Why does everyone say med school is expensive?

[bluepeach9]

Is it really? Their tuition according to MSAR seems comparable to undergrad schools. Why do people stress about loans? For an applicant with no undergrad loans, is it still stressful financially? I feel like I'm missing something…also, if your parents offer to pay but are each earning ~90K per year, will it still be hard to pay for the entire med school without any loans? I'm asking because I honestly don't know much about taxes and how it works :/

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[confidentandgood]

People stress about loans because loans accrue interest. The path to medicine is a long commitment. Huge loan balance + interest incurred during additional years of residency = enormous expenses.

This medical student also had no undergraduate loans. Food for thought.

http://www.kevinmd.com/blog/2011/04/real-life-medical-school-debt.html

 

[order66.exe]

Public medical schools tend to be around 30k per year while private tend to be 55k per year. Plus, since the vast majority of people cannot work during school your looking at at least another 12-20k of living expenses depending on where you go to school. This of course is all covered by unsubsidized loans which begin accumulating at 5-7% interest as soon as you take them out. Scholarships are quite rare except for the tippy top of the applicant pool. Now depending on the school they may offer some financial aid in the form of grants and this can be significant or minimal depending on the school. So in summary it can be a very stressful situation especially due to the interest which means your principal amount of loans can be almost twice as much by the time you pay it back

 

[kavorca]

$200k-$350k is what it is. I don't know if you consider that expensive or not. That would buy a pretty nice house in many parts of the country.

 

[exacto]

Because it is.

 

[bluepeach9]

Okay, I see. So, if I think my parents can help me pay for med school with no loans when they are earning a 90-100 K salary each, I'm basically being naive? Because I don't know how much of that goes to taxes…

 

[kavorca]

Don't let your parents hold out on you. That's plenty of money to pay for Med school.

 

[dpmd]

Okay, I see. So, if I think my parents can help me pay for med school with no loans when they are earning a 90-100 K salary each, I'm basically being naive? Because I don't know how much of that goes to taxes…

You can discuss with your parents whether and how much they are going to help with med school costs. Their taxes are only a small part of what their money is likely going to so it is impossible for us to know how much they may have to give you (assuming they choose to give you anything).

 

[order66.exe]

Okay, I see. So, if I think my parents can help me pay for med school with no loans when they are earning a 90-100 K salary each, I'm basically being naive? Because I don't know how much of that goes to taxes…

Your parents probably have an effective tax rate of around 30% leaving them with 140k assuming they each earn 100k. They can probably help out some but not enough to cover the full cost of attendance

 

[Lucca]

I have a feeling this thread is going to need some popcorn

 

[Gibbward]

Man I wish my parents would pay for my med school education 🙄 OP talk to your parents about this and honestly ask them how much they can realistically afford to help you with. For example, they may have an annual income of ~$140 k after taxes, but think about how much they pay for mortgage, car payments, car insurance, health insurance, groceries, electric bills, savings, retirement, general fun expenses for themselves, etc.

 

[iqe2010]

Any way you look at it, higher education is ridiculously expensive. And the average household makes like 50k so most people are borrowing tens of thousands of dollars to pay for it. And our wonderful government doubled the interest rate on federal student loans a couple of years ago, so now you have to pay back even more.

I'm so thankful my parents paid for my undergraduate education as well as my post-bac classes. If not I'd be like 60k in debt, without interest.

 

[studentdocftw]

It is very expensive OP. With no financial aid from the parents, it can be a burden for many. Loan forgiveness programs are an option, but for most, creating a financial plan prior to matriculating is a must. I believe the rate is around 6.8% compounding daily...meaning as soon as you take out loan, boom interest. It will capitalize quickly OP. Don't underestimate the banks! A loan of 60k per year will swell to 270k in 4 years and 330k in 7 years.


http://www.bestmedicaldegrees.com/is-medical-school-worth-it-financially/

 

[Mad Jack]

Is it really? Their tuition according to MSAR seems comparable to undergrad schools. Why do people stress about loans? For an applicant with no undergrad loans, is it still stressful financially? I feel like I'm missing something…also, if your parents offer to pay but are each earning ~90K per year, will it still be hard to pay for the entire med school without any loans? I'm asking because I honestly don't know much about taxes and how it works :/

4 years of unsubsidized private medical school plus residency will net me 380-400k at the end of the day. Private medical schools often offer very little tuition assistance regardless of grades (outside of the higher ranked schools), unlike undergrad that was largely on grants and scholarships on account of my performance.

