San Diego Housing Market News and Analysis

do not EVER sign on your kid's loan unless you aare fully willing and capable of paying the whole thing....

It is unbelievable to me that a "boomer" would be delusional enough to do the following:

Borrow to get ANY degree for themselves after the age of 45;

-borrow more than $20K to get a degree for themselves while under the age of 45;

-co-sign for their kids a student loan;

-take out a student loan for their kid's education;

-co-sign a mortgage for a personal residence for their kid and going on title with them;

-co-sign a auto loan for their kid; or

-co-sign a credit card for their kid.

I've seen a LOT ... Persons a few years away from retirement have financially WRECKED themselves by doing the above. There is a such a thing as giving money to your kid for part or all of a downpayment on a principal residence as a gift, or;

-opening up and regularly feeding a college fund while your kid(s) are young;

-giving your kid a gift or graduation present of a vehicle or a downpayment for one, paid directly to the seller;

-providing your kid with vehicle insurance, cell phone and medical coverage while a full-time student;

-taking out a 2nd trust deed on your kid's principal residence for part or all the downpayment you "loaned" them (although this is fraught with peril as well) ...

-and, taking care of your grandchild(ren) while your kid (their parent) works.

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Even with a college degree under their belt, as an adult, your kid could very well:

Get into an auto accident with injury or death for which they are liable and are uninsured or underinsured;

-become severely injured themselves and unable to work;

-get a judgment against them for collections on consumer accounts and have their pay garnished;

-borrow too much to buy property they really can't afford and become upside-down quickly;

-try to start a business with all their savings and lose it all;

-marry someone who gambles or turns into a drug addict;

-marry someone whom they have kids with who refuses to hold down a job for any length of time;

-have a child with birth defects;

-have multiple children and have to pay child support for all of them or be unable to collect child support for any of them;

-become a drug addict or alcoholic themselves and be unable to work;

-get addicted to gambling;

-get arrested and convicted of a felony and sent off to the Big House;

-file for divorce and their spouse turns vengeful, charging up, making claims against the "marital" property and taking everything they can;

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Don't laugh, Piggs. I've seen ALL of this happen to college-educated young people who have/had FT jobs where their parent(s) "over-helped" them throughout life.

For YOU, as a parent, who is "retired" or "soon to retire," all of the above (your kid's) problems will become YOURS if you enmesh yourself with your adult child's (age 18+) problems to the degree where you actually can't afford to help anymore. YOU need to be able to pay for your OWN food, shelter and Medicare parts B & D until you die. YOU have NO CONTROL over how your kids conduct their lives when they are an adult. If YOUR kids can't properly manage their OWN lives, how the h@ll are they going to be able to help YOU if you become indigent in your old age as a direct result from helping them ... long past the age (for you and them) where you actually SHOULD have done so?

Thanks for posting, scaredy. It's an eye opener and those affected seniors should be grateful that the GOV is only garnishing 15% of their SS checks. I foresee a lot of these seniors with a balance still owed to Sallie Mae, etc at the time of their deaths.

Piggs, PLEASE COACH your kids to REFRAIN from taking out student loans ENTIRELY!!!!!!

Like flu posted earlier today, tell them get a job at Costco for $20 an hr. They likely won't make that kind of money fresh out of college with a(n expensive) "Bachelor Degree." If your college student runs out of money midstream .... tell them to finish the quarter or semester and WITHDRAW and continue another day when they have more $$.

That's what people in my generation and those before us did. It's really okay to go to school at night after work when you are working in a FT job - 1-2 classes at a time. You know exactly what you want to do by then :)

College is getting to be a scam ... ESP private "for profit" schools.

[end of rant]

Very well said, BG.

People need to get over sending their kids out of state to college so they can get the "dorm experience," too. What a load of bull. NEVER get into debt (or let your kid get into debt) to send your kid to an out-of-state college. I can't tell you how many people I've known who have done/are doing this, and they cannot even begin to afford it.

Let your kid live with you at home, go to the local J.C. for the first couple of years (the cheapest way for them to "find themselves" and really decide what to major in), then they can go to the local state university/college for their undergrad degree. We are lucky to live in an area where there are many options for them to go to a good local college or university.

