Advice? The $80,000 question

Paying for College
1

<p>Now that rejection day is behind me (I got rejected from all the need blind top private schools) I now have to choose between in state and OOS.</p>

<p>I lived in Northern Cal all my life, so my top choice is U Michigan COE.
The only problem is the $20,000 per year gap. My parents can possibly meet this with PLUS loans because they have protected assets i.e. home equity, retirement. I'm visiting Michigan next week and the UC's later in April.</p>

<p>My UC choices in order are:
UC Santa Barbara, pre-business, possibly free ride.
UC Irvine, College Honors, Computer Science. Free ride.
UC Davis, Bio-engineering. Nearly free ride.</p>

<p>I got denied at Cal and UCLA, UCSD Eng is possible on appeal.</p>

<p>I am pretty much undecided on my major, though I know it's going to be math related. If I go to Mich, I'll apply to Ross in freshman year.</p>

<p>Here's my question. If I go to U Mich, I'm confident I'll graduate in four years and find job that pays at least $60K/yr. It could be a different story with the UC's. I may take 5 years to graduate. I may not land a job right away even if I graduate in 4 years. In either of those cases, it seems to me the $80,000 delta gets wiped out.</p>

<p>So where should I go? Ann Arbor or Isla Vista?</p>

2

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<p>This is where the alarms go off. There are no guarantees of anything these days. We all hope, for everyone’s sake, that things will be better in 4 years (or less!!), but you need to suspend your expectations to a large extent. Paying off large loans can be a pretty huge consideration.</p>

3

<p>You may or may not graduate in 4 years from Mich. I would skip it and save the money. Most employeers will not care where you went to college but just that you did well were you went. If the market is tough, U mich will not get you a job over going to to UC’s. YOU will make the difference not the college. My vote - go to UC and save the money.</p>

4

<p>I would not let my S take out 80K in loans for UG. You state you know you will get a job making 60K a year if you attend UM. Lets say you do. After taxes figure you bring home 40K. Have you done the caculation to figure out how much 80K (probably more than 80K with tuition increases and interest) will cost you per month? A quick calc (not knowing what kind of loans you are talking about) says you will owe about $900 per month. Are you going to be willing to forgo the new car most new grads like to buy? $900 per month is actually about what 2 car loans would be. How about saving for a house or condo? Sure, if you lived at home, contributed nothing to your room and board and put everything towards the loan for almost THREE years (don’t forget you willnow be paying loan plus interest) it might be worth it, but I doubt it. Who wants to live like that?</p>

<p>Go to the student loan calculator here and figure it out.
[Student</a> Loan Calculator Results](<a href=“http://apps.collegeboard.com/fincalc/servlet/calculateServlet?method=studentloan]Student”>http://apps.collegeboard.com/fincalc/servlet/calculateServlet?method=studentloan)</p>

<p>Don’t do it! I know you really want to go to Mich, but you can’t afford it. We all really want a lot of things, and maybe it isn’t fair we can’t have them, but part of growing up is learning to make do. You can have a wonderful undergrad experience at one of the UC’s. In 4 years you will be very happy to graduate debt or almost debt free.</p>

5

<p>Free at a UC or paying at Michigan? I’m with mamom.</p>

6

<p>Go to the UC…carefully manage your courses and you’ll graduate on time. If necessary, take a summer class at a local CC to help get your credits in. If you have any AP credits, that will also help.</p>

<p>People like to blame lack of class access as the reason they don’t graduate on time, but I think that changing majors, dropping classes, and not managing one’s schedule are largely the reasons kids don’t graduate on time…and that can happen at a UC or UMich.</p>

<p>The whole “taking an extra year to graduate” has been unfairly too much blamed on UCs. A year at a UC is 3 quarters worth of classes. If a person doesn’t drop classes and change majors, it’s ridiculous to think that it takes 3 more quarters of classes to graduate (about 12 classes).</p>

<p>I am a Calif native; I have nieces and nephews in the UC/Cal Poly system…All have or likely will graduate on time. </p>

<p>Do NOT borrow that much!! Crazy!!! </p>

<p>BTW…there’s a HUGE difference between having $80k in debt, and spending an additional $30k for an extra year of school. It’s irrelevant that you might be working a year earlier. </p>