 

[Lucca]

Any way you look at it, higher education is ridiculously expensive. And the average household makes like 50k so most people are borrowing tens of thousands of dollars to pay for it. And our wonderful government doubled the interest rate on federal student loans a couple of years ago, so now you have to pay back even more.

I'm so thankful my parents paid for my undergraduate education as well as my post-bac classes. If not I'd be like 60k in debt, without interest.

To be a little more accurate, the average medical student does not come from the average household...

https://www.aamc.org/download/102338/data/aibvol8no1.pdf

About 60% come from the top quintile of household incomes, meaning greater than 91k / year. Read that report, it has some fairly interesting information to know off the top of your head.

Further, one in five medical students has at least one physician parent which suggests that you could probably further divide the highest quintile of household incomes in that data to become even more stratified and at least 20% of those in the highest quintile would have household incomes beyond 200k.

http://journalofethics.ama-assn.org/2015/02/pdf/oped1-1502.pdf

Anybody have any hard data on how many medical students' parents are physicians?

 

[Mad Jack]

To be a little more accurate, the average medical student does not come from the average household...

https://www.aamc.org/download/102338/data/aibvol8no1.pdf

About 60% come from the top quintile of household incomes, meaning greater than 91k / year. Read that report, it has some fairly interesting information to know off the top of your head.

Further, one in five medical students has at least one physician parent which suggests that you could probably further divide the highest quintile of household incomes in that data to become even more stratified and at least 20% of those in the highest quintile would have household incomes beyond 200k.

http://journalofethics.ama-assn.org/2015/02/pdf/oped1-1502.pdf

Yeah, but not everyone has parents that help them with school. Your parents could be multimillionaires and it wouldn't mean **** if they didn't give you a dime. Some people get a free ride. A lot of us have to pay our own way.

 

[Lucca]

Yeah, but not everyone has parents that help them with school. Your parents could be multimillionaires and it wouldn't mean **** if they didn't give you a dime. Some people get a free ride. A lot of us have to pay our own way.

I'm not saying medical school is not expensive, quite the opposite. I'm just saying that with average debt being only like 60% of the total cost of attendance, if not less, at most schools, the fact that most medical students come from wealthy backgrounds means that what is a titanic obstacle for those from lower income families after graduation is less so for others.

Also, it's a little speculative to say that there is some significant subgroup of wealthy parents not paying for their kids' medical school. I'm sure there are some but it wasn't the point I was making. Personally, I won't be letting my parents help me with any costs post graduation. I'd rather they retire earlier.

 

[Mad Jack]

I'm not saying medical school is not expensive, quite the opposite. I'm just saying that with average debt being only like 60% of the total cost of attendance, if not less, at most schools, the fact that most medical students come from wealthy backgrounds means that what is a titanic obstacle for those from lower income families after graduation is less so for others.

Also, it's a little speculative to say that there is some significant subgroup of wealthy parents not paying for their kids' medical school. I'm sure there are some but it wasn't the point I was making. Personally, I won't be letting my parents help me with any costs post graduation. I'd rather they retire earlier.

It's actually pretty bimodal. There's a substantial portion, I believe around 40% (I'll dig up the data later, it's done number between 30 and 40 that I can't remember), of students with no debt at graduation. So that "average" is basically all lumped on the remaining 60% of students, who graduate with much more than the mean. I've discussed this elsewhere, but medical school debt figures are pretty skewed in two directions due to a divide between those that get virtually no institutional and family support, and those that get a lot of it.

 

[Lucca]

It's actually pretty bimodal. There's a substantial portion, I believe around 40% (I'll dig up the data later, it's done number between 30 and 40 that I can't remember), of students with no debt at graduation. So that "average" is basically all lumped on the remaining 60% of students, who graduate with much more than the mean. I've discussed this elsewhere, but medical school debt futures are pretty skewed in two directions due to a divide between those that get virtually no institutional and family support, and those that get a lot of it.

I believe you, yah.

 

[Affiche]

Lol OP if you started being an adult and paying for your own **** you'd learn quickly about taxes.

 

[Lawpy]

I'm asking because I honestly don't know much about taxes and how it works :/

This is why working in a job can help a lot. It helps you understand how finances work and can help you grasp basics of professionalism and work politics that will go a long way. But Investopedia has good guides regarding how taxes and loans work.

