Middle class families - Are you willing to take on a ton of debt for a top college?

[Anonymous]

Anonymous wrote:What I find telling about the college board is that it's often obvious when it's a kid posting or an adult posting. As in this thread, where it's clear it's kids who don't understand the realities of $140k. Or what it takes to be able to come up with that money. Even a successful dual income couple with household incomes in 300ks will find that a substantial sum of money. It's not just the figure itself that causes pause but the opportunity costs that comes with spending the extra $140k for a college degree. Adults understand that $140k can go a long way for retirement savings especially when set aside in long-term investments. $140k is a substantial sum for a down payment on a property. $140k goes a long way towards professional / graduate degrees or pays for it outright.

As an Ivy graduate (undergraduate and graduate) I can confirm there are plenty of people who go to the Ivy League and who don't have a remarkable life afterwards. And there are plenty of people who go to state universities and become extremely successful. I loved my Ivy experience but I'm not foolish enough to think it was that much more of a life changing experience compared to if I'd gone to the flagship state university. It did open some doors for me, but you know what, I still ended up working with graduates of state universities and other non-Ivy private colleges. I did well out of life but I don't owe that to the school but more my own abilities, and that's true for most successful Ivy graduates I know. And UVA is still a big name in itself. UVA has a lot of cachet especially in the South.

Going to the Ivy League to hobnob with the elite is laughable. The kind of people who will become "elite," whatever it means, are the people who will always become elite regardless of the school they attended. An Ivy diploma will not magically take a middle class dullard and transform him into a jet - setter elite.

What about people like Barack Obama? You honestly think he would have ended up POTUS if he hadn't gone to Columbia or somewhere similarly elite? No one thinks going to an Ivy makes *every* single, regular Joe Schmo MC kid into a super star. But it gives them the chance. It's a foot in the door to a world they wouldn't have had access to otherwise. They still have to walk through and do the work. It's about giving your kid every opportunity you can.

[Anonymous]

Anonymous wrote:I think (?) we were once upper middle class, after the great recession we are probably middle class but still paying 50% in taxes.

So, how much is your HHI?

[Anonymous]

Anonymous wrote:What I find telling about the college board is that it's often obvious when it's a kid posting or an adult posting. As in this thread, where it's clear it's kids who don't understand the realities of $140k. Or what it takes to be able to come up with that money. Even a successful dual income couple with household incomes in 300ks will find that a substantial sum of money. It's not just the figure itself that causes pause but the opportunity costs that comes with spending the extra $140k for a college degree. Adults understand that $140k can go a long way for retirement savings especially when set aside in long-term investments. $140k is a substantial sum for a down payment on a property. $140k goes a long way towards professional / graduate degrees or pays for it outright.

As an Ivy graduate (undergraduate and graduate) I can confirm there are plenty of people who go to the Ivy League and who don't have a remarkable life afterwards. And there are plenty of people who go to state universities and become extremely successful. I loved my Ivy experience but I'm not foolish enough to think it was that much more of a life changing experience compared to if I'd gone to the flagship state university. It did open some doors for me, but you know what, I still ended up working with graduates of state universities and other non-Ivy private colleges. I did well out of life but I don't owe that to the school but more my own abilities, and that's true for most successful Ivy graduates I know. And UVA is still a big name in itself. UVA has a lot of cachet especially in the South.

Going to the Ivy League to hobnob with the elite is laughable. The kind of people who will become "elite," whatever it means, are the people who will always become elite regardless of the school they attended. An Ivy diploma will not magically take a middle class dullard and transform him into a jet - setter elite.

