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Looking At College Costs

Looking at College Costs

Until recently, it was a logical concept a college: education or a graduate education would “automatically” get you a better job, which obviously, would enable you to move forward in life to have financial stability and growth. This is no longer an “automatic” conclusion. However, statistically, college graduates will earn more than those who do not have a college degree.

We, at Helfand & Associates, regularly handle legal issues relating to college and graduate school costs and responsibilities in divorce and post-judgment matters. Tanya Helfand is a Certified Matrimonial attorney. At the firm, we also look at and help clients with student loan debt management and modifications as part of our bankruptcy debt management practice. There are new Federal programs to help people that cannot afford their student loans.

In the Family Law cases, we have to look at an array of factors. Some of the factors are: the educational levels of one or both of the parents, the aptitude of the child, where the child gains entry (school cost), and obviously the financial circumstances of the parties and the children. Should the child have to pay a part of the fees even if there is enough money? Is this a responsibility that a child should assume, at least partially to be motivated? (Skin in the game) Another interesting factor, although very expensive and difficult to litigate in Court, is the relationship of the parents to the child. If a child refuses to speak to a parent, should the parent pay?

Sometimes it works out that if the parents were still together, a child would have to take loans, but if the parties are divorced, the Court protects the child’s interests more and can order the parents to pay. It is in the Judge’s discretion. Obviously, we all want our children to succeed, but what does that mean in today’s economy?

In Europe, when entering university, a young person must really choose a direction up front, which will be the focus of the education. Typically, a person is employable with a skill at the end of the college or university program. Here, in the United States, there is a view to allow kids to “find themselves.” They often go into college without any clear directions or goals and they take various classes “testing them out to see if they like them.” This can be an enormously expensive “test period” for either parents who pay or kids who take loans. Should children develop a greater level of responsibility and maturity about their education in this economy then in years past? Should we give our kids more direction or understanding of budgets and consequences when considering college? Maybe so.

I often have clients with modest incomes coming in who are willing to either take big loans themselves or have their kids take big loans because they say they want “the best for their child”. I then will ask, “What is the child’s goal?” Frequently, there is no specific goal or the job intended has a modest income at the end of the day. For example, parents earning a combined income of $90,000 per year, whether married or divorced, are willing to either take $100,000 to $150,000 of loans themselves or have the child incur this amount for the college and the child plans on being an elementary school teacher or communications major without a planned career goal. This monthly debt payment when school is complete will be approximately $1000 – $1500 per month. If a child graduates, and hopefully obtains a job of about $35,000 to $40,000 per year without enormous future earning potential, does it make financial sense to saddle the child, mom or dad with $1000 – $1500 a month for 25 or more years?

At $35,000 to $40,000 per year, after taxes, the salary will barely cover rent, food, utilities and automobile. An extra $1000-$1500 per month will crush the child or the parent, both may end up in severe debt causing bad credit. For a child right out of the starting gate, I do believe this is not a great plan. Is that really what parents want for the child or themselves? Of course not. Parents, of course, want their children to be “happy” in their careers. However, guess what, no matter how fantastic a job is, if you are getting collection notices and calls for non-payment, this certainly can drag a person down, and for a long time.

I truly believe parents and children really need to look at dollars and cents more carefully. Maybe going to a less expensive school, focusing on better grades for scholarships and grants, working and going to school at the same time or choosing a career where jobs are available. These discussions should occur in junior year or early senior year in High School. In divorce cases, at Helfand and Associates, we make this discussion part of the Property Settlement Agreement. Certainly, there are no perfect answers, but I think more analysis with real numbers, and long-term planning must be used when considering a child’s higher education plans.

A friend of mine, who is a “tradesman” in the construction business, disclosed to me recently that he was lousy in school and really didn’t like it very much. His parents had the money to pay for expensive college, but they told him that if he went to a less expensive school, they would give him a significant sum of cash (the amount saved on expensive college) to start his career or a business. He has an excellent work ethic. He was simply not interested in academic pursuits. In his case, this really made sense and worked out. My friend’s parents really looked at their child, gave him options and treated him like a responsible adult.

An important factor in looking at schools and debt also is the placement and employment of the young people from the school. Nowadays, a college should have to prove its worth, not just take a customer’s money; particularly, if a family is going into debt for this expense.

I believe parents and children must consider the quality of the education available at a school, the cost of the school, what special programs and career opportunities and fields are available for a young person, where the school places graduates, how much will the debt be at the end of the educational period, is this financially feasible for the parents and the child.

At Helfand and Associates, we help people in divorce and post-judgment situations when college and graduate school costs are in issue. We are very familiar with the laws and nuances of the cases and the procedures of the Courts relative to this extremely important issue. We can analyze a case from the legal perspective as well as the practical financial perspective and give parents and children their options. We are very sensitive to the fact that each child and parent is unique. Some people believe more in education than others. Some people are fine with taking on student loan debt. However, many people wrongly accept debt as the only option and do not understand the long term burden it poses. It is our job as attorneys to consider your specific facts and provide advice and guidance based on the law to achieve the most desirable outcome.

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