<p>Besides, with the UMich route, you will surely graduate with huge debt. There’s no certainty that you’ll take an extra year to graduate at a UC.</p>

7

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<p>I would not cosign that amount of debt. The reality is the STUDENT will not be able to secure loans in his/her own name in that amount. They will need a cosigner.</p>

<p>I vote for the less expensive option in this case. Have your parents TOLD you they will pay for this gap? If not…this option is probably not one.</p>

8

<p>*
My UC choices in order are:
UC Santa Barbara, pre-business, possibly free ride.
UC Irvine, College Honors, Computer Science. Free ride.
UC Davis, Bio-engineering. Nearly free ride.*</p>

<p>Are you saying that you’ve been given grants/scholarships that give you a free ride to these schools?</p>

<p>BTW…I don’t know what your parents’ finance situation is, but if they can’t help you much, what makes you think that they’d qualify for $80k in Plus Loans. Are you aware that many parents can only qualify for a year or two for such loans, and then their kids have to come home and graduate locally? If that were to happen to you, you’d have $40k in debt, no degree from Ross, and a degree from a school that you should have gone to in the first place.</p>

9

<p>Go to one of the UCs. It is insane to spend that kind of money on U Mich undergrad if you have those UCs as close-to-free choices. The idea that you will walk into a $60K per year job with an undergraduate degree in four years is a pipe dream. It might possibly happen–it more likely will not. The job market is currently littered with people with degrees from schools as good as U Mich PLUS experience PLUS graduate work.</p>

<p>A degree from a UC will look just as good as a degree from U Mich almost anywhere in the country except perhaps the Detroit area–and have you checked out how they are doing lately?</p>

10

<p>Thank you for the advice. I have couple of quarters worth of AP and CC classes, so I should be able to graduate on time from UCSB.
I thought their package was sweet - the subsidized and unsubsidized loans are small, no parent contribution required.</p>

<p>I’m admitted to pre-business at UCSB and EECS at UMich.
Mich is ranked #7 in Eng, SB is ranked #34 … and if I decide
to switch to Eng at UCSB it may take a year longer.
A year of working @$60K plus $30K for the extra year
= $90K washes out the $80K gap in my mind.</p>

<p>Hence the dilemma, mainly because of my undecided major.</p>

<p>PLUS loans are possible because parents have perfect credit,
though they have not much income in the past couple of years.
If Dad gets a job, all the grants go away. So the delta will
remain $20K/yr i.e. UC will go to $30K, UMich to $50K per year.</p>

11

<p>What if you decide to go to graduate school later on? 4 years is a long time when you are a young adult, what you think you want now will change substantially over this period of time. 80k in undergraduate debt is just too much.</p>

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<p>You don’t net $60K from a $60K job; by the time you pay taxes (likely with only the standardized deduction) and payroll (Social Security & Medicare) taxes you’ll be lucky to net $45K a year, and that’s if you don’t get charged for insurance.</p>

13

<p>perfect credit with no current income will not make it as easy to get loans I don’t think</p>

<p>either way you should still stick with the UCs, or even go to a CC for a year or two and transfer in to Cal or UCLA if you really need/want the name.</p>

<p>UMich is well regarded for engineering but any top 50 program will get you a great education and very few options are worth the 80K difference.</p>

<p>Unless you have a signed offer now, you can’t count on anything on graduation and 60K does not equal 60K that can towards loans.</p>

14

<p>^
“perfect credit with no current income will not make it as easy to get loans I don’t think”</p>

<p>It will. It may get even easier with the direct loans rider on the healthcare bill.</p>

<p>[Student</a> Aid on the Web](<a href=“http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp]Student”>http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp)</p>

<p>How do my parents get a loan?</p>

<p>For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your schools financial aid office.</p>

<p>For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.</p>

<p>Also, your parents generally will be required to pass a credit check. If your parents don’t pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if your parents fail to do so. Your parents might also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. You and your parents must also meet other general eligibility requirements for federal student financial aid.</p>

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<p>If you are just doing one degree, it should not take 5 years to graduate from a UC. Maybe 4 years and a quarter and some CC summer school, but not 5 if you are taking the full load of 4 courses/quarter, even with transferring majors at UCSB. </p>

