How much debt is Michigan oos worth? Specifically for Ross or economics at LSA. Michigan is by far my favorite school in the world. It has everything I could want in a university: world class academics, job recruitment, strong alumni network, great sport teams, beautiful campus, great community, Greek life etc. I am just not sure how much debt is too much debt for it.
@tytbound Students are allowed to borrow up to $27,000 in student federal loans ($5,500 freshman year, $6,500 sophomore, $7,500 jr and senior year). I think that is reasonable to take on for Michigan. But then you need to figure out how much your parents can comfortably pay based on their income, savings, assets, borrowing capacity and family wealth (I.e, inheritance, trust, grandparent or other family member that might help out financially). I cannot tell you how much debt your family should take on because that answer will differ with each family. Most OOS students who attend Michigan are either from wealthy families that can afford to pay $250,000 without any debt Or are from low income families under $90,000 where Michigan can provide sufficient need-based aid to make attendance affordable. Still, other families take on an amount of debt they feel they can pay back without too much sacrifice. And I imagine that there are some families that saddle themselves with insurmountable debt (parent plus loans, home equity loans, private loans) that will cause tremendous financial hardship and sacrifice, that they and their kids will be paying off for decades.
First, the question is what is the cost of alternative option? Second, I would consider the total cost instead of just the loan amount. Third, it depends on your major and job opportunity. Fourth, what is your career goal and do you plan to go to graduate school? In any case, the less debt the better. One common suggestion is not to exceed the amount of first year income after graduation, but I would rather set a lower limit.
My answer will not be popular but no debt is worth attending any certain schools depending on your alternatives. Look at the fortune 500 ceo list and what schools they went to. I remember reading that Miami of Ohio had more Ceo’s on the list then Harvard or something like that. The school doesn’t make you, you make the school. Going to any school or program doesn’t mean you will be financially successful. Now saying that, what is realistic for you to comfortably pay back. If you had to take on the max student loans as stated above you might “realistically” be able to pay that back with summer internships and work study and /or a job during the school year during your 4 years at college. You need to figure out what your monthly payments would be after your 6 month grace period and if you could afford that payment. Not everyone coming out of Ross has a guaranteed job day 1.
Us OOS parents are not all Rich or Wealthy… Sorry to burst that bubble… But a lot are just regular middle class working hard to support our kids. We have some 529 plans but not $250,000 per kid. So far we haven’t had to touch that yet with a junior in college and a freshman at Michigan. But I will not touch my retirement or major equity to finance their education or go into debt.
@Knowsstuff: Yes!!
@billscho: Good questions.
OP, unless you are independently wealthy, or are comfortable with carrying tens if not hundreds of thousands of dollars of debt for decades, then you seriously need to think about going somewhere other than the University of Michigan – perhaps a more affordable in-state institution – because it seems as though you will be saddling yourself and/or your parents with massive amounts of debt for a return that you could probably get via a less expensive institution.
@gandalf78 Yes!!! Right back at ya.!!
30 years ago I had to take on $100,000 and my wife a michigan grad $150,000. With forbearance and interest I think that amount doubled. After like 25 years I think we were payed off. So I speak of experience and it was easier then, then it is now to pay these loans off. We bought a house in a down market that quadrupled like twice in a very short period of time. Equity is a good thing if used correctly. But, in today’s climate. I would not go there.
If you have to borrow any more than $27,000, it’s too much. Student debt seems to be the new subprime loan of the 21st century. If you’re going to spend more money on college, you’re far better off using that money for a masters degree. Whether you graduate from Michigan or a regional university, it’s still going to be a bachelors degree and it’s worth exactly the same to employers.
To put things in perspective for everybody, my parents are providing 80k for my undergrad education. My families income is roughly 140k. No investment, trusts, or real estate other than the house that we live in. I applied for financial aid.
Now, regardless of what amount of debt I have, my parents said they will help me pay it off. When I talked to them about how much they will help last month, the figure that was brought up was $600 a month (7200 a year). This is what my parents currently pay for my private high school.
My goal is to work on Wall Street, specifically in fintech/risk analysis/management. If not Wall Street, then somewhere else. I am extreamely intrigued by this. This is one reason why I declared economics as my major. At Michigan, I would fight like hell to get into Ross and if I could, i would double major in economics and BBA.
