Choosing a College You Can’t Afford

By Joe Messinger, CFP®

March 11, 2022

4 min READ

The title of this blog post may seem to go against everything we share at Capstone Wealth Partners. We always talk about the importance of choosing a college you (and your student) can afford.

Occasionally, however, we come across a case where a family really should (or really wants to) choose a college they can’t afford, and we help them make the careful adjustments to their financial plan to make that decision a reality.

When would you pick a college you can’t afford?

Well, we don’t mean merely choosing an expensive college based solely on name-brand alone. Going to Harvard to obtain an education degree is not worth the investment if you are paying full price. An elementary teacher’s salary will not be enough to justify the cost to attend Harvard and will likely leave a student in massive debt.

Instead, families need to understand the payoffs and benefits of their school choice. Being blinded by “name recognition” can cause families to go into massive amounts of debt for no reason.

However, a few expensive colleges may be worth the extra cost depending on the outcome you are seeking. For instance, students interested in working on Wall Street that attend Harvard have a better shot at getting into a very lucrative field because of the connections they form at Harvard and its name recognition in the financial sector.

Engineering students at MIT also will have the potential for a more lucrative path ahead. The bottom line is that certain institutions are worth the premium, but you need to do some serious contemplation to make sure you couldn’t receive a similar outcome for your student at another school.

What is the desired outcome of a college education?

Answer this question truthfully. If the priority is receiving an education at an expensive college because the career goals are best met by that college, understand you will have to make trade-offs in other areas of your financial life to make that happen.

Recently, the federal government’s College Scorecard tool incorporated top fields of study at each school along with the median earnings in those degrees one year after graduation.

Only data from students who received federal financial aid, like student loans or federal grants, is included in the calculation–so keep that in mind. The Scorecard can be a tool to get an idea about earnings after graduation from the schools you are interested in.

Think about the value quotient.

Value quotient is when you evaluate the combined effect of the quality and the cost. It is the ratio of a solution’s desired effect (a specific career) to its undesired outcome (the cost).

Ultimately, no one can make this decision for you. Our goal is to make you understand the impact attending different schools will have on your overall financial plan (and lifestyle goals).

Hope is not a strategy.

Families need to understand that money has to be part of the equation when making their college decision. Parental financial needs (such as retirement) must be weighed against a student’s desire to attend a specific college or university.

Too often, we see parents steamrolled by their kids into making a poor choice. Have a money conversation with your child before committing to any particular college or university. With clarity on how much is available to fund college, and what parents are willing to contribute, you can both be on the same page to make smart choices.

Still going with the expensive college?

We understand. We get it. Your student has been accepted to Harvard. (An amazing accomplishment…thousands of valedictorians are turned down by Harvard each year.) Your student wants to be a Wall Street whiz. You have to trust that the value of the financial degree will outweigh the cost to you now.

You still need a plan.

We still want to minimize the student loan debt you and your student take on and ensure a comfortable retirement for you in the process. In the context of a comprehensive financial plan, we sometimes find that parents are in great shape for retirement, but have a big gap when it comes to paying for college.

Most financial advisors would tell you that there is only one way to pay for retirement, and student loans are always an option for college (there are no loans for retirement!). We couldn’t agree more.

But, if helping your kids get a great education from a specific college is paramount, perhaps families can reduce their annual 401k investment and decide to work for a few more years instead of retiring early as they had initially hoped. Understand where you are as a whole, and incorporate your family’s college choice into your larger financial plan.

A final note.

If your gifted student was accepted into Harvard, practically every school would love to have your student attend their college instead. And many will have lots of money to offer them.

Harvard and other exclusive colleges do not provide merit scholarships. If you earn more than $250,000, you will probably not be eligible for any financial assistance from Harvard. We encourage families to visit the net price calculator on the institution’s website, or to leverage our free College Money Report™, to get an idea of what the out-of-pocket cost will be to attend various colleges.

We hear stories all the time about students who were accepted to those exclusive schools but chose to attend a state school or a less well-known private college instead, because of full-ride scholarship offers.

Struggling with the draw of the name brand versus the pull of the more affordable price tag? A great book for you to read is “Where You Go Is Not Who You’ll Be: An Antidote to the College Admissions Mania,” by Frank Bruni.

Ok…off our soapbox.

Have you made your decision? Do you need help building the cost of college into your bigger financial picture? Reach out! We’d love to help you with your unique situation.

Originally published 11/2017
Updated 3/2022