Don't assume it's kids who disagree with you. Adults who make far less money (and who could imagine devoting an extra $100K of income a year to college saving) and adults who make far more money (and for whom saving for college doesn't require sacrificing vacations, retirement, housing choices) may be less than sympathetic toward the families who find this decision tough because of the economics.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, what is middle class in this case? 170K, 500K, 75K per year? Let's say it is around 150K. How can you justify taking a loan that is possibly half the cost of your house if your house is 400K, which is a modest house in DC metro? How can you possibly hope that you can repay that if you are mid 40s and have mortgage payments and income will not increase, but decrease with retirement. Are you going to sell your house and pay off that Parent Plus Loan and be without any savings? What am I missing? Even a cheaper in state college, with dorm, is at least 26K, and to me even 100K is a ton of money, having two kids, we are talking about 200K anyway with a regular in state school, unless you are lucky and live close to the college. Tell me how do you plan on paying that off? I certainly wouldn't consider 500K middle class, even if it might be here in DC. And I know from our own FAFSA that with an income of 150K DC got only 5K in Direct student loan for school that was over 50K per year.

According to this thread middle class are those who are paying 50% taxes on their income.

Well this is cray since we make over 600k and we don't pay 50% taxes. More like 30%. And we're definitely not middle class and can easily afford to save for our children's educations.

Throw in state income tax and imagine two self-employed workers who earn about $125k each and that could add another 20%. It's not impossible.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, what is middle class in this case? 170K, 500K, 75K per year? Let's say it is around 150K. How can you justify taking a loan that is possibly half the cost of your house if your house is 400K, which is a modest house in DC metro? How can you possibly hope that you can repay that if you are mid 40s and have mortgage payments and income will not increase, but decrease with retirement. Are you going to sell your house and pay off that Parent Plus Loan and be without any savings? What am I missing? Even a cheaper in state college, with dorm, is at least 26K, and to me even 100K is a ton of money, having two kids, we are talking about 200K anyway with a regular in state school, unless you are lucky and live close to the college. Tell me how do you plan on paying that off? I certainly wouldn't consider 500K middle class, even if it might be here in DC. And I know from our own FAFSA that with an income of 150K DC got only 5K in Direct student loan for school that was over 50K per year.

According to this thread middle class are those who are paying 50% taxes on their income.

Well this is cray since we make over 600k and we don't pay 50% taxes. More like 30%. And we're definitely not middle class and can easily afford to save for our children's educations.

Throw in state income tax and imagine two self-employed workers who earn about $125k each and that could add another 20%. It's not impossible.

Yes it is. It's a graduated income tax for a reason. Two people earning 250k together do not pay more than one person making > 600k.

[Anonymous]

Do you people not know how much you pay in taxes? Saying that 250K pays more than 600K is delusional, just as it is delusional to think that a person earning 150K should take a loan for 280K for college.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, what is middle class in this case? 170K, 500K, 75K per year? Let's say it is around 150K. How can you justify taking a loan that is possibly half the cost of your house if your house is 400K, which is a modest house in DC metro? How can you possibly hope that you can repay that if you are mid 40s and have mortgage payments and income will not increase, but decrease with retirement. Are you going to sell your house and pay off that Parent Plus Loan and be without any savings? What am I missing? Even a cheaper in state college, with dorm, is at least 26K, and to me even 100K is a ton of money, having two kids, we are talking about 200K anyway with a regular in state school, unless you are lucky and live close to the college. Tell me how do you plan on paying that off? I certainly wouldn't consider 500K middle class, even if it might be here in DC. And I know from our own FAFSA that with an income of 150K DC got only 5K in Direct student loan for school that was over 50K per year.

According to this thread middle class are those who are paying 50% taxes on their income.

Well this is cray since we make over 600k and we don't pay 50% taxes. More like 30%. And we're definitely not middle class and can easily afford to save for our children's educations.

Throw in state income tax and imagine two self-employed workers who earn about $125k each and that could add another 20%. It's not impossible.

Yes it is. It's a graduated income tax for a reason. Two people earning 250k together do not pay more than one person making > 600k.

It's not all linear. Social security taxes are capped (first $127,200 of incomes per worker). Self-employed workers pay both worker and employer contribution (so 12.4%). Tax brackets are large ($60K to 350K is in the same 8.5% bracket in DC) and rates don't go up that much from one high bracket to another. The scenario I gave nets out at about 44.5% income tax rate. And if someone in that situation also looks at property taxes as part of the tax burden that lowers their disposable income, then talking about 50% of their income going to taxes isn't crazy.

