Ask Me Anything: Took Out a $120k Student Loan to Attend SMU

Colleges and Universities A-Z Southern Methodist University
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@rickle1 Thanks for your post. I agree. These type of schools have a “system” already in place. And if you follow it and know from your experience in highschool you are capable of putting the work in, you have a very high chance of landing these jobs.

In this case, though, I had my first three internships before even being admitted into the Alternative Assets Program and got them by going to info sessions and the career fair and following up after. FYI students reading this, this program really only helps with IB jobs. Most consulting firms, even the ones at SMU, were not familiar with it. I still wanted to do it to learn, and network with other successful students/Alts alumni.

@jym626 @coolguy40 and @some others, I’m not sure if you guys are took familiar with the consulting and I industries, as well as some of the other jobs I’ve been mentioning available on campus. I’ve discussed the salaries, the anticipated promotion schedules have been brought up. As a bonus, many of these firms will pay for my MBA. 5 years vs. 10 years aside, if you are seeking any more information, please read up on Wall Street Oasis or Management Consulted about these industries as they will give you more info than I can hope to provide.

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Folks, I would not like to justify my family’s or my own decision for taking out the loans any more. I am not advocating for or against loans, but merely sharing my experience. Thr average student loan debt is around $40k nowadays, so I hope my perspective can be relevant to some. If my last posts do not make sense regarding my decision, shoot me a PM.

I would love to speak more on this thread about my experience on campus, student orgs, advice/what to consider when taking out loans of any size, and how to best capture the opportunities on campus if there are any questions.

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@FinalYear - for those who are not in the elite program such as yourself, how do you view the internship opportunities in general for the business school? Have you heard from any other friends about internship opportunities outside of the school? My D is thinking advertising with a business minor or double major - she is still deciding and will change her mind a few times.

And it sounds as if the party scene is alive and kicking, which doesn’t surprise me. But those in that party atmosphere - are you saying that by sophomore year you see that die down in general? Is this limited to Greek - or a high percentage of the campus? She wants to go Greek, so I know that’s an issue.

Lastly - do you feel because of the size of the school that most people are respectful of each other? Or a lot of divisive groups?

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@Publisher - I am familiar with anticipated pay schedules ( that include positions and degrees not yet achieved). That is my point. It assumes all goes as planned. It doesn’t always happen, just as the OP’s family medical crisis happened and wasn’t planned. There is nothing wrong with anticipating the positive outcome. It just doesn’t always work out that way. Hopefully it will for the OP, who has about 3x the average loan debt of an SMU student https://www.collegefactual.com/colleges/southern-methodist-university/paying-for-college/student-loan-debt/

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@jym626 Worst case, several scenarios happen as part of what I mapped out with my parents 1) it takes me 10 years instead of 5 2) I have to fall back on the excellent network I’ve built with my former employers and classmates or 3) heaven forbid this happens, but worst case, my parents/grandparents would help me with some (eg: $400/mo) of the loan payments until I get back on my feet. My parents/grandparents are in OK spot, and I am thankful for somewhat of a safety net.

Any situations that can’t be handled by these, and I guess I got bigger problems to deal with.

And thank you, I hope it goes well too. I’ll be happy to report back in a year with an update.

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Glad you have a workable backup plan. If there was, heaven forbid, a worst case scenario, your parents would have to help you. They co-signed the loan!

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Management consulting is one of the few industries I know of where the higher you climb on the ladder the less time you have away from work. I think of the lobster pot analogy. At first working relatively insane hours as a RA is a little stressful but it’s exciting and the pay and benefits are excellent. As you move up the ladder you do more travel and have more responsibility, meaning less time at home, and if you do a MBA (essential if you want to progress beyond a certain point) paid for by your firm that obligates you, at least morally, and in many cases contractually, to return to consulting afterward. It’s easy to get seduced by the glamor, pay, and perks of the industry and to live as if that money will always be there.

