The Wise Cracks Blog by Dan Otter



The Real March Madness: Choosing and Paying for College

My wife and I are super proud of our daughter, Lily. She applied to and got into 9 colleges. I applied to and got into exactly one college: San Diego State University. It was the best five years of my life. I miss it everyday. But I digress. Our daughter should be super proud of my wife and I because we have been diligently socking away money in a 529. In fact, Lily will have $100,000 available for college. That is a huge number in my opinion.

Lily is a pretty good student at a pretty challenging public charter school. We are thrilled with her educational options: American University, Arizona University, Clark University (outside of Boston), Saint Mary’s (northern California), Seattle University, Southwestern University (outside of Austin), University of Denver (for some reason known as DU), University of New Mexico (where I currently teach), and Western Washington University.

Her so called “dream school” was American University. I say was because the dream died when she got to page three of her acceptance letter and learned that financial support would amount to the option to take out a $5,000 loan. Doesn’t the institution remember I was a lowly adjunct there for three years back in the early 2000s? So much for loyalty. American has an annual cost of just north of $60,000. (Note all financial figures mentioned here are for 2016 and include all costs associated with attendance). They say AU has a “great” reputation, especially for Lily’s area of interest (International Studies). But is that reputation worth $140,000 in loans for an undergraduate degree? I don’t think so and neither did Lily. It was much the same with Arizona, Clark and DU. Basically our daughter would be looking at about $100,000 to $120,000 in student loan debt for attending these schools. Again, this is after the $100,000 we are contributing.

Ruling out these four schools has left five in her college bracket: Saint Mary’s, Seattle University, Southwestern University, University of New Mexico (a.k.a. UNM), and Western Washington University. The first three of these schools all offered financial support ranging from $14,000 to $18,000 annually. Lily could leave these schools with anywhere from $88,000 to $40,000 in debt (at today’s prices; it’s reasonable to believe costs will rise in years two through four). At $35,000 annually, Western Washington University is the most affordable out-of-state school. As of this writing (March 2016) we are waiting to hear if she will get any financial support WWU.

As a resident of New Mexico, UNM has a very generous in-state tuition cost through something known as the Lottery Scholarship. Lily could attend UNM, live on campus, and could graduate with $50,000 to $60,000 left over for graduate school. Until a week ago, Seattle University was in the lead by about 6 points over Western Washington University and UNM. Then my wife sat down with Lily, and using an online calculator, shared what her monthly debt would be at various schools. Suddenly, UNM (a.k.a. University Near Mom) was not looking too bad. I am pretty conflicted. I am a big proponent of new experiences. I think we grow by traveling and living in other places. I’ve been fortunate to have lived in Buffalo, NY; Bedford, England; Yorba Linda, CA; San Diego, CA; Corona, CA; Washington, D.C.; Anaheim Hills, CA; Bethesda, MD; and Albuquerque, NM. Each of these places have contributed enormously to my life view. I wouldn’t trade any of those living experiences (though I would trade some of my real estate decisions). Lily did spend seven weeks last summer living in the Dominican Republic as part of the Amigos de las Americas volunteer program. She has also visited England. I like UNM and think students can have a terrific experience there. It’s a big, diverse school with a lot of educational options. Plus, they have a robust overseas program so she could study overseas for a full year.

Next week Lily and I travel to Seattle University and Western Washington University. She will need to make a decision by May 1. I’ll report back here and on the Teach and Retire Rich podcast I host along with planner Scott Dauenhauer, CFP. On a related note he and I interviewed Lynn O'Shaughnessy of the College Solution Blog, a website designed to help parents and students navigate applying to and paying for college (episodes 19 and 20). Her advice is wise and real. Lets just say she doesn’t buy into U.S. News and World Report rankings. And she abhors the debt so many families are racking up. Anyway, the clock is ticking…