<p>I've read several anti-college articles about how kids loan out 100k+ to finance their private education while majoring in gender studies. They end up with mountains of debt that they can't pay off. This is obviously a situation where college is a bad investment.</p>
<p>I'm sort of in an in-between situation. If I go to community college for my first two years and then transfer to a four year university, I might graduate with something like 30k in debt. Supposing I major in something lucrative, like computer science, and get a job post-graduation that makes 45 - 55k/year. Is this a good investment?</p>
<p>Or is college even a good investment at all? I could probably argue that a smart and driven person could find just as much success without a college degree.</p>
<p>Anyway, is there some sort of rule of thumb for how much debt is a manageable amount of debt?</p>
<p>Great article. Thanks for posting it. I think it puts in light why a college education is important for certain individuals and will help them succeed later and be worth the investment. Some students will not find that college is for them but will hopefully find another path that will be just as useful before they wasted too much time and money in a college education.</p>
<p>If I go to community college for my first two years and then transfer to a four year university, I might graduate with something like 30k in debt. Supposing I major in something lucrative, like computer science, and get a job post-graduation that makes 45 - 55k/year. Is this a good investment?</p>
<p>That would likely be a good investment. However, keep in mind that a student cannot borrow $15k per year by himself. For your junior and senior year, you can only borrow $7500 for each year. If you borrow more, you’ll need co-signers. Would your parents be willing to do that? </p>
<p>Many parents won’t/can’t co-sign loans for many reasons…can’t qualify, have other children to consider, co-signing does hurt their credit while the loan is outstanding, fear that they will end up having to pay it back, etc.</p>
<p>If would be better if you could choose a local school to finish your degree so that you won’t have to borrow much.</p>
<p>But there is a point of diminishing returns, depending upon your major and college and your debt load.</p>
<p>Personally, I don’t see the value in taking out, say, $200,000 in loans to go to a ‘top’ school vs. going to a lesser school for free - especially for UG. A person who could get into a top 10 or 20 school, will have plenty of merit aid opportunities at a lower ranked school. If you can afford to go to that $50,000 year without loans and without it being a huge financial strain - do it! If not, then you really need to think about it because no matter what you make, $100K-$200k is an enormous amount of debt and most people (even people who are high incomer earners - like physicians) will struggle to pay it back on top of paying for a house, car and all the other things a person wants and needs once they start working. That’s not a fun way to live. I’ve heard quite a few people say that they weren’t sure it was worth it.</p>
<p>$30k in debt isn’t so bad and is definitely worth taking on if you have no other choices if you want to go to school.</p>
<p>It is true that some people who never go to college do very well but my experience has been they are few and far between. It’s like being a professional athlete. Very few will make it but those that do, do very well for themselves, thus perpetuating the myth that is the ticket to success.</p>
<p>To me, a college education is something no one can take away from you. Not only is it valuable because of career prospects but also there is something to be said for being an educated person. It affects your entire way of life.</p>
<p>About loan… I am saying this from my personal experience. I started out my career with a debt that was about 3/4 of my annual entry level salary. I managed – no big deal. But do consider the potential earnings of your chosen career. For some jobs, you could double your entry level earnings within 5 years and tripple it within 10. For others, you’d never double your entry level salary. The latter could be tough, especially when you have a family, buy a house etc. Don’t borrow more than your entry level salary if at all possible.</p>
<p>The percentage of debt to take on in relation to your anticipated first year salary is debatable. </p>
<p>I don’t like to so anyone taking on more than 50% of the possible first year’s salary unless you’re certain that you can live at home for free/cheap while making aggressive repayments. Knowing that you’ll be able to live at home during the early years of repayment can be “iffy” since you may not know where your future job will be located. </p>
<p>Also, many new grads have an inflated idea of how much they’ll be earning their first year out of school. There have been kids on this board that expected to earn $40-50k (or more) their first year out of college, but have had to accept jobs paying a lot less. </p>
<p>*
Personally, I don’t see the value in taking out, say, $200,000 in loans to go to a ‘top’ school vs. going to a lesser school for free* </p>
<p>Absolutely. The monthly payments would be over $2300 a month! What new grad can afford that?</p>
<p>Sometimes not having a college degree can be a killer. I have a friend who has worked in HR for years. Never finished college–got half way through, started working and that’s all she wrote when it came to progression toward a BA.</p>
<p>Now he is unemployed and having a heck of a time finding a job. He thinks that whether or not an applicant has a degree is one of the first cuts that a hiring partner makes with the hundreds of resumes that come into his or her in box for consideration of a position. </p>
<p>I don’t think that $30,000 of debt for a college education would be problematic. And if you are lucky, you might be able to pare that down by working in the summer and during the school year.</p>
<p>When I graduated from a private college some thirty-odd years ago my starting salary was $12K which was average for the time. The four years I was in college cost a grand total of $16K for four years tuition and R&B, (list price, no scholarships). Which means I recovered 75% of the total cost in my first working year. At the same school today a new grad would have to have a starting salary of $114K to get the same ROI. Shear madness.</p>
<p>Yes, college costs are MUCH higher than they were when we attended decades ago. It is a good strategy to keep costs in mind and keep them manageable. Attending CC & transferring to an in-state U can be a great way to keep costs under control while getting a quality education.</p>
<p>It is important to keep all of this in mind. Some folks really don’t believe how bad “crushing debt” can be until they graduate with huge debt and have no job (or very low paying job) in sight. The $550,000 debt that one 42 year-old md has & will be paying off for the next 30 years is quite eye-opening (on another thread).</p>
<p>Like toblin, I graduated private college in the 70’s. I had a full tuition scholarship; my parents were able to pay the R&B of 8T for four years total. A great gift since my father was retired on a small pension while mom worked as office help.</p>
