How bad is bad in terms of student debt?

Paying for College
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<p>Hi all- going to say right off the bat that I am NOT a numbers person, so I need some guidance here. This whole post will probably sound really stupid because this is not my area of expertise at all. :( I'll try to keep it short... </p>

<p>So I am in a position right now where I can possibly attend my dream school, going in as basically a transfer student so only having to do 2 years (4 semesters) worth of work. The school's tuition is $44k a year (yikes!). My family is (upper) middle class and makes what I believe to be around $120-130k a year. Don't ask me about financial aid, FAFSA, scholarships etc because I haven't gotten any of that info back yet from the school therefore I'm just going off "worst case scenario". </p>

<p>This school is my DREAM school with a great department in my majors (I am double majoring in History and Geography, and I intend to be a high school or community college level instructor). I would love love love to go there and my education is really important to me. I would rather attend the school of my choice than drive a new car, go on expensive trips, etc. My parents will contribute to some of my education but not all of it, they wouldn't want to pay $44k a year when I could go to a public school for like $11k. So I'd basically have to pay the difference. Ideally, I'd like to attend grad school straight after getting my bachelors. </p>

<p>ANYHOW, my real question is- if worst case scenario, I attend a school with $44k tuition a year for 2 years, what will my financial life be like as a 20-something year old straight out of college? Around how much money a month will I be spending to re-pay my student debt? This is going to sound naïve, but is it truly as terrible and horrible as people make it out to be? Am I going to be practically homeless, as the American public makes it out to be? </p>

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<p>Do undergrad cheaply and attend dream school for graduate work.</p>

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<p>I second @AlbionGirl‌ </p>

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<p>OP, I would say that “yes, it’s pretty much as terrible and horrible as people make it out to be.” I can totally understand why it’s hard for you to wrap your brain around just how uncomfortable this much debt will be for you. College “kids” simply haven’t had the exposure to this kind of debt or these kinds of financial decisions. I can tell you that it will suck to have this much debt over your head for years to come – especially while you’re starting out, looking for a job, and trying to make ends meet on any starting salary.</p>

<p>I think this is what you’re saying: Your parents are willing to pay $11K a year at your state school. You want to go to a $44K a year school. Your parents will pay $11K a year towards the $44K a year school, leaving you with $33K a year in college debt. (Are you sure you’re comparing apples to apples? $11K a year is for the whole ball of wax, just as the $44K a year is? $11K a year seems low – is that because you’ll be living at home if you attend the state school?)</p>

<p>If I got it right, then you’ll be taking on $33K a year in college debt.</p>

<p>First of all, though I don’t know much about your family’s finances, you likely wouldn’t qualify for $33K a year in the first place. Assuming that you don’t have an income, your parents would likely have to co-sign on loans for the amount exceeding standard unsubsidized federal loans. (They probably wouldn’t be willing to do that, I’m just guessing. I know that I wouldn’t do it for my kid – because it wouldn’t be good for him or her – or for me!)</p>

<p>But, as a best case and totally unrealistic dream scenario, assuming that you could take out $33K a year in unsubsidized federal loans (you can’t), and assuming a 4.66% interest rate for loans taken between 7/1/14 and 7/1/15 (the rate may go up before you get your loans – my own kids’ were much higher), your monthly payment for 10 years would approximate $700 a month. That is huge! </p>

<p>And here’s the thing … not only can you not take out $33K a year ($66K total) in unsubsidized federal loans, the amount you take out above $11K (which would be the standard unsubsidized amount for your 3rd and 4th year of undergrad = $11K), will be at an interest rate that is much higher than the 4.66% you’ll get on federal student loans. So the figure of $700 a month is a best-case, totally dream-world scenario … and ** it’s bleak**!</p>

<p>More realistically, if you were even able to take out signature loans for the amount above $11K in federal unsubsidized loans, you would owe about $115 a month on the federal loans for 10 years (at 4.66% interest), and you would owe about $725 a month on the signature loans for 10 years (at 10% interest). That’s $840 a month for 10 years!</p>

<p>And at the end of 10 years, after scraping by to pay off about $840 per month for all that time, you will have paid back about $101,000 for the privilege of borrowing $66,000. </p>

<p>Does that sound like a good deal to you?</p>

<p>Do you want to begin your career owing upwards of $840 a month for 10 whole years?</p>

<p>To put that in perspective, that amount approximates a monthly rental payment or a mortgage payment on an inexpensive home. To pay off your college loans, you would have roughly the equivalent of 2 rental payments or mortgage payments a month – one for living expenses, and one for college loan repayment. For 10 years. </p>

