May 27, 2024

Money Through the Ages: Balancing Debt Against College Choice

WHEN the financial aid award letter arrived from Juniata College several weeks ago, Mino Caulton and his parents had many reasons to celebrate.

He had been accepted, an accomplishment in itself for a dyslexic 18-year-old who has refused to take any extra time on his tests for much of high school.

Juniata, in Huntingdon, Pa., gave $18,500 in grants, not bad for a college with an endowment of much less than $100 million.

But it was not enough, not even close. Mino’s parents, whose household income has fallen 80 percent in the economic downturn, have little for his education now. Juniata wanted him to borrow $6,500 his freshman year and would probably suggest more in future years. And finally there was the $10,000 or so, beyond the grants and loans, that he would need to pay the total cost of attendance, more than $43,000.

His parents could borrow it, or he could borrow it himself if a bank offered him more in higher-rate student loans, aside from the federally subsidized $6,500.

So he has a question to answer, a choice that most 18-year-olds have no idea how to make and that a vast majority of parents are ill-equipped to consider as well: just how much sacrifice should teenagers (and often their parents) make to attend a high-quality liberal arts college, when a perfectly good community college is just up the road?

Both of Mino’s parents are struggling to help him sort it out. His father, Greg Caulton, did not attend college and apprenticed himself to a graphic design company in Australia, where he grew up. “There were 20 institutions of higher learning,” he said. “And the costs there are still structured in a way that it can’t ruin your life.”

His mother, Emily Bayard, is a college graduate, but she attended city schools in New York when they cost next to nothing.

While they did not anticipate a six-figure bill or the possibility of five-figure debt for their only child, they did raise Mino to watch his pennies.

“I have a 10-second memory of my dad telling me that I don’t need an inch of toothpaste,” he said. “And I got a lot of hand-me-downs, which I still wear. Why spend money on new clothes when these ones fit?”

Mino remembers the money he earned from a Mother’s Day lemonade stand years ago ($6) and from picking strawberries and tomatoes at a local organic farm ($25, cash on the barrel). He’ll gladly run for six hours straight if he can pick up four consecutive games of referee work in youth soccer leagues, at $35 a game.

Though Mino spends hardly anything, he has not saved enough to make a dent in private college tuition. So he applied to some financial safety schools: Greenfield Community College nearby and the flagship University of Massachusetts campus in Amherst. He is not sure that a big state school can provide more individualized instruction.

So how much should he sacrifice to get it? Zac Bissonnette, the 22-year-old author of “Debt-Free U,” a 2010 book that encourages families to borrow as little as possible in pursuit of a child’s bachelor’s degree, was practically foaming at the mouth with anger when Mino showed him his letter from Juniata.

The college’s subtle word choices reflect a cavalier attitude toward debt, Mr. Bissonnette said. “Your parents may further reduce 2011-12 educational expenses by applying for the Parent Loan for Undergraduate Students (PLUS),” the letter read.

“I think it’s sleazy to send a letter to a student suggesting that their parents borrow $10,180,” Mr. Bissonnette said. “If you’re going to send someone a letter suggesting they should borrow $10,000, you should send it to them.”

He also rejected the idea that loans reduced expenses. “Borrowing money to pay for something doesn’t reduce the expense,” he said. “It increases it, because you have to pay interest.”

John T. Wall, a spokesman for Juniata, said the college planned to change its wording in response to that criticism and added that it began encouraging parents to borrow over 10 years ago to remind families that there was an alternative to students taking on additional higher-interest debt to pay for college.

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