My husband was very successful as a MC with one of the MBB firms. He left it to take a substantial pay cut when the lifestyle became unsustainable. We remember the day he quit differently. He remembers his decision being driven by the sight of our 3 year old pursuing H’s limo down the driveway on his trike sobbing,“Daddy, don’t go!” as he left for another week-long trip. I remember how hard it was to get a voicemail of his daughter’s first work, “Daddy”, but we both remember that on that same trip his project manager said, “I know you’ve all been working hard but we’re going to have to start spending weekends here (a county abroad.)”

We were lucky in that we had saved and hadn’t lived beyond our means so when accepted an offer to be on the CEO
track at a family company we had a buffer to make it work. The pay was less but the lifestyle was much saner.

So the bottom line for me is to beware the velvet handcuffs. MC can be a wonderful, exciting industry but assuming a MC salary to pay back huge loans means you’re lashed to the industry for at least a few years. If your need for a social life changes, or if like many of my husband’s cohort you get tired of telling other people how to run their businesses when you’ve never run one yourself you’ll want a backup plan, and a large debt load can hamper that.

I do believe the OP can pay back these loans relatively quickly, but this is not a path I’d recommend for most students. The odds of landing these plum jobs are long, even at schools from which the firms heavily recruit. If you end up in the group that isn’t as successful paying back these loans could take a much, much longer time.

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@finalyear, Thank you for the clarification. I’m not expecting you to justify your family’s decision. However, you’re a college educated adult who presented your academic and business credentials and then started advising teens about loans and investing. I think that if you’re going to tell 17-year-olds that taking out massive loans may be a viable way to pay for college then you should be clear about the risks. That’s part of the job of a financial planner, right? For instance, if you were to die or become disabled before the loan is repaid is the loan forgiven or would your parents have to come up with the $1300/month? Since your parents are co-signers on two such loans, what effect does that have on their credit rating and borrowing power?

In hindsight, you are in a good position. You made it through a rigorous program, you have a well paying job, and you’re healthy. A huge advantage you had going in is that you come from an upper income family and you have 2 layers of financial support backing you. However, most families can’t risk borrowing over $100k per child for college. I know you mean well, but I think you should temper your advice with a little realism. The kids who are weeded out of rigorous programs or who don’t get the lucrative jobs are just as liable for those massive loan repayments as the ones who do, and if they don’t have the financial safety net that you enjoy their families will be financially ruined.

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^ makes excellent points about what happens when “life happens”. That needs to be factored in for everyone’s risk tolerance. This would be a different thread if the OP left out the debt issue and focused on his path to a great future, AMA about the school, etc.

In reality, discussing finances on CC is pointless as no poster has the information necessary to guide (or judge) anyone other than themselves (their family). Many here think full pay is crazy (full disclosure - we are full pay at expensive private. We felt it was worth it to invest in outcomes similar to OP. Difference is no debt involved so very different situation). They don’t have the benefit of knowing the individual details.

I am a financial advisor (for the past 30 yrs). Help all kinds. From the kitchen table to the boardroom. It’s all about one’s individual goals, concerns, and resources. You’d be amazed at the things some folks do (contrarian) but it works for them because of their scenario.

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A balanced perspective makes sense, as taking on the level of debt that OP did wouldn’t make sense for all. However, the judgmental nature of some of these posts are misguided. Yes, OP has a parental backstop, but he worked hard to earn his degree, excel in internships and secure a great career opportunity. None of that was due to luck, bringing to mind a favorite quote ‘the harder I work the luckier I get’.

Also likely germane is that this generation (in their 20’s) sees investing differently after experiencing the financial crisis (as kids/teens) of a decade ago. For example, I don’t think most folks of an older generation would be telling OP that taking out a $120K mortgage on a condo was the ‘wrong’ decision. Yet, life happens when you have a mortgage, too. Again, balance and an understanding of what could go wrong when making any large purchase/investment is important. OP chose, after seemingly thorough analysis and contemplation, along with his parents, to invest in his education which is a reasonable decision. OP had more control over that investment, through working his tail off, than many did as they watched their home and/or stock values plummet 10 years ago. Let’s get back to having OP talk about all things SMU as rising seniors likely have many questions.