[Anonymous]

Didn't read 15 pgs of this - but for me it depends on how elite the school is + what the kid intends to study. If they want to go down the finance or law road, I would take on debt for Columbia or Wharton - and of course for Harvard. At the end of the day, those are prestige driven professions and while people will pop up saying -- I'm in those fields and have made tons of money -- reality is that investment banking and biglaw recruiting has really narrowed to 5-10 schools; unless you're somehow famous/important, you aren't getting in with a degree from the U of Alabama. And if you're looking at it from a net worth perspective, starting in banking and biglaw with huge bonuses at a young age sets you up from a net worth perspective and allows you to "downshift" to very respectable jobs later if you want that'll still pay you 150k.

Now if a kid wants to go to UPenn to study history and then do teach for America and find there bliss -- um no -- they can go to state flagship u for that sort of thing.

[Anonymous]

Anonymous wrote:Didn't read 15 pgs of this - but for me it depends on how elite the school is + what the kid intends to study. If they want to go down the finance or law road, I would take on debt for Columbia or Wharton - and of course for Harvard. At the end of the day, those are prestige driven professions and while people will pop up saying -- I'm in those fields and have made tons of money -- reality is that investment banking and biglaw recruiting has really narrowed to 5-10 schools; unless you're somehow famous/important, you aren't getting in with a degree from the U of Alabama. And if you're looking at it from a net worth perspective, starting in banking and biglaw with huge bonuses at a young age sets you up from a net worth perspective and allows you to "downshift" to very respectable jobs later if you want that'll still pay you 150k.

Now if a kid wants to go to UPenn to study history and then do teach for America and find there bliss -- um no -- they can go to state flagship u for that sort of thing.

As the list of undergrad schools posted by a PP shows, BigLaw doesn't give a shit where you went to undergrad. It's your law school, and law school only.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, what is middle class in this case? 170K, 500K, 75K per year? Let's say it is around 150K. How can you justify taking a loan that is possibly half the cost of your house if your house is 400K, which is a modest house in DC metro? How can you possibly hope that you can repay that if you are mid 40s and have mortgage payments and income will not increase, but decrease with retirement. Are you going to sell your house and pay off that Parent Plus Loan and be without any savings? What am I missing? Even a cheaper in state college, with dorm, is at least 26K, and to me even 100K is a ton of money, having two kids, we are talking about 200K anyway with a regular in state school, unless you are lucky and live close to the college. Tell me how do you plan on paying that off? I certainly wouldn't consider 500K middle class, even if it might be here in DC. And I know from our own FAFSA that with an income of 150K DC got only 5K in Direct student loan for school that was over 50K per year.

According to this thread middle class are those who are paying 50% taxes on their income.

Well this is cray since we make over 600k and we don't pay 50% taxes. More like 30%. And we're definitely not middle class and can easily afford to save for our children's educations.

Throw in state income tax and imagine two self-employed workers who earn about $125k each and that could add another 20%. It's not impossible.

Absolutely, we're self-employed, have a CPA do our returns. Combined federal, state and enormous PROPERTY TAXES and we definitely see almost 50% dance out the door to the IRS and State every year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, what is middle class in this case? 170K, 500K, 75K per year? Let's say it is around 150K. How can you justify taking a loan that is possibly half the cost of your house if your house is 400K, which is a modest house in DC metro? How can you possibly hope that you can repay that if you are mid 40s and have mortgage payments and income will not increase, but decrease with retirement. Are you going to sell your house and pay off that Parent Plus Loan and be without any savings? What am I missing? Even a cheaper in state college, with dorm, is at least 26K, and to me even 100K is a ton of money, having two kids, we are talking about 200K anyway with a regular in state school, unless you are lucky and live close to the college. Tell me how do you plan on paying that off? I certainly wouldn't consider 500K middle class, even if it might be here in DC. And I know from our own FAFSA that with an income of 150K DC got only 5K in Direct student loan for school that was over 50K per year.

According to this thread middle class are those who are paying 50% taxes on their income.

Well this is cray since we make over 600k and we don't pay 50% taxes. More like 30%. And we're definitely not middle class and can easily afford to save for our children's educations.