 

[Efflorescence]

I'm going to one of the cheapest schools in the country, and my cost of attendance (for loan purposes) is ~55k this year. No family help, so I'm looking at at least $200k in debt before interest. It is what it is. I'm very lucky to have no undergrad loans, but it's still a big responsibility.

 

[Mad Jack]

I'm probably going to be in the 350-400k range myself post-residency, unless I get in a lot of moonlighting. I know how to love frugally though, so I'm not too concerned about it. Become attending> pay debt>retire as early as ****ing possible is my plan.

 

[Law2Doc]

Your parents probably have an effective tax rate of around 30% leaving them with 140k assuming they each earn 100k. They can probably help out some but not enough to cover the full cost of attendance

Let's put it this way, people who earn $200k don't have a spare $70,000 lying around at the end of each year after taxes, housing, cars, student loans of our own, retirement investing and other relatively modest life expenses. So it's more about what they've already saved rather than what they're currently earning. Which may not be much if they've been pitching in for tuition while you were in college. (Also we are assuming you (OP) are the only child.)

Now if you have parents who are willing to live on the cheap for four years, never go on a vacation, maybe downsize their house or cars and otherwise tighten their belts to ensure that your education is covered, then sure you can have less debt when you get out. I don't think many of us are arrogant enough to ask their parents to start eating Ramen and make their next car a used one. The fact that both parents are working full time may reflect trying to maintain a certain dual income lifestyle though.

But the truth of the matter is the average med students take on debt with an average somewhere between $160k-$200k. There are even a few like MadJack above who end up borrowing into the $300k range. Which will grow by the time they are able to start paying it down. And impact your lifestyle and your ability to start socking away money for your own kids tuitions.

 

[bluepeach9]

Let's put it this way, people who earn $200k don't have a spare $70,000 lying around at the end of each year after taxes, housing, cars, student loans of our own, retirement investing and other relatively modest life expenses. So it's more about what they've already saved rather than what they're currently earning. Which may not be much if they've been pitching in for tuition while you were in college. (Also we are assuming you (OP) are the only child.)

Now if you have parents who are willing to live on the cheap for four years, never go on a vacation, maybe downsize their house or cars and otherwise tighten their belts to ensure that your education is covered, then sure you can have less debt when you get out. I don't think many of us are arrogant enough to ask their parents to start eating Ramen and make their next car a used one. The fact that both parents are working full time may reflect trying to maintain a certain dual income lifestyle though.

But the truth of the matter is the average med students take on debt with an average somewhere between $160k-$200k. There are even a few like MadJack above who end up borrowing into the $300k range. Which will grow by the time they are able to start paying it down. And impact your lifestyle and your ability to start socking away money for your own kids tuitions.

Thanks for clarifying it in detail for me. I am extremely naive when it comes to finances. I've never paid for anything in my life and, as a result, am very irresponsible with money…parents paid for my state undergrad (I don't even know how much it cost in total but my dad only took out one small loan which he repaid $4000 for). Tbh, my parents never instilled independence in me growing up, so I didn't really feel a sense of responsibility now, I'm just trying to understand how it all REALLY works

I believe my state undergrad was around $12K in tuition/year and I was a commuter, so my family could make ends meet. However, I am not an only child. I have a sister who will be starting college in two years. Also, my family bought a house worth $800K two years ago. It was above our budget, but the place we live is expensive in general. So, I assume the mortgage fees are another looming ordeal. Oh, and no, my family doesn't have tons of $$$ saved up either…it's like an average amount I guess. We are immigrants, so never really saved up on American salaries.

My cheapest state school fees are $58-60K COA. My parents earn a combined salary of ~$200K before taxes. But based on what you all are saying and the new info. I posted above, I'm starting to doubt that I can count on family help to get through med school with zero loans.

 

[Akewataru]

This is one of the reasons why I'm not applying to medical school for another 2 years. I'm going going to use that time to study, work to stash money away, and pay off debt. Also I'm going to use that time to establish residency in a state that highly favors its in state residents, the tuition for the state school is the among the lowest in the nation. Plus I discovered the state offers a program that pays you $14,000 a year if you pledge to practice as a doctor in that state for the equal amount of years you take the $14,000. No you don't have to do primary care. They do this no only for medicine but for a variety of health professions. They just need health professionals so badly because a lot of their residents are underserved.