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@FinalYear Congratulations to you on being able to make your/ your parents investment in your education work out! You have answered many of the negative posts with grace and without being defensive. That trait alone - I am assuming you are that way in real life as well - should get you far in all the things you do. I lived a long time ago in TX and recall that SMU was popular then, and it seems to have risen even more in prestige now in the state. So it was a calculated risk that worked for the OP.

I am interested in hearing more about the program in SMU. Are the recruiters primarily from the Texas region? Did you feel that smaller size of SMU (opposed to A&M or UT) was helpful for you?

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“For example, I don’t think most folks of an older generation would be telling OP that taking out a $120K mortgage on a condo was the ‘wrong’ decision. Yet, life happens when you have a mortgage, too. Again, balance and an understanding of what could go wrong when making any large purchase/investment is important.”

Except you can sell a condo, or have the debt cleared by bankruptcy. You have no such cushion with student loans.

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@elodyCOH But you get a finance or accounting degree from SMU, you’re not walking away with nothing. Average salary is almost 60-70k. (SMU placement data). Condo isn’t giving me much of an ROI unless you’re using that as an investment too. And if the economy tanks, sure you can sell for a loss. But I can also take a job that pays 50k (not with this much in loans/without parental safety net, but for average 40k loans students take out). When the economy rebounds in 3 years, the degree is worth the same as before. There is a reasonable length to fall before my parents would have to go all out, paying the whole 1300 of my loan payment. But, every investment has worst case scenarios and risks to be attuned to and we did our due dilligence the best we could.

In my experience, an education from a good school like SMU buys you all the options you could want, at least for a career in business. My parents didn’t have any options from where they came from, and wanted to pave a way out for me. Given my circumstances, we were going to have to take out big loans (40k+) regardless, and they told me what amount they felt comfortable with. I advise others in similar situations to check what their parents are comfortable with as well, obviously.

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^ and that is how a well balanced advisor thinks. Clearly, objectively, weighs different scenarios, and pulls the trigger.

Best of luck to you. You’ll do great!

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I completely agree with @FinalYear

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@3mamagirls “Internship opportunities without being in Alts?”: As mentioned, my internships were all obtained prior to being in Alts. I can’t speak for advertising much unfortunately. I do have two friends in advertising and while they aren’t the type to chase down internships, they seem happy with the program. One of them is working with SMU to help advertise our sports and academic programs during school, which seems neat. I also know we are a target for many ad agencies such as the Richards Group, which is down the street from us. Also, DFW is home to 22 (and counting) F500 like P&G, AT&T, and Kimberly Clark, so imagine there is good opportunity in that space.

In the business school, I do see plenty of internships in all categories… We were rated Top 10 schools for internships by PR or the like. Our career fairs and job site is full of hundreds of opportunities on any given day. Usually someone in the business school not receiving an internship by sophomore year: 1) did not choose to pursue an internship, either by choice or by not going to the career fair, checking on the job board, and attending information sessions (from companies of all sizes, not just the well-known F100) 2) GPA was low (lower than 3.3), or 3) did not get involved in anything Freshman/Sophomore year (usually this crowd’s only involvement was the vibrant party scene). Again, I have attended information sessions by F500 companies and observed only 3-5 others in attendance, and employers standing alone at the career fair the entire time. There are opportunities here.

“And it sounds as if the party scene is alive and kicking, which doesn’t surprise me. But those in that party atmosphere - are you saying that by sophomore year you see that die down in general?” No, there is always an outlet for the party atmosphere for those interested. After Soph year, it seems like a lot of the older girls/guys have found their cliques and some become less involved in their fraternities/sororities. That being said, since people are 21 at this point, the party scene transitions to uptown Dallas, which is full of bars and clubs and about 3 miles from campus. The party scene after Soph year is less off the frat/srat parties at large venues they have rented out and more in this central/older crowd location.