@coolguy40 “If you have to borrow any more than $27,000, it’s too much. Student debt seems to be the new subprime loan of the 21st century.” Right on! My family has three kids in college right now and we aren’t uber rich, a middle class family but all three of us are happy at our respective colleges (most of us have scholarships, which have been life savers for our family) That much loan in college for a bachelors is not worth it, I think.
If you get a job on Wall Street making big bucks and working 80 hour weeks you will be able to pay off loans yourself. but that is a big IF.
As a future financier you should be able to compute the monthly payment amounts for various levels of debt and interest rates. I think that the interest rates on federal loans (unsubsidized) are running about 6-7% right now.
What are you alternatives?
Current alternatives are my state school- University of Oregon- and Arizona State. These (and Michigan) are the only schools I’ve heard back from. I’ve received merit from both Oregon and ASU. I’m still waiting to hear back from 7 other schools (6 privates and one oos public). @TomSrOfBoston
No more than your federal loans. Those loans have good consumer protections that private loans don’t. I went to Ross. My advice is to take your in state option.
Well I literally just found out that I got into UDub… @TomSrOfBoston
Still waiting to hear from another oos public: UVA
@tytbound: You’re not going to get any merit money from UVA, assuming that you are admitted.
Regarding the economics of attending the University of Michigan, OOS tuition/fees/room/board is around $59K this year; with travel/miscellaneous expenses, let’s call it $60K, for ease of mathematics. So if your parents are providing $80K for your undergraduate education, then that pays for approximately 1.33 years of your undergraduate education, leaving 2.67 years to pay for via loans. Assuming that OOS undergraduate costs remain constant at $60K (and they won’t, they will only increase), then you/your parents will need to fund a minimum of 2.67 years x $60K/year = $160K; if this is paid back at $7.2K per year as a no-interest loan (something else that bears little resemblance to reality), then you are looking at a minimum of 22.25 years to repay the loans you/your parents will have to take out to fund your undergraduate education at the University of Michigan as an OOS student.
In my opinion, you don’t need to saddle yourself or your parents with this kind of debt. Stay in-state or at an OOS school that you can afford without incurring this kind of massive debt.
This all just sent a chill up my spine… What does your situation looks like if you go to your instate for a year or two and if you must then transfer? Ross is great but just one avenue to Wall Street and good paying jobs.
When you go OOS and plan to incur debt you should do so only if the salary that degree provides is worth it. You should also push to graduate in 3yrs.
After graduating, ideally you can pay back your debt in large chunks over a short period of time. If you get a degree in the sciences/engineering, you are young and should be able to save a ~25k a year and pay back a 100k in 4 years. I think that is reasonable amount of debt for an engineering degree.
Marketing, sales, business 75k in debt.
If you are looking at a liberal arts degree, plan to be a teacher then 50k in debt.
If you plan on going to med/grad/law school then opt for the instate solution at the best school.
So as a rule of thumb, the debt you incur should be only a little more than your starting salary.
The other flip side to this argument is what if he went to an instate college and was close on the money his parents can provide. Now add 5 years salary. Where will he be then VS having the loans. The question is… Is that worth it?
“Worth” is in the eye of the beholder…
Would I pay 25k extra per year to attend the college I desire? Yes I would.
50k? No I wouldn’t. At some price point OOS tuition becomes ridiculous. That price point is different for each individual.
For most student, the question is not whether it is worth, it is whether it is affordable. Even if it may worth that cost, not everyone can pay that price, with or without loan.
“Michigan is by far my favorite school in the world.”
I think that this is the main problem.
Michigan is a very good university. There are a lot of very good universities. There are even several which are comparable to Michigan.
Ideally, you would avoid all debt for undergrad, while attending a very good university that has a very strong program in your major and is a good fit for you.
If you have to take on debt, and if you would be paying OOS costs for U.Michigan, then you are looking at a tradeoff between the cost versus going to a school where you want to go versus getting the academic program that you want.
Assuming that it is even possible for your to borrow enough money to go to and graduate from U.Michigan, I don’t see how the rest of us can give an intelligent opinion regarding whether it is worth the cost without knowing what your other choices are, and what your finances are. However, if you are borrowing the full OOS cost for any university, or if you are borrowing more than the student federal loan amounts, I doubt that it is worth it.