too expensive for most of the middle class to readily afford is to relieve them of any obligation to pay, by declaring their children independent? Does this boil down to saying that college should be cheaper or there should be more financial aid?

This is a good but very difficult question and I wish I had a ready answer.  I think the answer is a little bit of both.  College costs should be cheaper - in my lifetime the California State College system was cheap enough to pay tuition and room and board by working a minimum wage job - that no longer exists.  To get back to that, we would likely need to raise taxes and/or make cuts in spending - something our federal leaders can't seem to compromise on to solve problems.  Another way may be creating online courses that become standard for college freshman and sophomore prerequisites.  I personally think that most public Universities should eliminate their sports programs entirely and go all club sports.  There's no need for taxpayers to continue to support Western Illinois University's football basketball, hockey, soccer, baseball, wrestling, etc. programs.

From a financial aid perspective, there should be more access for the middle class - especially if the parents DO NOT have a pension.  Most folks who FIRE on here have at least a $1 million and "regular" financial advisors are telling folks to save $1-2 million.  As we all know, many ignore this real problem until late in life.  That's poor planning but should their children suffer because their parents were spendthrifts - or worse - savers who didn't make enough to save to be FI?  Politicians on both sides of the aisle are talking about cuts or means testing for social security which, of course, means that we should all save more.  Are we really taking these gigantic retirement (and healthcare) costs into account when looking at a family's need? I don't think so.

That said, I don't think it makes any sense for a middle class kid, who has good grades and desire to complete a 4 year degree to spend 2 years washing dishes because their parents (who might not value college or haven't kept pace with the times) won't fill out a FAFSA form or co-sign on a loan.  Sure, it might build character but it would seem to be more useful to get that adult into the workforce at the highest job they are qualified to do via student loans where the government allows only the student to sign for (and repay) the loan. 

In addition to "traditional" financial aid for students in this circumstance (or not),  I would also be open to some sort of non-military public service program that would pay tuition and room and board for a state school after 2 years of service.  I am also open to a comprehensive GI Bill that provides significant dollars for educational benefits.

 

[prof61820]

Without even getting into the specifics of individual situations, no doubt financial "need" can be defined based on some broad range of principles. But what you're suggesting is that a given family's priorities should be trump cards in the determination of need. While in the big picture I'd rather have a university education system that was very different from the current U.S. "system," I don't see a workable solution buried in your complaint. Aside from the rare student who has significant financial resources independent of his or her parents, wouldn't you create a system where every parent would say they didn't believe children "should be handed everything"?

Are you suggesting that saving for retirement is not a need?

No, I think if you punish student aid fraud appropriately, you wouldn't create  a system where every parent would say they didn't believe children "should be handed everything"?  If a parent decides to "game" the system to collect aid, they would pay a penalty enough to deter others from gaming the system.  If a parent certifies that they won't help, then the student should be treated as an adult and as an individual.  If they have good grades and a strong desire to get a degree I suspect they will be a better credit risk than other borrowers.

It's interesting to note that as the middle class gets squeezed on higher education, healthcare and retirement costs,  the middle class is responding by marrying much later in  life and having a lot less children.   If this trend continues, this will exacerbate the problem of wealth inequality in this nation.

[darkadams00]

That said, I don't think it makes any sense for a middle class kid, who has good grades and desire to complete a 4 year degree to spend 2 years washing dishes because their parents (who might not value college or haven't kept pace with the times) won't fill out a FAFSA form.  Sure, it might build character but it would seem to be more useful to get that adult into the workforce at the highest job they are qualified to do via student loans where the government allows only the student to sign for (and repay) the loan. 