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[Mansamusa]

Thanks for clarifying it in detail for me. I am extremely naive when it comes to finances. I've never paid for anything in my life and, as a result, am very irresponsible with money…parents paid for my state undergrad (I don't even know how much it cost in total but my dad only took out one small loan which he repaid $4000 for). Tbh, my parents never instilled independence in me growing up, so I didn't really feel a sense of responsibility now, I'm just trying to understand how it all REALLY works

I believe my state undergrad was around $12K in tuition/year and I was a commuter, so my family could make ends meet. However, I am not an only child. I have a sister who will be starting college in two years. Also, my family bought a house worth $800K two years ago. It was above our budget, but the place we live is expensive in general. So, I assume the mortgage fees are another looming ordeal. Oh, and no, my family doesn't have tons of $$$ saved up either…it's like an average amount I guess. We are immigrants, so never really saved up on American salaries.

My cheapest state school fees are $58-60K COA. My parents earn a combined salary of ~$200K before taxes. But based on what you all are saying and the new info. I posted above, I'm starting to doubt that I can count on family help to get through med school with zero loans.

Yeah, your parents did not make the best financial move with that house. If I remember correctly, the general rule is that you can afford a house that is no more than double your income. They should focus their money on that mortgage (and retiring of course)

 

[dpmd]

Thanks for clarifying it in detail for me. I am extremely naive when it comes to finances. I've never paid for anything in my life and, as a result, am very irresponsible with money…parents paid for my state undergrad (I don't even know how much it cost in total but my dad only took out one small loan which he repaid $4000 for). Tbh, my parents never instilled independence in me growing up, so I didn't really feel a sense of responsibility now, I'm just trying to understand how it all REALLY works

I believe my state undergrad was around $12K in tuition/year and I was a commuter, so my family could make ends meet. However, I am not an only child. I have a sister who will be starting college in two years. Also, my family bought a house worth $800K two years ago. It was above our budget, but the place we live is expensive in general. So, I assume the mortgage fees are another looming ordeal. Oh, and no, my family doesn't have tons of $$$ saved up either…it's like an average amount I guess. We are immigrants, so never really saved up on American salaries.

My cheapest state school fees are $58-60K COA. My parents earn a combined salary of ~$200K before taxes. But based on what you all are saying and the new info. I posted above, I'm starting to doubt that I can count on family help to get through med school with zero loans.

Your parents had to take a loan to pay part of your small tuition for undergrad and will soon have another kid in college they will need to help, but you still think they are going to be able to give you anything for med school? You need to grow the hell up and quit looking to mommy and daddy to take care of anything for you. Go get a job. It won't cover the cost but it would probably do you a lot of good.

 

[040111333]

This is one of the reasons why I'm not applying to medical school for another 2 years. I'm going going to use that time to study, work to stash money away, and pay off debt. Also I'm going to use that time to establish residency in a state that highly favors its in state residents, the tuition for the state school is the among the lowest in the nation. Plus I discovered the state offers a program that pays you $14,000 a year if you pledge to practice as a doctor in that state for the equal amount of years you take the $14,000. No you don't have to do primary care. They do this no only for medicine but for a variety of health professions. They just need health professionals so badly because a lot of their residents are underserved.


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Is this state Texas? lol if not, which state is it?

 

[The Knife & Gun Club]

This is one of the reasons why I'm not applying to medical school for another 2 years. I'm going going to use that time to study, work to stash money away, and pay off debt. Also I'm going to use that time to establish residency in a state that highly favors its in state residents, the tuition for the state school is the among the lowest in the nation. Plus I discovered the state offers a program that pays you $14,000 a year if you pledge to practice as a doctor in that state for the equal amount of years you take the $14,000. No you don't have to do primary care. They do this no only for medicine but for a variety of health professions. They just need health professionals so badly because a lot of their residents are underserved.


Sent from my iPhone using SDN mobile

South Carolina?

They had one of the best deals I've ever see. Even OOS students could establish IS residency after the first year and pay the ~$22000 tuition after that. Plus that thing where they pay you to stay in the state after school.

 

[Cotterpin]

This thread should have a trigger warning. Just reading the title makes me angry.