IF they are so hot that they "deserve" to go to an ivy-league or out-of-state school, let them earn it by proving that they will take things seriously and are driven to take it to completion. Not only that, but if they are *that* good, they can get scholarships or grants in many cases to pursue their graduate degrees.

One more thing, the BEST thing a kid can do while in college is WORK. Many employers would rather hire a kid who has actual experience and who knows how to handle him/herself in the workplace than to hire some snot-nosed, entitled brat who was given everything all the way through college.

BG - your list of "dont's" really depends on a lot of things. If they own $900k of property, paid off and want to spend $50k getting a degree for themselves of a kid, why not?

A couple alternatives which haven't been considered:
(a) Send kids to college abroad. A family friend sent his son to med school in Poland. Much cheaper than in the US, level of education is equivalent these days, and some of the coursework was actually done in the US via an "exchange."
(b) Kids don't always have to work in Costco or similar. Tell them to look at local small firms that do what they're interested in doing. I interned for a local engineering firm last year of high school. An advertising firm that I consulted for hired college freshmen as paid interns.

Do people really plan letting their kids go through school with a loan these days?

I mean, if one has a kid, shouldn't one be saving for the kid anyway?...You know before all the other crap one buys (cars, boats, expensive clothing items, luxury vacations, meals, etc,etc,etc,etc)...And then based on how one's saving for kid worked out, send their kids appropriately to the school of his/her choice based on a "budget"...

I mean, there's things like 529 plans with some tax sheltering (and it's transferable between folks needing it to some extend)...There's custodial accounts to help saving/grow...There's a bunch of other things, one could do (assuming the entire tax the wealth bullshit stops....well actually it some of this stuff helps you redefine that you're not wealthy...)....But needless, all the tools are there for folks to plan, save,etc

Or am I missing something here...

flu, I think more parents would sign up with a 529 but it does not come with any money... Joking aside, trying to save enough money to pay for your kid or kids college is a daunting challenge when trying to pay for eveything else. The goal is for kids is to be independent, getting there is not a clear path and it is different for everyone. Sending a kid to a JC might be the "cheapest" way but it is not the only way. My best freinds son is going to be starting his 4th year at a JC. Sending your kids to an out of state school for a "dorm" experience is not bull. It teaches kids to be on their own, to fail and succeed on their own, to make the choice of partying or studying. Is it the best option, it is for some but not all. As most know I spent the money to send my kids out of state. But what most don't know is the sacrifice my wife and I made from day one to save and earn the money to pay for their school. I feel for all parents now trying to get their kids through college, it is really a challenge. KID ALERT UPDATE WARNING : My son has now been out of college two years and has worked his way to a top salesperson with his company. He is totally independent, has a girl friend, and is doing great, still in Houston. My daughter graduated in May and she moved on her own to Houston, just a coincidence that her boyfreind lives there....She starts a new job on monday, and should be about 75% self sufficient, we will help with her rent. Talk about relief........

Desmond,

Congratulations on doing such a great job with your kids!

My apologies to you (and anyone else whom I've offended) for the "dorm experience" remark. It's just that I know more than a few people who were in NO position to be spending any extra money, yet did this anyway. They were in such bad shape that they were barely able to set aside money for their own retirements. If people can't afford to save for their own retirements, they should not be sending their kids off to college, IMHO.

Now, they are much closer to retirement age, very short on money (have been taking money out of retirement accounts just to pay basic living expenses, and paying the penalties!!!!), have maxed out the HELOCs on the houses, etc. Obviously, if one can afford it, that is a different subject, entirely. I'm just thinking about all those people out there who are doing it because they think that's what they're supposed to do.

Really, we need to re-think the way we deal with college expenses and the debt that pushes the costs so high. The credit bubble has affected prices of many things, houses were one, but college is another. IMHO, we need to stop financing everything and start using cash/savings. That, in itself, will bring prices back down to where people can afford things without going into debt.

CA, no apology needed. Like I said some things will work for some and not for others. I think to many people are living in a fantasy world and just don't want to face reality. I feel for anybody dealing with kids that are college age, it is just to expensive and to much pressure.

i have a new idea for enhancing college performance.

let kid get the "dorm" experience by living close by campus in student type rental housing and hang out with student roommates and work for a living for a year before going to college.

in this way, he can party his ass off, kind of hang out at the college he's intereste din, sit in on some classes, meet people, but not ahve to do any academic work, accumulate no debt, but kinda clear his head or cloud it, depending on how things go.

i probably shoulda done that.