A few questions --

(1) Who determines the highest job the middle class kid is qualified to do? Is the choice of major selected by committee, by aptitude test to ensure the chosen field is truly the highest job they qualify to do? Americans are flooding the B-school and vacating the tech fields.
(2) Freshmen, especially first-generation college students, are the most likely to drop out of school--would 2 years of dishes and some skin in the game (savings) help reduce that rate by not even "helping" students who couldn't focus enough to bring anything financially to the table? Wouldn't they be better off if they didn't assume a year's debt AND then drop out?
(3) Why only minimum wage for 2 years? Neither of my sons made minimum wage after the first 60 days, and both were several raises past that after a year. My younger son will have most of his half of his schooling paid for --- in his freshman year. He's worked hard, has had ~85% savings rate, and has opted not to spend money on car/car expenses (helping the savings rate).
(4) Is 2 years of work a detriment to success? Had my son worked full-time for 18-24 months after high school to save for college, do I think he would have been developmentally delayed? Would it have impacted his overall level of success--not a chance. That reminds me of the helicopter parents who argue over the best kindergarten programs. In a 70-80 year life, two years typically mean very little. Many of our best employees--with advanced degrees--are career changers and folks who didn't earn their master's until their late 20's/early 30's--definitely not within the 24ish year old "traditional" time frame.

[prof61820]

A few questions --

(1) Who determines the highest job the middle class kid is qualified to do? Is the choice of major selected by committee, by aptitude test to ensure the chosen field is truly the highest job they qualify to do? Americans are flooding the B-school and vacating the tech fields.
(2) Freshmen, especially first-generation college students, are the most likely to drop out of school--would 2 years of dishes and some skin in the game (savings) help reduce that rate by not even "helping" students who couldn't focus enough to bring anything financially to the table? Wouldn't they be better off if they didn't assume a year's debt AND then drop out?
(3) Why only minimum wage for 2 years? Neither of my sons made minimum wage after the first 60 days, and both were several raises past that after a year. My younger son will have most of his half of his schooling paid for --- in his freshman year. He's worked hard, has had ~85% savings rate, and has opted not to spend money on car/car expenses (helping the savings rate).
(4) Is 2 years of work a detriment to success? Had my son worked full-time for 18-24 months after high school to save for college, do I think he would have been developmentally delayed? Would it have impacted his overall level of success--not a chance. That reminds me of the helicopter parents who argue over the best kindergarten programs. In a 70-80 year life, two years typically mean very little. Many of our best employees--with advanced degrees--are career changers and folks who didn't earn their master's until their late 20's/early 30's--definitely not within the 24ish year old "traditional" time frame.

1)  The student determines this based on their aptitude and hard work - not their parents resources.  Sort of the American Dream we've all been taught.
2)  I'd rather see the skin in the game via some sort of national public service that would bring a lot of Americans together rather than simply doing dishes.  Nothing wrong with doing dishes, but public service would be another option.  You shouldn't lump all freshman together given how our nation's system of students loans is "need" based rather than "merit" based.  A middle class kid with good grades and  desire to attend college is a much better credit risk than others both with and without co-signers.
3)  That's great.  Can you provide more details on where they work, how many hours a week they work and how did they get their jobs?  I am assuming that you had nothing to do with them landing these jobs.
4)  Probably not, but a person should not be held back because their parents refuse to participate if they know exactly what they want to do for a living.

[Undecided]

Are you suggesting that saving for retirement is not a need?

No, but when to retire, when to save, how much to save, etc., all involve ample room to characterize "saving for retirement" as involving not just needs, but priorities.

[darkadams00]

1)  The student determines this based on their aptitude and hard work - not their parents resources.  Sort of the American Dream we've all been taught.
2)  I'd rather see the skin in the game via some sort of national public service that would bring a lot of Americans together rather than simply doing dishes.  Nothing wrong with doing dishes, but public service would be another option.  You shouldn't lump all freshman together given how our nation's system of students loans is "need" based rather than "merit" based.  A middle class kid with good grades and  desire to attend college is a much better credit risk than others both with and without co-signers.
3)  That's great.  Can you provide more details on where they work, how many hours a week they work and how did they get their jobs?  I am assuming that you had nothing to do with them landing these jobs.
4)  Probably not, but a person should not be held back because their parents refuse to participate if they know exactly what they want to do for a living.