 

[Goro]

Extremely naive

Okay, I see. So, if I think my parents can help me pay for med school with no loans when they are earning a 90-100 K salary each, I'm basically being naive? Because I don't know how much of that goes to taxes…

 

[Affiche]

This thread should have a trigger warning. Just reading the title makes me angry.

NO KIDDING. I'm so happy @dpmd said what we were all thinking lol.

 

[TehTeddy]

To be fair to OP, I think it's reasonable to expect your parents to contribute to your education if they can afford it, including med school. Not saying they can with the OP specifically, as I don't know their living situation. The way I see it, there are two "chains" of family planning you can take. These are at either end of a continuous spectrum but you get the idea.

1) Family pays for all education and expenses up until you can support yourself with a career (all tuition, living expenses, etc.). In turn when you have kids you do the same for them.

2) Family expects you to pay your way through school after high school. This could include having a part-time job, taking out loans, etc. When you have kids you would likewise expect them to do the same.

Now, obviously these are two extremes and most people have something in the middle, and it can change depending on the generation and how much wealth the family has to work with. But in general, if I did the numbers correctly, a family chain employing method 1 will be wealthier in the long run, and each member of the chain will be better off. Without worrying about paying for school, you don't have to delay getting a career to save money, earning sooner with 0 debt. Even with paying for your own children's education, you would still be way better off than in situation 2. Replacing familial support with a bank sounds like a reliable way to get screwed.
I understand for many taking out loans is necessary, but let's not bash OP for getting family aid. I get heavy family support as well, which will continue into med school. In the future I'll support my kids to the farthest extent I can.

 

[Affiche]

I think it's reasonable to expect your parents to contribute to your education if they can afford it, including med school.

This is what pisses people off. Adults aren't entitled to their parents' money just because they have it. You're an adult ffs, start taking care of yourself and let your poor parents enjoy the money they've earned.

 

[Mad Jack]

To be fair to OP, I think it's reasonable to expect your parents to contribute to your education if they can afford it, including med school. Not saying they can with the OP specifically, as I don't know their living situation. The way I see it, there are two "chains" of family planning you can take. These are at either end of a continuous spectrum but you get the idea.

1) Family pays for all education and expenses up until you can support yourself with a career (all tuition, living expenses, etc.). In turn when you have kids you do the same for them.

2) Family expects you to pay your way through school after high school. This could include having a part-time job, taking out loans, etc. When you have kids you would likewise expect them to do the same.

Now, obviously these are two extremes and most people have something in the middle, and it can change depending on the generation and how much wealth the family has to work with. But in general, if I did the numbers correctly, a family chain employing method 1 will be wealthier in the long run, and each member of the chain will be better off. Without worrying about paying for school, you don't have to delay getting a career to save money, earning sooner with 0 debt. Even with paying for your own children's education, you would still be way better off than in situation 2. Replacing familial support with a bank sounds like a reliable way to get screwed.
I understand for many taking out loans is necessary, but let's not bash OP for getting family aid. I get heavy family support as well, which will continue into med school. In the future I'll support my kids to the farthest extent I can.

Downside to parents paying for school is feeling like you owe them. I can pay back a bank, but I couldn't deal with the eternal debt of feeling like I owed my parents everything.

 

[Mad Jack]

This is what pisses people off. Adults aren't entitled to their parents' money just because they have it. You're an adult ffs, start taking care of yourself and let your poor parents enjoy the money they've earned.

Eh, their parents probably instilled that sense of entitlement in them, so I have no pity all around.

 

[Lawpy]

Thanks for clarifying it in detail for me. I am extremely naive when it comes to finances. I've never paid for anything in my life and, as a result, am very irresponsible with money…parents paid for my state undergrad (I don't even know how much it cost in total but my dad only took out one small loan which he repaid $4000 for). Tbh, my parents never instilled independence in me growing up, so I didn't really feel a sense of responsibility now, I'm just trying to understand how it all REALLY works

I believe my state undergrad was around $12K in tuition/year and I was a commuter, so my family could make ends meet. However, I am not an only child. I have a sister who will be starting college in two years. Also, my family bought a house worth $800K two years ago. It was above our budget, but the place we live is expensive in general. So, I assume the mortgage fees are another looming ordeal. Oh, and no, my family doesn't have tons of $$$ saved up either…it's like an average amount I guess. We are immigrants, so never really saved up on American salaries.

My cheapest state school fees are $58-60K COA. My parents earn a combined salary of ~$200K before taxes. But based on what you all are saying and the new info. I posted above, I'm starting to doubt that I can count on family help to get through med school with zero loans.

