A hard test in college finances

I boarded JetBlue’s flight to Los Angeles with a bag full of mixed feelings. My daughter, Samantha, and I were returning from Boston after a week of college tours. Seven colleges in five cities in seven days, it made a whirlwind European trip seem lazy.

But what was bothering me was my plan. My confidence about how I was going to manage college costs was shaken. And I was supposed to have this all figured out.

Four years ago, I wrote a book on financing college. With the assurance that only someone with no personal experience on the topic could have, I waxed on about how you could decide how much to save. And if you started early enough, you could meet those goals without starving or giving up on the retirement plan. That much remains true.

The tough part was that our weeklong jaunt made me question my savings goals.

They were all based on what I believed was reasonable and, frankly, what I would do given a world of choices. In a nutshell, I’ve told my kids that I would give them $10,000 annually -- $40,000 total -- which is enough for tuition, fees and books at a school in the University of California system, which I believe is the envy of the world.

At UCLA, for example, tuition, fees and books currently run $8,076 a year for a California resident, according to the College Board, which offers school snapshots on its website at www.collegeboard.com. Room and board add $12,312 to the annual total.

My plan, incidentally, factors in the fact that I’m only half of this college finance equation. When my husband and I divorced five years ago, we divided in half the money we had saved to finance the children’s college education. So if their father also pays $10,000 a year for each of them and if they go to a school in the UC system, almost all of their bills will already be covered. I’d still encourage them to work. But scrimping, borrowing and juggling three jobs along with a full course load, like I did, would not be necessary.

I’m an avid saver and earn a reasonable salary, so financial aid is not in the cards. (Federal financial aid formulas consider only the custodial parent’s income, not the income of the nonresident spouse, though private schools often take both into account.)

My kids know they’ll get $40,000 from me regardless of what college costs. If they spend a couple of years in junior college and don’t need all their savings, they can use the excess to buy a car or go to Europe. If they need more, they should be prepared to pay for it, either by working or by taking out student loans.

Everyone approaches college expenses differently. My sister and her husband, who graduated with tens of thousands of dollars in student loans from college and law school, expect their kids to work but are trying to pay enough to allow them to graduate without any debt.

My friends Diane and Alex want their children to pay a portion of their college costs, even if that results in some debt, so that they feel invested in their own educations. Other friends pay all costs because they want their kids to concentrate solely on school. Each of these approaches makes sense. We choose the ones we’re comfortable with and can justify based on our experiences and our beliefs about money.

My approach is based on the idea that this is another opportunity to teach my kids about making money choices. They need to understand how much you have to work to generate $100 in after-tax income and whether it’s worth it to them to pay $300 for something when they could get a similar item for $100.

Relative values are different for everyone, so I don’t want to make the decision for them. But I also want them to understand -- and take responsibility for -- the repercussions. There will be hundreds of similar decisions to make later in life. The Prada shoes or the Nine West? The Mercedes or the Toyota? The $2,000-a-month beach apartment that means a long commute or the $1,000 Pasadena condo that is more convenient?

I can’t justify paying $30,000 more of my money each year -- $120,000 more over four years -- for a private university than for a highly rated public university such as UCLA or UC San Diego. If my children can, they have to put their money where there mouth is.

Or so I said.

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Georgetown on her mind

The first stop on our college tour was Georgetown University, a 300-year-old Jesuit college in a quaint section of Washington. Annual tuition and fees: $35,964. Add $12,146 for room and board, $1,060 for books and $2,120 for other incidentals for a total estimated cost of $51,290.

Fifteen minutes into the hourlong opening talk at the university, I was hooked.

Classes -- even the undergraduate seminars -- were small and taught by seasoned professors. Two faculty members live in each dorm. Although it is a Catholic school, it’s diverse and tolerant. There are Jewish, Protestant and Muslim services on campus, as well as a chapel where my daughter could go to Mass. The 70 Jesuits who live on campus invite students into their homes for dinners to discuss such topics as politics, literature, science and philosophy.

Georgetown’s liberal arts school -- in which Samantha would be likely to enroll -- is world renowned. The campus is minutes from the heart of a vibrant world capital, presenting vast and varied internship opportunities in government and at the city’s many prestigious think tanks. The shops and night life of fashionable Georgetown are just steps away.

“Did you see the internship for the Folger Shakespeare Library?� Samantha asked, with stars in her eyes.

Were she another child, I might not have been shaken. But my daughter reads the newspaper. When we went to the Times Festival of Books gathering last spring, she insisted on sitting in on a session on politics in the Middle East. The reason: She’s a big fan of Jeffrey Goldberg, the Washington correspondent for the New Yorker. She’s the only 17-year-old I know who uses her own money to subscribe to Newsweek.

Until spending three hours at Georgetown, I thought she’d be great at UCLA. Afterward, I started doing the math.

Let’s say Samantha chose Georgetown. If I stuck with my plan and my ex-husband contributed as much as I did, she would accumulate more than $30,000 in debt each year for four years. Assuming interest rates on student loans are at 8% a year, she’d graduate owing more than $140,000 . (The government pays the interest on loans for needy students while they’re in college, but my kid isn’t needy.)

If she tried to repay that over the standard 10-year repayment schedule, she’d be on the hook for $1,638 a month -- almost $20,000 a year. She’d have to earn $23,124 a year, assuming she pays 15% of her income in taxes, just to pay off her loans.

The bottom line: My indebted scholar would either have to score the starting job of the century or wind up impoverished by her college debt. She’d have the option of repaying it over 30 years at $991 a month, but that would make her education decision cost her $356,608 over that time -- roughly about the cost of a very nice suburban home in almost any city other than Los Angeles.

I mulled over these thoughts while driving to Baltimore.

Johns Hopkins University: total cost, $49,996 a year.

On to New York. Columbia: $49,220. New York University: $49,190.

Then New Haven, Conn., for Yale: about $49,500.

And finally Boston. Tufts: $48,842. Boston College: $48,584.

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A new study list

Samantha, whose selection process is meticulous, walked away in love with Columbia, Georgetown and Tufts.

When we toured UCLA months before, she loved it so much that she refused to buy a sweat shirt: “I don’t want to get set on this and then not get in.�

It was now her fifth or sixth choice.

Why? Class sizes can be massive, teaching assistants are in charge of many required courses, some professors are more interested in publishing papers than enlightening students, and the school is so big that students must be very disciplined to avoid getting lost in the shuffle.

I am flummoxed.

I still believe that you can get a tremendous education at a state university in California. But like most parents, I also want what’s best for my child. Does that mean the private university, even if it buries her in debt?

If her parents can afford to pay more, should we -- or are we enabling a Chanel lifestyle for somebody likely to start her career on a Wal-Mart budget?

In a few months, Samantha will start applying to schools. A few months after that, she’ll know where she’s been accepted. I’ll then have to decide how much, and how, I’m going to pay for her schooling. I’ll need to figure out whether I was right from the start or should revise my plan and start skimping to pay much more than I anticipated.

At that point, I’ll have to at least pretend I still know what I’m doing. Right now, I don’t.

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