<p>And 60K out of undergrad may very well be a pipe dream if this economy recovers at the predicted rate. You can’t guess how long it might take to find this 60K job either.</p>

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<p>A year of working @$60K plus $30K for the extra year
= $90K washes out the $80K gap in my mind.</p>

<p>hahaha sorry but this makes no sense at all. go ucsb its awesomeee</p>

17

<p>If you decide to change your major at some point, my advice is to catch up by doing summer coursework. I agree that changing your major in the first year, or early in the second, would not likely put you so far behind that you would have to take an entire extra year. If you’re undecided between several majors going in, take as many classes as possible that would satisfy requirements for both (ie. math, science, gen eds). Try to do some shadowing or find a mentor in each field to help you make a decision.</p>

<p>Imo, the only time high student loans might make sense for an undergrad without significant family resources is if the student is certain they will work in a field where they’ll be eligible for student loan forgiveness, or they will work in a field where high signing bonuses and/or high starting salaries are the norm. Even so, there is always the risk that any of these conditions/programs will change over the course of 4-5 years and it generally locks you into a field/employer for a number of years.</p>

18

<p>As a California parent of a child who is graduating this year from a large midwestern university with a top-notch business program (Indiana), I realize the dilemma you are facing.</p>

<p>(1) Most California UCs have no highly ranked business programs. The program you would be going into at UCSB is not really a business program at all–and is geared only for accounting majors to get significant business experience.</p>

<p>(2) Michigan’s Ross school is ranked #3 in the country for business–and to get in required either being pre-qualified or applying at the end of the freshman year for admission as a sophomore–thus transferring from a California school is next to impossible.</p>

<p>(3) Getting a job at $50-60K out of Ross is far more likely than getting the same job coming out of the business school at UCSB or even UCI (which does have a true undergraduate business program–but one that only started last year).</p>

<p>(4) The payback doesn’t seem so bad when one considers that loan programs exist for this purpose and your parents can probably get these loans–and you are willing to help them pay them off later.</p>

<p>Here’s the problems, however, in your analysis:</p>

<p>(1) The higher salary (most likely) you will get out of Ross is just as likely to be outside of California as inside California. Thus, saving enough to pay back loans is not going to be easy–interest will start running at about $5,000 a year the first year out–and you’ll be paying them back for at least 10 years at least if you are not living at home–not a good idea for you–and not for your parents.</p>

<p>(2) You are forgetting that Ross places most of its graduates in Chicago or New York, and the problem is that salaries tend to be lower in Chicago than in California (on average) and the salary in New York won’t go far (due to the high cost of living in NY).</p>

<p>(3) Even getting into Ross is not a guaranteed thing. Yes, it is about 75% likely–but that’s not the same as it being 100%. Are you going to be as happy with a Michigan economics degree if you don’t get into Ross?</p>

<p>If you knew for sure that the major you want is business, that you know you will do well enough to get into Ross, and that you have every intention of returning to California for at least 3 years and living at home so that you pay off the loans, then yes, it might be worth it–especially when one considers that the UCs are likely to increase tuition (and dorm fees and food costs) at least 15% or more for each of the next three years. Just be sure you know the plan–and stick to it.</p>

<p>My own son’s situation was that I had the money to foot the bill for his time in Indiana (well, all except about $10K in loans that I’m asking him to pay;–I think all students should pay at least part of their college costs). This makes quite a bit of difference–and even he, part way through his studies, was asking me why I didn’t “force” him to go to local community or 4-year college the first two years and then transfer to either Indiana or USC and thereby save the money spent during those two years. He realized that the finance burden is a great one.</p>

<p>Okay, that’s my advice–so consider what you consider worthwhile (or not) in what I said, and then make a choice on where to go. Best of luck with your $80,000 decision.</p>

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<p>Calcruzer, did your student find a job yet? My son went to school on the other side of the country and has now decided to return to California. Most of the school’s alum contacts and networking are on the East Coast. It will be difficult for them to assist him in placement in a job in CA. Something to consider when you are looking at loans. (We were not due to merit money from the OOS.)</p>

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<p>A year of working @$60K plus $30K for the extra year
= $90K washes out the $80K gap in my mind.</p>

<p>This is the kind of math that a few of my in-laws use… No wonder they are deep in debt and struggling.</p>