Your parents had to take a loan to pay part of your small tuition for undergrad and will soon have another kid in college they will need to help, but you still think they are going to be able to give you anything for med school? You need to grow the hell up and quit looking to mommy and daddy to take care of anything for you. Go get a job. It won't cover the cost but it would probably do you a lot of good.

This thread should have a trigger warning. Just reading the title makes me angry.

NO KIDDING. I'm so happy @dpmd said what we were all thinking lol.

Yeah OP is rather sheltered. It's good to have parents paying for your education, but expecting them to do so is wrong and irresponsible. Becoming self-sufficient is very good and will help a lot in the long-term. And understanding how finances work should be a top priority.

 

[Affiche]

Eh, their parents probably instilled that sense of entitlement in them, so I have no pity all around.

Meh, I feel like blaming your immaturity and entitlement on your parents is one thing if you're still living at home as a teenager, but another thing entirely when you're an adult and living on your own. At some point you have to take responsibility of the fact that you're acting like a selfish entitled brat and grow up, just like everyone else around you has.

 

[dpmd]

To be fair to OP, I think it's reasonable to expect your parents to contribute to your education if they can afford it, including med school. Not saying they can with the OP specifically, as I don't know their living situation. The way I see it, there are two "chains" of family planning you can take. These are at either end of a continuous spectrum but you get the idea.

1) Family pays for all education and expenses up until you can support yourself with a career (all tuition, living expenses, etc.). In turn when you have kids you do the same for them.

2) Family expects you to pay your way through school after high school. This could include having a part-time job, taking out loans, etc. When you have kids you would likewise expect them to do the same.

Now, obviously these are two extremes and most people have something in the middle, and it can change depending on the generation and how much wealth the family has to work with. But in general, if I did the numbers correctly, a family chain employing method 1 will be wealthier in the long run, and each member of the chain will be better off. Without worrying about paying for school, you don't have to delay getting a career to save money, earning sooner with 0 debt. Even with paying for your own children's education, you would still be way better off than in situation 2. Replacing familial support with a bank sounds like a reliable way to get screwed.
I understand for many taking out loans is necessary, but let's not bash OP for getting family aid. I get heavy family support as well, which will continue into med school. In the future I'll support my kids to the farthest extent I can.

No, it is never reasonable to expect something from your parents besides their love once you are no longer a child. If they have money or if they don't is irrelevant. That is their money to do with what they choose. It is reasonable to REQUEST they help you pay for school and I would say most parents will try to help pay for undergrad for their kids. It is even reasonable to request their help paying for graduate education if they can do so without jeopardizing their future. If they are barely affording what they have at the time and there are more kids coming down the line who will need help I think the more reasonable thing to do would be to discuss with the parents the situation and offer to handle it on your own so they don't feel guilted into tapping into retirement savings or ending up in a financial crisis later.

 

[JustAPhD]

...But in general, if I did the numbers correctly, a family chain employing method 1 will be wealthier in the long run, and each member of the chain will be better off. Without worrying about paying for school, you don't have to delay getting a career to save money, earning sooner with 0 debt...

I am very curious as to just what numbers you 'did'.

 

[Mad Jack]

Meh, I feel like blaming your immaturity and entitlement on your parents is one thing if you're still living at home as a teenager, but another thing entirely when you're an adult and living on your own. At some point you have to take responsibility of the fact that you're acting like a selfish entitled brat and grow up, just like everyone else around you has.

Most college students are effectively children. I give them a pass because they haven't entered the real world, and I know once they do they're in for a smackdown the likes of which they can't even comprehend. If they still think like this post-undergrad tho? Zero tolerance.

 

[Affiche]

Most college students are effectively children. I give them a pass because they haven't entered the real world, and I know once they do they're in for a smackdown the likes of which they can't even comprehend. If they still think like this post-undergrad tho? Zero tolerance.

Right, but we're talking about feeling entitled to your parents' money post-undergrad. I can't comprehend that.

And I need to take a time-out from pre-allo again. Too many triggers.

 

[dpmd]

Downside to parents paying for school is feeling like you owe them. I can pay back a bank, but I couldn't deal with the eternal debt of feeling like I owed my parents everything.