Speaking from personal experience, if one chose a major carefully, it's a very good idea to borrow for an education.

scaredy, this is an excellent idea for a kid who is thinking of attending an out-of-state college with a CA HS Diploma. ESP if they have relatives in the area to look in on them and invite them in for a meal periodically so they can report back to the parents how they're doing. I think doing this for a little more than a year might be a better plan (from June when they graduated HS to August of the following year when they enroll in college in the new locale) OR from May when they receive their Associate Degree at a(n) (inexpensive) CA community college until August of the following year when they check into the out-of-state campus. Of course, they will need to file at least ONE tax return in the new state (claiming themselves only), using W-2's showing earnings received in that state. This is the way my brethren did it back in the day to avoid out-of-state tuition. A major caveat is that the prospective student should be continuously employed (full or part-time) and have a rental agreement or lease with their name on it showing intent to remain a resident and the CA-resident-parent will have to cease claiming them on their tax returns even if they're helping with rent and bought them a vehicle. (Obviously, the out-of-state leaseholder can be a relative, preferably with a different last name than the prospective student).

In most states, out-of-state tuition is at least 275% of in-state tuition and should be avoided at all costs.

Again, working a year before college is an excellent idea for CA residents who won't, by any stretch of the imagination, be able to be accepted into a CA university that they would want to attend (due to intense competition and VA preference) in the coming years. Even if accepted, it is and will be increasingly difficult to graduate in four years at UC/CSU (with CSU being more difficult) due to the systems cutting classes from their budget which are critically needed for degree programs. At CSU campuses, it often takes three semesters of waiting in line and crashing classes just to obtain a needed 300 or 400 level class to graduate in ANY degree program. Other, less-populous states don't have this problem with their university system and so the student can easily finish in 4 years (or 2 yrs if they entered with an Assoc Degree). This "5-yr work-first-plan" is likely faster than if the CA HS/CC graduate were to enroll in a CA university and be unable to graduate in even six years due to critical class cuts.

I'm with CAR in that dorms EVERYWHERE are ridiculously expensive and small/lacking privacy when compared to 3-4 students living in a 2 bdrm apt, ESP in states with lower-cost rents. In addition, a ($350-$400 mo) campus meal ticket is a ripoff if the student is unavailable during the times the meals are served due to work/study commitments. And many student jobs offer an "employee menu" of free food so an expensive campus meal ticket is not necessary.

Graduating out-of-state college students always have the option of bringing their degrees back to CA to compete for jobs at "home" if they wish to return after college.

The one exception with dorms/campus food being more expensive is if the student has a large financial aid/scholarship package. This can sometimes cover on-campus housing and food, but not apply to living costs off campus.

Sure, up to $20K for an Accounting or other specialized business degree while under the age of 45 ... preferably WELL under. NOT sure its worth it for an advanced degree as there is no guarantee anymore of a promotion when the student finally obtains it (excepting teachers, but that's probably not happening as much anymore).

If the student is borrowing for a degree program which is glutted with unemployed majors, a program which is not occupational or for ANY degree program after the age of 45 (ESP in SD County, where THOUSANDS of GRATEFUL FT employees cross the int'l border every day to work), they are fools and will never see enough money from employment in this county to pay off that program in their lifetimes, IMHO.

"Legal" age discrimination is alive and well everywhere, although in some areas of the country it is much worse. SD County, CA is one of those areas.

As long as the financial aid pkg is a GRANT or scholarship and NOT a loan ... yes it is worth it to take the "full ride" or reapply for it every year. If ever turned down midstream, though, and the student is already out-of-state after attending one or more years on the scholarship, they probably will need to come back to their home state to finish college.

Those out-of-state students accepted with scholarships or conditional scholarships with grants included for on campus dorms/meal tickets will NEVER be able to qualify for in-state tuition under those circumstances.

Yep, I meant grant/scholarship, not loan-type financial aid.

