Mom stole college fund. What to do?
Dear Liz: What recourse would my 21-year-old nephew have if his mother embezzled his college fund? The fund was set up by his parents when he was a child.
Answer: If your nephew wants to try to sue his mother, or file a criminal complaint against her, he should talk to an attorney about his options. Money that’s placed in a trust or custodial account for a child’s benefit is no longer the parent’s to take, although too many parents don’t understand this and grab at an easy source of funds when money gets tight.
In the more likely case that he doesn’t want to take formal action against his mother, he could simply ask her to return the money she took. His chances of success may not be great — people who steal from their kids may not be eager to make amends — but he likely stands no chance if he doesn’t ask.
Don’t overdose on debt for a child’s education
Dear Liz: I have an 18-year-old daughter who wants to attend a private, out-of-state school. I don’t have any money saved for her education and do not make enough to cover the cost of this college. What are my options? She’s an A student and is planning to go to medical school.
Answer: You need to have the conversation you probably should have initiated a few years ago, before she started the college application process. She must understand that what she wants and what you can afford to provide for her may be two very different things.
Start by applying for financial aid at the colleges that have accepted her (let’s hope she applied to more than one). The “estimated family contribution” calculator at FinAid.org can give you a rough idea of what you’ll be expected to pay, but the actual package you’re offered can vary somewhat depending on how much the school wants your daughter to attend. You may want to invest in some books to help you understand the process, such as the Princeton Review’s “Paying for College Without Going Broke, 2012 Edition” and education expert Lynn O’Shaughnessy’s workbook, “Shrinking the Cost of College,” available at thecollegesolution.com.
Once you have the financial aid offers you can see which schools may be within your grasp and which are too expensive. Some schools encourage students and their parents to borrow heavily to attend, but that can lead to financial disaster — particularly since she has so many years of schooling ahead. Your daughter should try to limit her borrowing for her undergraduate education to what’s available through the federal student loan program (typically $33,000, total) and avoid private student loans, which have fewer consumer protections.
You as a parent can borrow through the federal PLUS program, but it’s easy to go overboard. The PLUS program will lend you up to the full cost of your daughter’s education, but the loan payments could be overwhelming and could prevent you from retiring. Student loan debt is almost impossible to discharge in bankruptcy, so you should be cautious about taking it on.
Your daughter should be able to cobble together an affordable education if she’s flexible about where she gets her undergraduate degree. Beyond that, she should know that the military and the National Health Service Corps pay for medical school in exchange for several years of service.
Some college educations aren’t affordable
Dear Liz: I have some very important questions regarding my son who is going to be attending a private university next year. He is going to be a student athlete (he golfs), which does not help very much financially. We’re shocked at the cost and do not have enough saved. We were counting on selling our home and downsizing to pay for his education, but got caught up in the real estate downturn. We need some help and advice on how we can get access to the free money that I know is out there. We also have two other boys, 13 and 6. We will start immediately saving for their college.
Answer: The “free money” you know is out there may not be the answer to your problems.
Yes, there are scholarships your boy might get to help pay for his education. But if he receives any financial aid from the university, those scholarships may reduce the amount he gets in grants — another form of financial aid that doesn’t have to be paid back.
If, on the other hand, he doesn’t get any grants, the scholarships could reduce the amount of loans he’d otherwise need to take out. He can start his search for scholarships at FastWeb.com.
You definitely should apply for financial aid from the university, if you haven’t already. (FinAid.org’s estimated family contribution calculator can give you a rough idea of how much you’ll be expected to chip in, although the school’s actual package may differ somewhat.)
Then take a hard look at what this education is going to cost you. You may not be able to afford it. If you would have to stint on your retirement, or your son would have to borrow more than the federal student loan limits ($5,500 for his freshman year), you probably need to look for other alternatives.
One option is for your son to live at home and attend a two-year college to get some of his requirements out of the way. Another is an in-state school, or one with a golf team that wants him badly enough to offer a better merit-based package of aid. FinAid.org offers resources and ideas for getting an affordable education, as does college expert Lynn O’Shaughnessy’s workbook, “Shrinking the Cost of College,” available on her website, TheCollegeSolution.com.
What you don’t want to do is bankrupt yourself, or consign yourself or your son to huge student loan debts. No education is worth a lifetime of debt, particularly when other options are available (and you have two other kids to educate).
Finding a way to pay for school
Dear Liz: What are some good possible resources for loans and other financing to pay for school? I am going back to school to try for my degree and I am pretty strapped for cash even though I work full time. Any suggestions would be appreciated.
Answer: Don’t go back to school to “try” for a degree. Go to get one. A college education is economically useless if you don’t get that sheepskin.
The financial aid education site FinAid.org is a great resource. You’ll find an “estimated family contribution” calculator that will predict how much you’ll be expected to pay for your education and how much financial aid you can expect. You also can learn about federal student loans, which are available to just about everyone and which have reasonable, fixed rates and numerous consumer protections, including income-based repayment plans. Try to avoid private student loans, which have variable rates and few of those protections.
Is it too late to go back to school?
Dear Liz: I’m 64 and have a master’s degree in education but can’t find a job. Is it too late to go back to school? I was thinking of majoring in occupational therapy.
Answer: It’s never too late to go back to school — but it is possible to spend too much doing so.
The good news is that occupational therapy is a fast-growing field with many job opportunities. The bad news is that you typically need a master’s degree to be an occupational therapist, and master’s programs (as you know) aren’t cheap.
Plus, your age is a factor to consider. Getting hired after 50 is tough, regardless of your field.
So rather than invest a ton of money in a master’s program — or, worse yet, borrow to fund this education — consider becoming an occupational therapy assistant. This field is relatively high paying and usually requires an associate’s degree, which you can get at a low-cost community college.
Before you begin, though, you should research the job opportunities in your area to make sure demand is high enough that your age will be less of a factor.