<p>With a bachelor’s of science I started at 11K and thought I was wealthy. And with rent split between two other roommates, I kind of was!</p>
<p>I had other choices but financially, this was the best. My education has held up fine and fortunately, my earnings have expanded well with experience.</p>
<p>PaperChasePop, thanks or posting the link to the Zen of Education article that Chicago Magazine ran.</p>
<p>A snippet:</p>
<p>"Take the social sciences. Economics concentrators—this is today identified as the most careerist major—are 24 percent in banking and finance, 15 percent in business consulting, 14 percent lawyers, 10 percent in business administration or sales, 7 percent in computers, and the other 30 percent scattered. Historians are often lawyers (24 percent) and secondary teachers (15 percent), but the other 60 percent are all over the map. Psychologists, surprisingly, are also about 20 percent in the various business occupations, 11 percent lawyers, and 10 percent professors; the rest are scattered. And there are the usual unusuals: the sociology major who is an actuary, the two psychologists in government administration, the political science concentrator now in computers.</p>
<p>As for the humanities, the English majors have scattered to the four winds: 11 percent to elementary and secondary teaching, 10 percent to business occupations, 9 percent to communications, 9 percent to lawyering, 5 percent to advertising. Of the philosophers, 30 percent are lawyers and 18 percent software people. Two English majors are artists and one is an architect. A philosophy major is a farmer and two are doctors.</p>
<p>With the exception of those planning to become professors in the natural sciences, there is no career that is ruled out for any undergraduate major. You are free to make whatever worldly or otherworldly occupational choice you want once you leave, and you do not sacrifice any possibilities because you majored in something that seems irrelevant to that choice. There is no national evidence that level of performance in college has more than a minor effect on later things like income. And in my alumni data, there is no correlation between GPA at Chicago and current income."</p>
<p>One interesting statistic I read is that future success (earning potential? I forget the metric) is the same for people who were accepted to top schools but did not attend them as for people who attended them. In other words, being the sort of person who had the aptitude and work ethic to be top-school material is the determinant. It does suggest there is not a financial payoff to paying hundreds of thousands extra and going into huge amounts of debt to attend a top private school.</p>
<p>A friend and I were just discussing how much is too much to pay for college and how long does it take to pay the debt…</p>
<p>Should a student take on 200k debt to go to a top school only to make $35k a yr…How long does it take that student to pay that debt, beyond cost of living, buying a home, getting married, having children etc…</p>
<p>And would we want our daught or son marrying someone with so much debt and not the career/potential to pay off the debt…when is it crazy to go to a high ticket school for a low income stream/field</p>
<p>What we discussing is …why go to an expensive school if you can get a great education at a more economical alternative IF your future career/potential income stream will not adequatley support paying for that fancy/expensive college debt…
We want our kids to go to great colleges and also do not want them taking on outrageous debt that will hamper their ability to be good stewards, pay their bills, buys homes etc.</p>
<p>“Should a student take on 200k debt to go to a top school only to make $35k a yr…How long does it take that student to pay that debt, beyond cost of living, buying a home, getting married, having children etc…”</p>
<p>A student with 200K in college debt who ends up making $35K a year will be unlikely to ever pay off the debt given that the debt will continue to grow as interest accrues – only exceptions I can see are: 1. If the debt is the kind that can be forgiven by working for a set number of years in some certain region or occupation; or 2. If the student moves back in with his parents, doesn’t pay them rent, takes public transit in lieu of getting a car, brown bags it to work every day and forgoes Starbucks, and then uses the resulting savings to pay off the student loan over 20 years; or 3. Wins the lottery.</p>
<p>I guess the question is, how does one KNOW which kids will end up with the $35K jobs and those who will end up with $135K jobs. I know a wonderful woman who recently graduated from an OOS public that cost her parents a good deal. She graduated with a degree in English, minor in business. She attended law school, graduated & married another attorney. Her salary is many times his & he graduated with significant debt. </p>
<p>Who KNEW she’d get into law school & more importantly get a job that pays as well as hers did? Many of her college & law school classmates are earning $35-40K or unemployed.</p>
<p>Other friends I know have a D who graduated with a degree in ballet and several with a degree in psychology (including one with a masters from Harvard). Some are now frantically working on getting a teaching certificate & masters, so they can teach and earn a living, while others are doing research & planning to apply to grad school. All of them incurred significant expense in getting their education (OOS publics & OOS privates) but from all I’ve heard, none regret it, so far. The loans are daunting, especially when acquired as an undergrad and significant sums.</p>
<p>“I guess the question is, how does one KNOW which kids will end up with the $35K jobs and those who will end up with $135K jobs. I know a wonderful woman who recently graduated from an OOS public that cost her parents a good deal. She graduated with a degree in English, minor in business. She attended law school, graduated & married another attorney. Her salary is many times his & he graduated with significant debt.”</p>
<p>You can’t know. But you can have a good idea. Sometimes people are wrong, but in general someone majoring in English isn’t going to make 135K/year. </p>
<p>In my opinion, for anyone willing to study hard and who is reasonably smart (and I mean that broadly), there exists a college which is worthwhile to go to. And for many I think it is the University of <em>state you live in</em> or <em>state you live in</em> State University. If that university is going to leave them in more debt than they will make in their first year, so be it. I still think it’s better than just getting an Associates or going to trade school or something like that.</p>
<p>There’s absolutely NOTHING wrong with getting an associates degree or going to trade school. For many, many people college is not the right answer. Because our society regards higher education as the end all solution to all problems, people who go to a trade school are looked down on. THIS IS RIDICULOUS. Have you seen the job openings for plumbers and the like? There’s TONS. And some people are smart enough not to spend thousands of dollars on an education you can receive at the local library!</p>