My parents did what they could for me in undergrad because cost of attendance was higher than what I could get in loans myself. But because they weren't wealthy part of that was in the form of them getting a loan that I promised to pay back. Then later my mom made payments on one of my med school student loans because she wanted to help. Now that I am well off I tried to pay them back and they won't take it even though they are in a somewhat precarious financial situation (retirement funds aside from social security are pretty much gone and both seem like they have plenty of life left, but at least they have no mortgage and an old house also paid off that brings in rental income so they aren't that bad off). So instead I buy stuff for them when they want it but it isn't in the budget. Can't imagine what it would feel like if I had not been mostly responsible for the costs of school (and they don't even use that debt like a weapon like some parents do, except for one particularly bad time before I knew about the financial situation they were in and got called out by my dad for discussing my mom paying something we had agreed on her paying-but once was enough to make me glad the debt isn't greater than it is)

 

[dpmd]

Most college students are effectively children. I give them a pass because they haven't entered the real world, and I know once they do they're in for a smackdown the likes of which they can't even comprehend. If they still think like this post-undergrad tho? Zero tolerance.

Funny. I was technically actually a child in college (started at age 17 due to when my birthday was) but by that time had been in the same job for 3 yrs and had even worked part time at another job all in an attempt to build up a college fund to go along with money that I got as gifts over the years but didn't spend.

 

[studentdocftw]

FWIW My dad is paying for my cost of attendance (utilities, books, etc on me) but that has taken an enormous weight off my shoulders. He has been putting aside money for my education for years and for that I am eternally grateful. He is charging me for the cost of attendance at 2% interest... that beats the 5 to 6% everywhere else. I think this is a more responsible way to fund your children's education, I still get to pay him back, but definitely won't have nearly as much interest.

 

[Mad Jack]

Funny. I was technically actually a child in college (started at age 17 due to when my birthday was) but by that time had been in the same job for 3 yrs and had even worked part time at another job all in an attempt to build up a college fund to go along with money that I got as gifts over the years but didn't spend.

Work turns people into adults, at least to some degree. I've got a 23 year old friend that has a two year degree and a job in management that she worked her way up into, that is more mature and has her life together than a lot of interns I've met. Why? She's been working since she was 16 and managing in a position of responsibility since she was 21. Experience trumps age or education in regard to maturity.

 

[dpmd]

Work turns people into adults, at least to some degree. I've got a 23 year old friend that has a two year degree and a job in management that she worked her way up into, that is more mature and has her life together than a lot of interns I've met. Why? She's been working since she was 16 and managing in a position of responsibility since she was 21. Experience trumps age or education in regard to maturity.

This is why my nieces got jobs in high school even though my brother is doing well and can pay for their school like he has done for their private schooling. He also mostly took loans for school along with what help my parents could give.

 

[CyrilFiggis]

If I remember correctly, the general rule is that you can afford a house that is no more than double your income. They should focus their money on that mortgage (and retiring of course)

As someone with a mortgage (technically two), that's not hard and fast. A lot of factors play in, interest rate, debt-to-equity ratio, down payment, HOA fees, property tax, etc. If you follow the 50/30/20 plan - fixed expenses/personal/retirement & savings - you just don't want all your combined debts, including mortgage to exceed 50% of your income. If you earn $100k, that means you take home around $6k/month after taxes. If you by a $300K home with 10% down, your mortgage is around $1,650/month which is around 27% of your monthly costs. You'll also have around a $9k reduction in your MAGI at the end of the year. So 2x may be a rule of thumb for nervous investors, but you really need to crunch the numbers first.

Even with paying for your own children's education, you would still be way better off than in situation 2. Replacing familial support with a bank sounds like a reliable way to get screwed.

That's very short sighted. If Couple #1 pay for 4 years of tuition at $17k/year, that's a $68K investment on their part. If instead, they had invested that into their retirement with a reasonable rate of return of 6%, they are looking at a loss of around $150,000 in their retirement portfolio. While you don't want your kids to be burdened with debt, repayment options can be adjusted to fit their income. However, you as a parent have a finite number of years left to fit your retirement goals. If you were smart and opened a 529 plan when the kid was born, that helps alleviate many of those issues. But there is no way you can say with certainty that paying for your child's full education is better in the long run.

 

[Mansamusa]

I am very curious as to just what numbers you 'did'.

I mean, technically if you aren't paying interest that is saving some money? Otherwise, I don't know where those calculations are coming from