<p>OP, that is HUGE. You would surely regret it.</p>

<p>imo, it would be foolish to accept that much debt – particularly when there are suitable alternatives.</p>

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<p>Stitchpony, here is a take from both a CPA perspective and from the perspective of one who has written a financially oriented book:</p>

<p>With student loan rates between 7-8%, and considering that you can only deduct $2,500 a year in student loan interest, I would recommend that the total debt for undergrad studies should not be more than $35,000 in TOTAL for all four years (give a take a few thousand dollars)!What you are proposing is insane! NO UNDERGRAD SCHOOL IS WORTH IT!</p>

<p>I have met dozens of people who have gotten into debt through student loans, yet I haven’t met one person happy about paying them back. I certainly haven’t met anyone who felt that paying back over $75,000 was the right choice even if they attended a top, dream school. In fact, in many cases it has taken people DECADES to recover from their high student loan indebtedness. PLEASE, PLEASE, PLEASE don’t incur the amount of debt that you are considering.</p>

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<p>You also need to know that high school teachers and community college teachers don’t make a lot. You are not going into a high paying field, and could possibly end up with additional debt from graduate school. Go to your state school, it would be a MUCH wiser decision.</p>

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<p>i think it also depends on the field you’re interested in.</p>

<p>It can be somewhat sensible to go to a school and get 30k in debt if you want to be a chemical engineer. Probably not much more so for women’s studies or art history, they are not lucrative fields at all. hard to pay those loans back</p>

<p>But if you are going to grad school, go to your inexpensive state school. Students go to great grad school from just about any undergrad school in the nation. </p>

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<p>Do NOT consider doing this. Not necessary. Go to dream school for grad school.</p>

<p>An instructor makes little money, so you won’t be able to afford the payments on loans. </p>

<p>Besides, it’s doubtful that your parents would co-sign these loans anyway. So your question may be moot.</p>

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<p>This is bogus. If you want to function independently, you will have to be able to handle simple numbers. </p>

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<p>It’s probably foolish to borrow the money, but depending on the terms and where you live, it won’t likely bankrupt you. </p>

<p>In the most generous districts, the starting salary is just under $50K. At 6.5% at over 20 years, a 66K loan is about $500/mo. </p>

<p>Let’s imagine that your gross salary will be about $4000/mo, you’ll take home about $3000/mo. </p>

<p>In a place where they pay teachers $48K, it will probably cost you $1500/mo for an apartment and utilities. </p>

<p>So basically, you are left with $12000 a year for food, insurance, car repairs (remember no new car right?) gas, and anything else you’ll want to do. </p>

<p>That $500/mo will be with you until you are in your 40s. You will be poorer than most teachers. It will likely adversely affect your ability to form a household, etc. You probably wouldn’t be homeless. </p>

<p>Sounds foolish to me, but it’s your life. </p>

<p>And I’m a guy who thinks borrowing money to invest in yourself can often be a good idea. </p>

<p>The problem here is that the upside in your chosen profession is minimal, and while it’s admirable that you want to give back by teaching, it would also be foolish to take on this debt for this goal. </p>

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<p>Thanks everyone… yeah. Im going to have to think about this one. :frowning: Sounds like financially its not the best investment…</p>

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<p><<<
In the most generous districts, the starting salary is just under $50K. At 6.5% at over 20 years, a 66K loan is about $500/mo.
<<<<</p>

<p>This may be true. However, generous districts generally are compensating for very high Cost of Living…so rent and home prices and taxes will be high.</p>

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<p>Firstly, I’ll say that there is nothing wrong with debt, as long as it will help you land a higher paying job. I don’t think this is the case for you. You should go to the cheapest school then consider going into debt to attend a better grad school. </p>

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<p>Also to consider - are you getting certified to teach as an undergrad or are you counting on grad school to get your initial certification. The cheapest way is to minor in education and get certified as undergrad and move on to making money sooner. If you are wanting to get certified as part of masters program, realize that teaching masters programs likely will have no funding and when you student teach for a semester your options of having part-time work while attending school are small. D is in MAT program now and they were basically told not to count on working while in program (she does a little on weekends). I say this to point out that grad school costs will be totally on you. My advice is to get through undergrad inexpensively and save the debt for grad or try to get certified in undergrad (check to see if your school does a 5 year program which would also save money where the 5th year gets you certified and gets you a masters in education.)</p>

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<p>What school is it that you would want to take out $66,000 in loans for?</p>