1) And the American Dream says if you work hard, you'll get where you want to go, not necessarily when you want to go. For some hard work might include temporary work in the kitchen, behind a lawnmower, or in the military. Unfortunately, life's not exactly fair--first-world birth vs third-world birth, pretty vs ugly, rich parents vs poor parents, deathly ill vs healthy childhood. I would agree with your suggestion if this was a "now or never" issue, i.e. go to college at 18 years old or never have the chance to go again (anti-American Dream, in other words). But given the wide range of backgrounds of the extremely educated people I work with in a highly competitive and technical field, 2-3 years difference means nothing in the long run.
2) Public service is fine, but at the end of the day, someone has to pay. We don't live in a financial perpetual motion machine. We already support public services via the military (GI Bill), and many states have Teaching Fellows type programs (free schooling for 3-4 year of teaching afterwards). These services are needed and rightfully subsidized. There are likely others. But whether the service is before or after college, the service requires years of work--dishes might be a stepping stone to something that takes less time to degree.
3) (a) My older son got a job vacuuming/cleaning cars at a quick lube joint, learned how to do the under the hood tech work, became certified to do inspections/OBD II, etc. His pay has increased commensurate with his experience and skills, while he's watched over a dozen guys start, work a bit, and then leave after a few months with no additional skills and often no more than a single raise. He's getting a math degree and plans to get a master's in mathematical finance--nothing at all related to what he's doing now. And he moved out of our house to a town 2 hours away, so I had nothing to do with this job. He's helped two friends get jobs there, but neither lasted. Prior to that, while at home, he worked as a YMCA tutor and as a summer counselor--no help getting that job either. (b) My younger son is working in a fast food joint and at a higher-end restaurant. He started with cashier at the first and dishes at the second. Now he can get all of the hours he wants at the fast food shop, and he's a line leader at the restaurant. In both jobs, he can do almost anything in the kitchen. In both, he has watched 17-24 year olds come and go, including a couple managers, while he just keeps clicking along. He put in over 40 applications looking for these jobs back when he was searching for a job (both called him back within two weeks of each other, so he took them both). He has never quit or changed jobs, and he's called weekly by one place or the other to see if he'll cover for someone. Two jobs, ~22-25 hours/week while in school, ~50-60 hours/week during breaks and summer.
4) I posit that very few 18 year olds know what they want to do for a living. They might know they want to go to college (if many of their friends are also going or their parents went), but they often don't really know what they want to do. Ask a college counselor how often students change majors.

Your position = "Lend to me, and I'll show you what I can do." My position = "Show me what you can do, and I'll lend to you."

Bottom line--From experiences and acquaintances, I know that if a person wants to succeed in life, he can. That life will be influenced by forces outside his control. That life will go in directions he didn't foresee. But if a few right choices are combined with hard work and a minimal number of wrong choices, then his future in middle class America is bright. He can be a millionaire if he chooses. He can live a life of service if he chooses. He can marry or not. He can have children or not. Barring life-changing catastrophe, the end result of his life will be the product of what he chose to do with what he had--not whether he was eligible to sign up for unnecessary debt when he was young and wet behind the ears.

[Overseas Stache]

Anyone can go to college in the states without their parents cosigning on loans if they make the right choices. First, a parent does need to fill out their portion of the FAFSA so the student can get the Pell grant and federal student loans. Many colleges will also offer the perkins loan as well. Plus if the student is smart he will have some scholarships as well. Here comes the key, the child must go to a college that fits his financial situation. If parents refuse to pay for the student he must look at what is options are based on his financial realities, but with out a doubt there is a college out there that will fit them it just might not be their dream school.

My parents did not have any money to help pay for my college and I went to a somewhat expensive private school (around 20K/year). Here is how I made it work. I took some loans about $20K for 4.5yrs of school all of it federal subsidized student loans. I had a few scholarships and got about 3K a year in pell grants. Then I worked my ass off. I worked at least 25 hrs a week at my main job construction job, framing houses, and another 15 hrs in the dorm (during which I could study). Plus my friends and I had so many side hustles, including buying and selling cars, mowing lawns, buying and selling stuff on Ebay. Basically, if there is a will there is a way and the way does not have to be private student loans or parents cosigning. I am actually grateful for how hard it was for me to pay for college because it means I had to really start working and I learned so much from working construction. It made me grow up very quickly and become responsible instead of just treating college like one big party.