“Lastly - do you feel because of the size of the school that most people are respectful of each other? Or a lot of divisive groups?” Yes, I think overall people are respective of each other and any reported “tensions” are overblown by a small group. My friend group was diverse - think Muslim, AA, Indian, White, male/female. SMU certainly is on the conservative side of the political spectrum ESPECIALLY in the B school (like 70% of our finance class admitted voting for Trump) as my liberal friends have pointed out. Due to the school size, most people have at least seen or bumped into each other other at least one point or another by Sr. Year.

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College debt is unsecured debt while a condo is secured. Two different animals. Very unlikely parents/grandparents would be required to co-sign a mortgage because the security is the condo as the condo can be liquidated to repay the debt.

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@Sue22 Those are excellent points — those “plummy” jobs want A LOT from you to get to the higher rungs. There is quite a bit of turnover in those companies because the lifestyle really sucks. A person with large loans isn’t really able to build a good savings nest egg if they decide they don’t want that lifestyle a few years down the road. But the OP has the luxury of (1) parents who could qualify for large loans, and (2) parents who can backstop them if the OP can’t repay for some reason. Privilege that I doubt the OP even recognizes. Most students don’t have this backstop, making the risk of large loans even less attractive to them. I’d just hate to see other students use this story as an excuse to get themselves deep into debt when a similar career path could very well be found at other schools without the large loans.

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@FinalYear - when did you change from your initial plan to pursue a marketing degree to planning to pursue finance and apply (successfully) for the prestigious Alternative Asset Management program? What made you change your mind?

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As for unexpected life events, most benefit plans offer both short term & long term disability insurance at group rates as well as life insurance benefits in addition to retirement plan contributions that can be tapped in times of emergency.

But, while one can proceed with caution (calculated risk), it is not wise to focus on potential tragedies at the expense of living life; otherwise no one would fly or drive a car on a highway or enter a hospital room since there are possible tragic consequences.

If OP lost his job after two years, the training & experience received should make him an attractive hire to other employers in the same or related industries. See this frequently with Big Four accounting firms & biglaw firm attorneys lateraling or moving to a regional.

The issue here that the naysayers are concerned with is the size of the student loan. The only general rule is try not to exceed expected first year’s earnings–in this case that would be in the range of $85,000 to $90,000. But base pay is lockstep & quite good during the first two years and outstanding in the third year & beyond. Bonuses are not paid in a lock step manner, but are paid nonetheless.

If businesses did not invest in themselves & take calculated risks, then there would be no jobs.

OP invested in himself & in a SMU business education, degree & placement office. I doubt that OP would have made the same loan commitment if not a direct admit to a prestigious business school with great placement statistics & internship opportunities.

Easy to worry about “what ifs”, but hard to make a living at it. OP is in a lucrative and promising position as a financial consultant in an established national firm.

As for the long hours & travel time, it is a price that many young graduates are willing to pay for the experience & financial rewards. If seeking a career change within five, six, seven, or so years down the road, then change jobs & get on a CEO or CFO path or get an MBA or Executive MBA if wanting to switch industries.

If an intelligent, single, healthy, young man without family obligations shouldn’t invest in himself for a highly marketable degree in a broad, lucrative industry, then we need to rethink the capitalist system in which we operate. Especially in the case of a young man with both front office desirability and back office technical skills–all of which should be enhanced by his new position. If he didn’t invest in himself, then he very well might have missed the multiple opportunities & experience gained through an SMU business education. For the naysayers, yes community college would have been cheaper & probably loan free, but a lot more costly in the long run due to opportunities lost.

While a few posters focus on the negative–which is good for generating healthy conversation–the more obvious consequences of OP’s decisions is a myriad of opportunities while in school, now & in the future.

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