@tytbound thanks for clarifying that the Villanova debt would be after your dad’s contribution.
Some food for thought that might help you feel better about deciding against taking on debt: if you plan on getting an MBA, then how important would attending a Wall St. target for undergrad be? Isn’t Villanova a semi-target, as opposed to a target, and what does that mean for types of jobs? Are you admitted to the business school at Villanova and if not, is on-campus Wall St. recruiting as good for arts & sciences students as for the business school students? (I once read someplace that’s not necessarily the case.)
Hopefully Michigan will have a better package for you. If it helps, I know out-of-state full-pay students interested in Oregon - it is a desirable school.
Way too high and it that amount would definitely limit your options for the future. You may dream of a job on Wall Street but the competition for those jobs makes college admissions look like a piece of cake.
My rule of thumb for loans is no more than the amount of money you can earn working full time in a year, based on current qualifications (because everything else is pie-in-the-sky, wishful thinking). A smart high school grad should be able to find a job paying $25K a year, so that is a reasonable amount of debt to plan for undergrad. Maybe $30K at the outside. (Minimum wage in your state would equate to around $21K a year)
Your admission to an MBA program down the line is probably going to depend a lot more on work experience, and if you have too much undergrad debt that is likely to severely restrict your options. MBA programs are expensive so you might also be looking at taking on high amount of debt for that degree.
Go with the option that is affordable now and do your best in college, because that is the best foundaiton for the future.
The best gift you can give to your parents is the ability to retire without debt.
Keep in mind that the amount of debt you are carrying is going to impact your credit rating, which will in turn impact your ability to rent or buy an apartment or home, and in many states may also impact your employability. In some, but not all states, employers can use information from a credit check in hiring decisions. In your home state, that is generall prohibited, but there is an exception for banks & credit unions, and some other job categories, especially in situations where the job would put you in a position of that gives you access to client financial information. Like, say, working at a brokerage firm.
Go to the college you can afford, and use the money you save to help fund summer internship opportunities. (Even if the internship is paid, you might need money to pay for travel & housing).
I have people working for me who graduated with ~75K debt. That was about 1 year’s salary in engineering in the Boston area when they graduated. They all live like students with roommates but seem happy, with used cars, or no cars. Another one of my guys who had no debt, bought himself a condo, an expensive mountain bike, and takes nice vacations. He doesn’t live like a student.
I think that this is the kind of calculated risk that people in business make all the time. Your parents are backstopping you, whether they admit it or not, and they want you to get comfortable taking calculated risks because they’ve found success doing so. I think you should give their opinion serious weight.
You will be under tremendous pressure to do well to make sure you can pay this debt.
I can think of many reasons not to do it, but it’s not my life it’s yours.
Imagine getting a finance job and what rents are in those hub cities. Can be thousands/month. Imagine paying your parents back and how little will be left for a life.
There are better ways to test yourself and tske risks. Be smart.
Of course you can get into a fine MBA program from Oregon.
I think the ex-students with loans can be happy sharing an apartment and riding the subway, but they may be limited to the jobs they can afford to accept.
However, the 80K is borrowed in 4 installments. The OP can try Villanova and if (s)he learns that it’s not the ticket (s)he’s hoping for, (s)he can bail and go back to Oregon.
I’m just providing food for thought. It’s not me taking the risk. I don’t think I would take this one. But there are people who’ve taken big risks who’ve made a lot more money than I have. Who am I to judge.
Smart people in business generally have a “Plan B” or something to fall back on. They are managing both income and debt, and they have the skills to make good decisions.
Not-so-smart people in busines often find themselves in bankruptcy court.
But student loans can’t be discharged in bankruptcy.
Greater risk tends to mean greater potential reward, but it also means smaller odds of success.
I think one of the most common end results when kids take on large loans with their parents cosiging is that down the line the young adult ends up estranged from the parents. There’s a set back, the kid can’t pay whatever the parents expected to receive, the parents are in financial trouble and there is tension every time they talk to the kid – and eventually the kid stops returning phone calls.
Even more of a potential for a rift if the kid gets married and has children --now the kid has a spouse to worry about and money is tighter than ever —and the grandparents who are struggling to make payments on the student loan find themselves shut out of their grandchildren’s lives as well.
That’s why as a parent who did borrow a moderate amount via a PLUS loan, I never expected to my kids to pay me back or even hinted at it. And I never would have cosigned an unsecured loan fo my kids.
So to @tytbound – if your parents tell you that THEY will take on that PLUS loan without expecting you to pay anything back - and you feel comfortable taking that as a gift from your parents – then yes. $53K is NOT an unreasonable amount for an adult with your dad’s income to borrow.
But don’t go to college based on an understanding that you will pay them back for money they borrow, or that they will cosign on debt that you take out … because if things go wrong, that is going to hurt your parents and hurt your relationship with them in ways that simply are not justified by the choices you now have.
@tytbound
From Forbes- show this to your parents, and have them read this thread as well.
"For most parents, taking on student loan debt for their children is always a bad decision. Beyond the fact that parents should be focused on retirement, there are many more pitfalls than benefits for parents taking on student loan debt.
A prime reminder of this is the story from Andrew Josuweit, the founder and CEO of Student Loan Hero. Andrew graduated in 2009 with $100,000 in student debt, which he initially defaulted on. Not only has his credit score ruined – his parents’ was as well, because they cosigned his loans. This severely damaged his relationship with his parents. As a result, Andrew believes that unless it’s absolutely necessary, parents should not cosign or take out student loans for their children.