[Johnez]

In California, you can get an associates degree (half your 4 year degree) at a 2 year community college for dirt cheap, less than 3 grand.  With books and other incidentals, I'd wager that comes out to 5 grand total.  Not that bad.  Ten years ago it was less than half of that when units were $20.  Taking out loans for the remaining two years, or working through it really isn't the end of the world.  I honestly don't see the big deal with college costs and do not understand the $50,000 or more people rack up in student loans.  To me it's about priorities. 

I can see how irritating it is for middle class students with parents obviously "able" to pay their way, unfortunately our generation is "all about me" instead of family.  Kind of sad, especially with the tax advantaged savings accounts that can be set up for kids.

I'd say a large part of the problem is the text book companies running amok with their price gauging efforts, especially putting out "editions" that are completely useless after the semester with "electronic keys."  No, calculus and history has not "advanced" that much, thanks anyway.  Rip off artists.  The "college experience" of dorm living and crap is a complete waste of time and money as well.  The high school counselors pushing people into 4 year universities doesn't really make sense for students in low income situations either when taking community college courses can slash the college bill 25% or more.  College doesn't have to be terribly expensive, at least in California.

[prof61820]

"Lend to me, and I'll show you what I can do."/ "Show me what you can do, and I'll lend to you."

My position is to make the loan based on high school grades and test scores.  I'm sure there's a smart banker out there that can run a program to determine likelihood of repayment if a student is a successful high school student.   That is a great record to look at for success in college and life.

I'm not a big fan of college debt.  However, if an ADULT child finds himself in a position with  parents who don't support higher education, they should have the opportunity to attend a school that THEY can afford.

[prof61820]

Anyone can go to college in the states without their parents cosigning on loans if they make the right choices. First, a parent does need to fill out their portion of the FAFSA so the student can get the Pell grant and federal student loans. Many colleges will also offer the perkins loan as well.

Do Federal student loans and Perkins loans not require parental co-signers?

[prof61820]

Public service is fine, but at the end of the day, someone has to pay. We don't live in a financial perpetual motion machine. We already support public services via the military (GI Bill), and many states have Teaching Fellows type programs (free schooling for 3-4 year of teaching afterwards). These services are needed and rightfully subsidized. There are likely others. But whether the service is before or after college, the service requires years of work--dishes might be a stepping stone to something that takes less time to degree.
3) (a) My older son got a job vacuuming/cleaning cars at a quick lube joint, learned how to do the under the hood tech work, became certified to do inspections/OBD II, etc. His pay has increased commensurate with his experience and skills, while he's watched over a dozen guys start, work a bit, and then leave after a few months with no additional skills and often no more than a single raise. He's getting a math degree and plans to get a master's in mathematical finance--nothing at all related to what he's doing now. And he moved out of our house to a town 2 hours away, so I had nothing to do with this job. He's helped two friends get jobs there, but neither lasted. Prior to that, while at home, he worked as a YMCA tutor and as a summer counselor--no help getting that job either. (b) My younger son is working in a fast food joint and at a higher-end restaurant. He started with cashier at the first and dishes at the second. Now he can get all of the hours he wants at the fast food shop, and he's a line leader at the restaurant. In both jobs, he can do almost anything in the kitchen. In both, he has watched 17-24 year olds come and go, including a couple managers, while he just keeps clicking along. He put in over 40 applications looking for these jobs back when he was searching for a job (both called him back within two weeks of each other, so he took them both). He has never quit or changed jobs, and he's called weekly by one place or the other to see if he'll cover for someone. Two jobs, ~22-25 hours/week while in school, ~50-60 hours/week during breaks and summer.

Congratulations on your kids' strong work ethic.  I suspect folks on this site hope to have kids just like your kids.