College Cost Analysis: Investment Decision

In providing college counseling through the years, my financial acumen has been called upon with increasing urgency.  Some part stems from my work in the career counseling space.  I have a strong sense of what “pays off”.  Some part stems from deep financial knowledge spurred in part from my early legal career – Securities and Exchange Commission – and some part from doing this work and running a business for 20 plus years.  The real reason: we raised three children of our own!

College Case Study: This is a real world college decision made by a friend of a friend who lives in Fairfield County. Daughter was admitted to Northwestern and Penn State. The friend of a friend lives in Pennsylvania, making this decision similar to considering Northwestern versus UCONN.

The parents could broadly be described as “upper middle” by suburban Connecticut standards (even though they likely are upper-upper by standards across the nation).

They have saved $125,000 for college for their daughter.  They have two other kids who are college-bound and need to save all additional college funds for those two children. The daughter wants to attend Northwestern.

This seems to be the dilemma that many parents face: Should we spend more money on a high-priced private school, particularly an elite one like Northwestern, and/or have the college-bound child take out loans?

Ultimately, the parents left it to the child to decide.  She decided on Northwestern. Her parents will give her $125,000, and she will take out loans for the rest.

What decision would you make?