Rather than get caught up with that thread I think this deserves another look.Ivygirl wrote: ↑Sun Apr 11, 2021 6:32 am A quick search tells me that over 40% of people who go to college don't graduate. How many of those took out student loans, which can't be discharged in bankruptcy, and have no degree to earn the money to pay them back? How many lost years is that, working at low wages for nothing just to pay on a mistake. What if they had followed Mr. Ramsey's common-sense advice instead: https://www.ramseysolutions.com/saving/ ... CNL_180617
"When it comes to choosing a school, the only relevant factor is if you can pay for it without student loans."
I would change it to:
"When it comes to choosing a school, the primary factor is out of pocket cost."
Say you're like me, rising senior and looking at school. There are lots of threads here on whether parents should pay, how to save, is Harvard worth it, etc but in my quick search I didn't see a topic title in terms of strategy or selection criteria in the first few pages of the search results.
In my case we make too much for aid (beyond loans) and he's not getting a full ride anywhere so my assumption is that everything is coming out of the money I've saved. Outside of some place like Harvard with a large endowment and lots of financial aid options this isn't likely too rare for Bogleheads.
Using this random google hit on the costs of college here's my assessment:
https://www.valuepenguin.com/student-lo ... of-college
Scenario 1 - 4 years private, live on campus = $203,600
Scenario 2 - 4 years flagship state school - in state, live on campus = $101,160
Scenario 3 - 2 years community college (live at home) + 2 years in-state university (live on campus) = $18,360 + 50,580 = $68,940
Scenario 4 - 2 years community college + 2 years state school (live at home all 4 years) = $18,360 + 28290 = $47,340
Scenario 5 - 4 years University of Michigan = $273,980 (An elite out of state public)
If you can swing Scenario 4 because you happen to live near your flagship great. I'll assume many cannot so Scenario 3 is likely the cheapest reasonable option.
Scenario 3 vs 1: $134,660
Scenario 3 vs 2: $32,220
Scenario 3 vs 5: $205,040
Invested in VTI between 2000 and 2020:
Scenario 3 vs 1: $709,302
Scenario 3 vs 2: $169,714
Scenario 3 vs 5: $1,080,019
(I used PV)
So theoretically, assuming you had saved $273,980 for college and could invest the cost difference between community college + state university vs one of the best public university in the US as out of state in VTI, your kid could have a million bucks extra before age 40.
Now we are fortunate enough to be able to afford option 2 AND save money them in the future but we understand that 4 years on campus is a luxury experience we can afford. We happen to be lucky enough to be able to do option 4 if we wanted so for us the cost delta is $53,820 or $283,489 after 20 years. Which is a nice sum to be honest...
This quick and dirty analysis does highlight that out of pocket cost, at least for folks that prioritize saving and investing, should be the primary driver in college selection.
It is also probably not unreasonable to save for Scenario 3 and go though this with your kids and tell them anything more than that they would have to come up with and no, you're not going to agree to a loan. They'll have to earn a scholarship or cashflow the delta with a part time job if they want the option to live on campus the first two years.