BLOG: Heartbreak of Achievement: Paying for College

Now that the deposits to colleges were due on May 1, we are seeing many families take a good look...for the FIRST TIME at the affordability of college. 

If they make over 95k a year, and are intending to go to the UCs, they are looking at spending $33-$36k per year for the next five to six years. Families earning 95k a year are feeling like they are barely swimming with their heads above water – let alone having to come up with an extra $33-$36k a year per child. 

Unlike free advice families get from their friends, family and local high schools, I am pleading with families to get PROFESSIONAL help. Interview independent college counselors. Get a good feel for whether they can work with your family.

If you cannot write a check AFTER taxes for the full cost of college, your college counselor needs to be well versed in which colleges will be most affordable for your student, while considering the academic, cultural and social fit.

I had a parent call me yesterday whose guidance counselor steered her to the colleges she "could get into." This poor parent is a single mom, barely able to make ends meet, and her daughter had some medical issues, so her GPA would not permit her to get into the colleges that would give her money. So how is a mom, barely living above the poverty line supposed to come up with $48k for Colorado of University Boulder? 

The answer is SHE CAN'T (at least not responsibly). Yet every year, we see parents sign for PLUS loans, or co-sign for student loans. 

The government gives out PLUS loans with the ONLY criteria being that the credit of the parent needs to be "good." There is no requirement for income or assets for collateral. Repayment is deferred until six months after the student graduates.

Does this sound eerily familiar to the "stated income" mortgages and 125 percent LTV?