Written by Karen Rile
Published: March 13, 2014 at 2:02 PM [UTC]
“Never go into debt for a conservatory education.” You hear that one a lot lately, and for good reason. I’ve been meeting with students at the college where I teach—not a so-called “frivolous” arts conservatory, but a university noted for its pre-professional environment—and I can tell you first-hand: the mood is anxious all over. “We graduate with the equivalent of a mortgage, but no house to show for it,” one young woman said bitterly.
Here are some numbers: four years, full-sticker price, at a private college will set you back about $250,000 at today’s prices. Were you to borrow the full amount at 6.4% interest (the current rate on a Parent Plus loan), you’d be looking at a $1560 minimum monthly repayment, spread over 30 years and a total cost of $562,000. Or $2,826 a month, if you repaid it over ten years. (Check it yourself with this handy student debt calculator.) For added fun, multiply by the number of children in your family. This kind of borrowing is obviously a shortcut to ruin for anyone, let alone an arts major whose lifetime earnings will be lower overall than those in more lucrative professions.
Nobody would argue with the statement that the American higher education system is broken and unsupportable. But this system is all we have to work with it and the moment, so your job now is to figure out how to go forward. Unless you are exceptionally wealthy, or unless your child earns a full-ride talent scholarship, whatever you decide will probably involve compromise.
Don’t expect sympathy. Friends, relatives, and colleagues who don’t have college-age children won’t get it. Your parents won’t get it. Their generation did not have to deal with an economy that demanded this level of sacrifice to educate their kids. In 1980, private colleges cost about $6000 a year (about $14,000 a year in current dollars) for tuition, room and board. Enough to make you want to crawl into the time machine your kid could have designed if only she were a STEM major. The next time a childless friend starts pontificating about how he “worked his way through college” or how his parents never had to spend a dime on his education, refer him to this chart.
Don’t take it personally. First-time parents of college students are often aghast to discover the size of their EFC (Expected Family Contribution). “FAFSA thinks we can shell out $37,000 a year!” and devastated by the puny financial aid offers at the schools their kids worked so hard to get into. “Peabody only gave Punchinalla $10,000.” Don’t make the mistake of anthropomorphizing an institution. FAFSA can’t think, and neither can a college. All colleges, even nonprofit educational institutions, are businesses. They are not interested in or even capable of caring about you or your family. You may find sympathetic, dedicated, personable individuals in the faculty and administration, but they are just employees, as vulnerable or more than you and me and our children. The institution exists to perpetuate itself, not to shine benevolently on you or anyone. Likewise, colleges don’t “give” money. (If anyone really gives you $10,000, take it and run!) Financial aid offices, in concert with admissions committees, offer tuition discounts. That’s a huge difference. Ridding your vocabulary of these paternalistic phrases will go a long way to help you think more clearly about the choices you need to make.
But remember that you are dealing with real people. While anthropomorphizing the college, parents sometimes make the simultaneous mistake of dehumanizing its employees. Not only is that a moral error, it’s self-defeating. Financial aid offices are staffed by live people, not robots. If you receive a financial aid package that seems impossible to work with, you can appeal it. But you won’t get far if you abuse the office staff, or behave as if your child is entitled to more than her share of help (“Punchinalla is one of the most gifted violinists of her generation!”) When writing an appeal, it’s important to realize that the line between merit aid and need-based aid is often fuzzy. Write a convincing appeal that outlines, in hard numbers with supporting documents, why your family needs more help than they were given. Keep it in perspective: yours in not the only family in this position, so you will need to demonstrate more than what is obvious from the FAFSA. For example, if you are paying Plus Loans from older children, detail that information in your appeal. The same with extraordinary medical expenses, or relatives you are currently supporting (including any under-employed recent college grads.)
Don’t be passive. It takes time and effort to craft a detailed appeal, yet there’s no guarantee your request will be granted. However, if you take the lazy way out and don't make a request, there’s a 100% guarantee that your offer will not change. The financial aid staff can’t read your mind, but if you give them enough information they might be able to help you. I recently called the financial aid office at my daughter’s conservatory because, to compensate for a pay cut, my husband and I used part of our retirement savings to fund her sister's tuition. This disbursement showed up on our tax forms as if it were income. The administrator told me that I should document it in a letter. “We want as much information as you can give us, so we have a clear picture of the situation,” she explained. “We are always happy to hear more from parents.”
Your situation isn’t special. Awful, perhaps. Painful, perhaps. But not special. Remember that dozens, hundreds, thousands of other families are in the same situation, or worse. If you are a middle-class parent with a retirement fund and a decent amount of home equity, you’re better off than most. No college will demand that you hand over that nest egg or the keys to your house, but look at it this way: if you were in charge of giving out scholarship money, and all other things being equal, would you grant the appeal of a family with considerable non-liquid assets or a family with none? If you don’t qualify for a large need-based award, don’t fall into the jealousy trap. It’s bad for the soul. Middle-class parents sometimes complain that poverty-level families receive a free ride. Not so. When your family income is $20,000 per year, covering that extra few thousand dollars is as difficult (or, frankly, much more difficult) as covering a gap of tens of thousands for families earning $200,000.
Use what you have. Do you own a home? Have you accumulated equity? If so, you might want to consider using home equity to pay for college at a far lower rate of interest than Plus Loans. Years ago, when my oldest kid was still in high school, a friend told me that she and her husband (a professional, two-career couple) took a second mortgage to pay for her son's tuition at Oberlin. He had a partial merit scholarship, but no financial aid. I paid attention. In 2011 my husband and I mortgaged our home to pay off high interest Plus Loans and to fund tuitions going forward for our four kids. It won’t get us all the way through, but it’s helped a lot. If you decide to do this, you will probably want to put the proceeds from the mortgage into a 529 college savings plan. (By law, this money may only be used for qualified educational expenses.) You can also withdraw from your retirement savings to meet qualified educational expenses, but be prepared—you’ll have to pay taxes on this withdraw at your current rate. And also be aware that you cannot use retirement money to pay off education loans unless you are willing to pay the additional 10% penalty. (As always, check with a financial advisor, which I am not, before attempting any of these tricks at home.)
Revise expectations about how the rest of your life will go. Sounds dramatic, but a large financial decision like this one requires serious thought about the compromises ahead. Most of the items in our lives that we feel are necessities, including higher education, are actually privileged choices. The big-tickets items—house, car, vacation, college, retirement plans—are obvious candidates for scrutiny. But every day we make hundreds of micro-decisions that impact our futures. (Take-out coffee or brew-at-home? Pay for parking or take the bus? Gym membership or mow the lawn yourself?) If your family decision is to send your kids to private colleges, you may need to rethink your own future.
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Click here for a reference page to all of Karen Rile's series: A Parents' Guide to Conservatory Auditions
I feel like I'm watching the home mortgage wave building up only this time it's the college loan pyramid.
It would be one thing if your kids would come out of college with good long term job prospects, but I have some serious questions about that, even the much vaunted STEM jobs. Seriously, how many of the good professional jobs of 30 years ago are gone or drastically shrinking. I'm not sure that music as a career won't be any worse than anything else.
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