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8/15/2016

Student Loan Costs University California vs Community College

Your child is going to college this fall with no Financial Aid?

 My sister teaches first grade and her ex-husband is an executive. In their divorce decree (topic I can write novels about) their attorneys failed to encourage an agreement about college. This weekend her ex-husband who makes $200000.00 a year and owns four properties in California informed her he plans to pay zero for his son’s education. His argument is that son should go to Saddleback; the local community college, and transfer to U C system. 

Here is my analysis of this choice.
My sister faces a mountain. Her son is accepted to University of California system <hereafter called UC>. Cost to live on campus is about $31,000 a year.

Here are my suggestions:
Son saved $2100.00 working at Ralphs Grocery store. He can sell his car. He is not allowed to have a vehicle on campus Freshman year for $1200.

Facts about Saddleback Community College
Tuition $762 + $35 registration + books $1630= $2427 year cost X 3 years it takes on average to finish AA with trade degree not UC classes there due to crowding equals $7281.
Statistics show that students who transfer from Saddleback to UC campus’s take three years to finish the four year college. Then 50% of 3 years at UC system $106000 divided by 50%= $53000
The half cost her ex owes with his plan is $60,281 total and $15,070.25 a year towards U C system school.

Although U C costs $31000 a year or $124000 total, son’s chances of finishing or percentages of graduating are much higher.
Of students at community college Saddleback which is highly rated, only thirty five percent of students get an AA degree. The statistics to the finish line from the community college pathway are far worse. This is not due to cost. The culture of community college doesn’t drive students in the same direction as UC system.
16% transfer to a 4 year university
8% transfer to UC system
UC system transfers take 3 years to graduate UC and 50% drop out of the 8%
So 4% of those Saddleback students graduate from a UC school; not a glowing pathway to save less than three thousand dollars.

Next piece of the puzzle is how to pay for the costs. UC takes monthly payments. This breaks up the burden of a large check in the start of the quarter. There are federal student loans which offer low interest rates BUT this monkey will heavy on son’s  back for about ten years following graduation, unless he hits a high paying job. Son is planning to study engineering. 
If he finishes with an Engineering degree of any kind salary levels are in the $70 -120,000 range according to CNBC article this week: http://www.cnbc.com/2016/08/15/the-15-highest-paying-jobs-in-los-angeles.html

My suggestion is: look into private money student loans. Why you ask? Because the federal ones NEVER go away. If for some reason son fails or doesn’t finish there is no way to release or forgive Federal student loans. When they go into repayment default the low interest rates jump up to the 19% -20% APR range. I’m not saying it is a plan to file bankruptcy, but if he becomes seriously ill or disaster strikes that is a backup plan, assuming she doesn’t cosign.
Discover and Wells Fargo offer some of the better non-federal student loans with APR rates in the 11.5% range (choose a fixed rate ). Meanwhile tighten the belt, work more and sell something. But most of all tell your son you love him, believe in him and this is fixable.

What grants have you secured?
What fixes do you have to financing college education?

Links and references

·      StudentAid.gov is a source to find and apply for federal grants.
·      Fastweb.com sends you personalized options for grants and scholarships  This service will send emails to parent and student. Remember that when student becomes 18 years old your ability to access college information and scholarships becomes limited as the child is a legal adult
·      StudentScholarshipSearch.com is a free database containing hundreds of scholarships This website is s time eater. Do NOT pay for any applications. Write the essays make the deadlines every hundred dollar award is one step closer to the finish line.
·      Scholarships.com lets you customize your search results based on your profile – also has awards by you heritage or essay or talent. Don’t you have an uncle who worked for J P Morgan, maybe you qualify for  Chase’s $100 grant?

Link to wells fargo student loan information
Link to Discover student loan programs

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