Stop! $200K? What are you thinking?

Put down the pen. Back away slowly, then turn and run for your (financial) life.

First of all — does your 19 year old REALLY want to go to college and knows exactly where they want to be in $200K… I mean in 4 years? If your child can honestly state and has been stating ever since s/he could speak that they are going to be a doctor/vet/accountant/whatever then start again slowly. If not, put your kid in the military or at a minimum wage job or volunteering to find out what they would like to do with the rest of their lives. Make them responsible for a portion of their costs of the household. Give them $1000 and kick them out to manage on their own.

Second — find out what courses can be CLEPped. I CLEPped (tested out of) an entire semester of introductory courses including Biology 1, History 1, English 1 and 2, and – to my amazement – Spanish. If your 19-year old can’t CLEP anything then they shouldn’t be going to college (at least at the moment). There is a charge for the tests, but it is certainly cheaper than 1/5 of a $45K semester.

Third — As earlier suggested, community college is much less expensive and you learn exactly the same things as the first two years at university (assuming you haven’t CLEPped them).

Fourth — Try a less expensive school. Trust me, I never ask my MD or orthodontist where they matriculated. When was the last time you were impressed with someone ONLY because they went to Prestigious U?

Fifth — Have them look for a job with training potential. I seem to recall a book called something like ‘The 100 Best Companies to Work For’ which had several companies with liberal education plans for their employees.

Also say when the son finishes school and wants to settle down, buy a car, a house, when lenders see his $200k debt, i doubt they will offer him anything without a huge security deposit or down payment (atleast $100,000).

And yes just like Matt Smith says, $50k/year in student loan debt is for someone who really knows what he wants to do in life… Most 1st year students change their minds after their 1st year…. “ooh i don’t really like Computers so i’m gonna switch to Marketing.”

Abdul @ Debt Consolidation Community http://www.3debtconsolidation.com

College is often a time for kids to grow and make mistakes. That sort of debt is a liability for anyone who is unwilling to take university study seriously.

I agree with a lot of people here that 200K is a lot of debt for a 19-year-old to sign up for. For health professions, maybe maybe maybe, but not for undergrad. Unfortunately, you probably didn’t know this when he accepted an offer. So the first thing you must do is see if the financial aid office can do anything with your package. Did you fill out the FAFSA and Profile? (Profile is similar to FAFSA but non-government based; many private schools require it.) Is there anything that the formulas would have missed? (e.g. other drains on the support, such as disabled family members)

If this line of inquiry doesn’t turn up anything, then you may want to re-examine your options, as other posters have mentioned. It may be worthwhile in the long run to abandon a deposit, but if your son has a specific needs or dreams, such as certain academic programs or services, community colleges may not help him, either. Remember that if you co-sign, you have to be able to plan on paying the loan yourself; depending on your financial planning, that may take some discussion. Insert family communication here! You have to walk the line here treating him as an apprentice adult rather than a child.

If you’ve done all that, and his resources are sufficiently high that he is ineligible for government aid (including subsidized loans), then yes, what will be left is private loans. In this case, you may not have to go through the school–from what I understand, it is basically a personal loan with a little better rate because it’s for education. Check with your own bank or credit union first, then try searching at Bankrate. Imelda is correct that some things have hit the fan recently.

If you haven’t worked with the college process for some time, ask friends who have done it in the past five years (for themselves or for their children) and see if they have advice. High school counselors are overworked (at my high school, each one handled about 300 students) and although they are sincerely helpful (mine came across town to my house to help sift through two boxes of colleges’ mailings) they may not always be able to stay up to date on everything. I know that a lot has changed even since I started undergrad in 1998, such as the new tax credits! Remember the other things like keeping your eyes open for small scholarships and so on–they will reduce your loans and interest later on.

I think Trent had mentioned some time ago that student loan type debt should be about 8% of your income.

Today, of course, tuition is higher, but it’s still far cheaper to start at a two-year college. When you get your university degree, there’s nothing to distinguish your accreditation (in terminology or external prestige) from a student who spent significantly more and attended all four (or more) years at university. Now some colleges are even offering BA programs in partnership with universities, so you can do all four years in selected programs in your hometown at a reduced tuition rate, and still have university accreditation (the instructors and curriculum are university-level, but the teaching happens on the college campus).

My point is that although post-secondary education is important for both personal growth and earning power, don’t assume you ‘need’ to spend the world to get it, especially if you can’t afford it. I had many friends who did four-year university degrees, discovered they hated the profession they trained for, and ended up saddled with thousands in student loans and working a job in retail.

It’s not about how much you spend on your education, and if you don’t need to spend $50,000/year to do what you love, why would you? Education is important, but the value you get from it doesn’t always correlate with the price.

But I also wanted to point out one thing to the reader–be wary of the school’s “recommended lender” list. It probably has nothing to do with your best interests. I’m not saying those lenders are bad, but colleges have been getting into a lot of trouble lately for recommending lenders that offer them kickbacks. It might be worthwhile to do some external research, too.

:-)

Two years ago I graduated from THE most expensive undergrad school in Canada (hey, they had the program I wanted!). Total cost for my top-of-the-money-heap BA was $80k Canadian – about $72k US right now, but the dollar was lower then. That includes living in residence, meal plans, everything. I’m fairly sure all the public universities are between $6-10k a year in contrast. hmm…. a four year degree for $25k, or ONE SEMESTER?

Also, I’d strongly urge you to consider community college for the first two years if you must take out a 100% loan for all four years. Although a lot of people get stuck in community college, determined students can take of their requirements for far less, while also working part-time and saving money up for the eventual transfer. Transfer acceptance rates are very high if you kee p your grades up and make sure you take the classes that are required for first and second-year students at your target school.

Trust me on this one, my husband financed his entire undergraduate and graduate education and we’re now $250K in the hole (with my smaller graduate debt included). Meanwhile, I went to community college for two years and received exactly the same education for FAR less money.

Plus, he / she can’t get drafted.

If this parent co-signs then he or she will be on the hook for repayment if the student can’t hack it, is that correct?