I went to a small but well-endowed private school. "Grants" of 50% of tuition and board weren't unusual, which brought expenses down to levels not much higher than state schools.

up to $20K? that's gonna be tough to get a degree.
I think there's a rule of thumb for how much to borrow: The amount borrow should not exceed the expected annual income for the first few years.

I borrowed $225,000 for school. Very glad I did. Would definitely do it again. Wouldn't be where I am today without this loan.

I wouldn't borrow for some lib art degree but for a practical field, it's worth every penny.

I left law school in 1995 with $95,000.00 in debt. Not sure what that is inflation-adjusted. Probably a lot.

Je ne regrette rien, but, I easily could've and froma financial planner's perspective, shouldve, borrowed less. If I did it over, I'd have atteneded a different school and left with 20-30k debt, if that.

Timing is everything. That debt was a good deal at the time for me, in retrospect. It still might be a good deal. It's just, there's less room to change direction nowadays. You better be damn sure what you're doing when you have 250,000 in student debt.

BG, not sure about the "under 45" criteria. You could be 50 and easily work till you're 80.

My Mom is older than that and stillworks most days.

Indeed, perhaps the debt and the degree would give some individuals a purpose, mission and reason to keep living!

bobby, are your SURE you would encourage your kid to take out this size of a student loan TODAY ... even for a "practical" degree?

And if you don't mind my asking, how long ago did you finish borrowing this amt and how much left of your student loan do you still have to pay?

scaredy, I agree that $250K is a whopping sum to borrow, leaving a former student with crippling debt and making it next to impossible to move on with his or her life (buy vehicle/home and/or get married/have children) at the age he or she normally would.

However, 1995 (when you graduated) was 17 years ago, when new lawyers could still get secure gov't jobs (like yours) and state and local gov'ts were still hiring. Is your agency still hiring? And if so, how many newly-minted lawyers do they have lined up to compete for ONE entry-level opening?

Of course, nearly ALL boomers would like to continue to work (even PT) indefinitely. Those that don't have secure employment (where they can't be discharged without cause) are likely either insecure about their continued employment or unemployed. Once unemployed and over 50, it doesn't matter WHO you are or what you know ... you will very likely never be hired again, at least in SD County.

Maybe it's different in other locales where many young people (potential employees) have fled for more opportunity or left for college and never returned.

I know people over 50 (including my parents) who were re-hired. This is in NYC, with quite a lot of young people, not Detroit or Harrisburg.

At the least you should be able to pay for 75% of your total college expenses and take on no more than 25% debt. If you can't do that then you should take a less expensive route. Even becoming an M.D. and taking on that debt is going to be hard to justify from now on.

I left law school about a decade later, with about $50k more debt (total for undergrad and law - although most was law). The debt was a good deal for me also. I disagree about room to change direction - I have a lot of friends and colleagues who have done so less than a decade after graduating. Admittedly, I went to a high-ranking law school, which plays a key role in the ability to switch course in a way that is not financially disastrous. Most of these people went to big firms, were miserable for a few years, paid their law debt, then found something they loved doing (opening small offices, non-profit work, government work, moving to africa with the peace corps, etc). So, my addendum to "damn sure what you are doing" is "or put yourself in a position where you can quickly dig yourself out if you aren't sold on that course."

And BG - you are right about holding off on some larger financial purchases (like a house) - I just bought last year, despite making a low 6-figure income for 5 years prior, because qualifying and saving for a decent down payment was harder with paying off law school debt. But the flip side to that is that my income is easily 2-3 times what I would be making if I hadn't gone to law school (I took a year off and worked as an accountant, so I have a good basis for saying this). The difference in monthly debt payments vs. monthly income, and the type of house/area where I was able to purchase, is more than worth it.

deleted - double post. Stupid slow internet.

1. no kids. Yes, I would tell them to borrow if they have to (but I think by the time I have kids and they go to school, I would be ale to pay for them).

2. Graduated in 2002. Still have about $100,000 but at 3.xx interest. I can write a check and pay it off if I want to but low interest rate is nice.

3. We grew up in a single mother household income on welfare/foodstamp/garage sales everything. Both my brother and I borrowed heavily for our education. we both are quite happy we did this. Without our education, we would still be dirt poor.