.
And that’s exactly what this warning is about. Parents should not take on student loans for their children, but instead have an honest conversation with their children about affording college, the family finances, and what help is possibly available to them."
Re MBA admission and costs: This is based on your undergrad GPA, your GMAT scores, your academic and professional LORs, your essays, and your work experience. A bare minimum of two years of increasingly responsible professional experience is required for the top programs. Five years or so is even better. If you are lucky, an employer will help pay for your MBA. Otherwise, you will pay for it out of savings and loans. Check the current costs of the MBA programs that you are dreaming of, and calculate what they are likely to cost about 7 or 8 years from now if they increase at 7% each year (fairly standard increase in tuition/fees).
Honestly, there are better ways to take calculated risks than signing up for a boatliad of debt. If you want a chance to go out of state, get a bachelor’s degree from OR debt free song do an exchange program for a semester or a year, such as the National Student Exchange where you can study at another campus and pay resident + 50% tuition. Another option is go to UO, get free bachelor’s degree and then get work, save, and get a grad/professional degree elsewhere.
Good luck! We would not want our kids to rake on $80k debt for undergrad, plus interest and possibly more, as college costs keep rising and many students take longer than 4 years to graduate.
Yes - many state campuses have domestic or overseas exchange programs. Look into those. If your mother is encouraging you to take out loans I’m afraid to say she’s being very short sighted. MANY more doors will be open to you if you don’t have that debt hanging over your head.
Depending on the type of loan that your parents take, some loans require payment as you go to school.
Loans are sold and resold all of the time.
I agree with Calmom, the loan taken by your parents would have to be a gift to you. You won’t be able to repay it soon after you graduate, even if you try.
If you plan to do Wall Street, where will you live? NYC is VERY expensive. It won’t come cheaply. How will your budget include the appropriate clothing and comforts, if you have to start immediately repaying a loan?
There are lots of what if’s.
People get sick.
Grades are affected by illnesses and time off of school.
People can age well, . . . . or not. Things come up.
What will you do if something out of the ordinary happens?
Those bills don’t stop because you or your parents are incapacitated.
In some states and for some types of jobs, the employer can run a credit check, which will tell them the amount of outstanding debt you have; and in those situations they can use that information to decide not to hire you.
Your first job out of college will likely be an entry-level position. Generally the salary for an entry level position is not particularly high, and it can be hard to make ends meet with that salary. If you have to be making large payments to service your loan, you may not be able to accept a desirable job in a desirable city because you won’t be able to afford your rent + loan payments on the salary you have been offered.
The jobs with the best opportunities are not necessarily the ones with the highest pay. If you have a lot of loan debt, you have to prioritize salary over potential for growth & learning, or having a job in a desirable location. Sometimese the entry point to a desired employment situation is to take a temporary or part time position, or a low paid internship of some sort in the hopes that it positions you better for long-term, full time employment. So maybe that means you have to pass on job that seems more interesting in favor of a job that requires longer hours and more drudge work, because you really need the money. Or maybe you have to take the first job offer that comes your way, even though you know it’s a low-end salary offer, because you can’t afford to wait for something better.
My daughter just accepted a job in a new city. She’ll be making pretty good money (IMO) but she has a lot of start up costs - an apartment, a car, car insurance, some furniture, taxes, health insurance. And yes she’ll need to figure her student loans into her budget. I don’t think she could have afforded to take a job in San Francisco or NYC. Her student loan payments will be under $200/month, not $800-900. Having an $800 loan payment changes a lot of the budget. You either have to make a lot of money, live at home and pay no rent, or live in your car.
Your immigrant parents are WAY overestimating the advantage—if any—of going to Villanova over University of Oregon. (Not even considering Michigan because you have not been admitted yet.) The idea of “out of state” is meaningless.
If the choice were between UO and Stanford or Yale or Princeton, that would be a different story. But for Villanova? No. Any way to look at it, VIllanova is not worth $80k in debt.
You said you want to get an MBA. That’s the school that will be more important. Go to University of Oregon debt-free, graduate with at least a 3.8 GPA, then work for five years in a great job, then get an MBA at the best school you can. Top MBA programs take students from ALL types of schools. Having graduated from Villanova will confer exactly zero advantages in MBA admission.
At 18 years old, you think you want a career in finance, which requires savvy. You want to get a good job, with great pay, in a great city, in one of the most competitive fields, but at this point, it’s no more than a dream.
Be savvy about the loans, research what parents here are saying, what loan terms are, payback schedules, the enormous interest you’ll pay on 80k, rent in NYC, SF, or Chicago, living costs. Be informed about what it takes to land a great job. It’s NOT Villanova or Michigan over Oregon.
You think it’s easy, cuz Dad will take the larger loan and you’ll pay Dad back. That’s not your own mature independence. It’s not the kind of forward planning that will get you what you want. It’s not the level of thinking, not reality. Just dreams and blinders.
Gather the right info. Run the numbers. Assess your chances realistically.
What if you discover a different major or have troubles with academics? What if something happens and your parents aren’t earning enough to keep feeding you loans? What if you get sick or distracted or anything? Or fall in love, lol. The 80k doesn’t go away.
My kids have the usual 27k loans and good jobs. It’s hard to put that 300 in their budget monthly (even for the one who earns what many young finance kids make.)
Think. Not just want. Show your savvy. Starting now, before you’re crippled by debt.