Throw in state income tax and imagine two self-employed workers who earn about $125k each and that could add another 20%. It's not impossible.

Yes it is. It's a graduated income tax for a reason. Two people earning 250k together do not pay more than one person making > 600k.

It's not all linear. Social security taxes are capped (first $127,200 of incomes per worker). Self-employed workers pay both worker and employer contribution (so 12.4%). Tax brackets are large ($60K to 350K is in the same 8.5% bracket in DC) and rates don't go up that much from one high bracket to another. The scenario I gave nets out at about 44.5% income tax rate. And if someone in that situation also looks at property taxes as part of the tax burden that lowers their disposable income, then talking about 50% of their income going to taxes isn't crazy.

+1 That would be us. State + Federal + Property taxes + ACA med insurance policy ($30,000 in after tax dollars) = more than 50% goes right out the door before we even start paying regular bills like full-freight college because FAFSA says we can afford college for two. Yeah, right.

[Anonymous]

If your kid doesn't 'speak the language' I don't see the point. They'll just end up funneling to where ever their high school friends end up, probably marrying someone from their hometown.

[Anonymous]

Anonymous wrote:If your kid doesn't 'speak the language' I don't see the point. They'll just end up funneling to where ever their high school friends end up, probably marrying someone from their hometown.

Believe it or not, some kids actually learn a great deal in college and, if they are talented and ambitious, new worlds of possibility open up to them. Obviously, kids don't have to go to an HYPS-level school for this to happen (nor does this happen for every kid who goes to an HYPS-level school), but it's not all about ingratiating yourself with the children of the rich and powerful.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Didn't read 15 pgs of this - but for me it depends on how elite the school is + what the kid intends to study. If they want to go down the finance or law road, I would take on debt for Columbia or Wharton - and of course for Harvard. At the end of the day, those are prestige driven professions and while people will pop up saying -- I'm in those fields and have made tons of money -- reality is that investment banking and biglaw recruiting has really narrowed to 5-10 schools; unless you're somehow famous/important, you aren't getting in with a degree from the U of Alabama. And if you're looking at it from a net worth perspective, starting in banking and biglaw with huge bonuses at a young age sets you up from a net worth perspective and allows you to "downshift" to very respectable jobs later if you want that'll still pay you 150k.

Now if a kid wants to go to UPenn to study history and then do teach for America and find there bliss -- um no -- they can go to state flagship u for that sort of thing.

As the list of undergrad schools posted by a PP shows, BigLaw doesn't give a shit where you went to undergrad. It's your law school, and law school only.

With the exception of a tiny number of extremely snooty firms, it's your grad school that counts. If you went to the University of Alabama for your BA and then finish an MBA from HBS, or Wharton, you're still well placed for IB. Of course, making the leap into HBA or Wharton from Bama is probably more challenging than getting their from Middlebury. There are some corner cases where a firm explicitly wants recruits with undergrads from elite schools, because they want kids from privileged backgrounds so they can relate to their affluent clientele, but this is rare, and only applies to new recruits.

[Anonymous]

I wonder if "it's all about mingling with the rich and powerful!!" realize half of students at Columbia receive need-based financial aid? Or that 20% of Harvard students pay nothing? (Meaning their families make less than $65K/year). All Ivy-league schools and their equivalents have 45-60% receiving need-based aid, for that matter. So there's a very, very high chance of NOT dating/marrying/whatever an elite, ESPECIALLY if your kid doesn't come from that super affluent background as is the case here.

In fact, UVA has fewer kids from the bottom 60% than Harvard, Columbia, Yale, Penn, Stanford, Dartmouth, Cornell, Brown, etc. and very comparable # of 1%ers to all of those schools as well. If you really want your kids around the super rich, Ivy League schools aren't the place to do it. It's schools like Wash U, Washington & Lee, northeast LACs, etc. -
See this article: https://www.nytimes.com/interactive/2017/01/18/upshot/some-colleges-have-more-students-from-the-top-1-percent-than-the-bottom-60.html?_r=0