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<p>People in this section talk about "debt" like it's the worst thing ever. Yet I don't see how it can be a big deal to have $60,000 or even $100,000 of debt if, ten years after you graduate, you make even $80,000 a year (which isn't difficult for someone who graduates from a top school).</p>
<p>So, people who have actual experience with significant "debt," I'd appreciate your advice. Thanks.</p>
<p>Yes, in a word, it is. It is easy to get into, but harder to get out of debt, speaking from experience. If you are abel to get into Harvard or Yale, and choose the right major, you could make it back. The right major being something leading to investment banking, medicine or law, but keep in mind, these best paying fields usually require an MBA, MD or law degree to get to the best fields. The monthly repayment seems easy now, but when you are later buying a house, cars, wife wants a vacation or gets pregnant unexpectedly, etc. those tuition payments will be a pain in your side for years to come.
If you can choose a rock solid state university or one where you get lots of FA, then you will almost certainly be better off getting started with little or no debt. I would gamble on the debt but ONLY if it were for, say, a top 10 school and of I had a definite career plan and even that is a gamble. Do you knwo how many premed students are now pharmacists, etc. because they did not get into med school? I think that the top investment bankers have Ivy MBAs don;t they? Trust me, debt will crush you, but most of us had to learn the hard way....PM me of you want more opinion...</p>
<p>so Hopeful Dad, in my case, I've narrowed it down to UNC-Ch or Georgetown. I will have to pay about 17k for UNC, and I just got my aid package from GU with a 27k scholarship, 3k work/study, and 3k loan for one year, where my family is required to pay 20k (minus ~$100). I'm going into the medical arena. What do you think I should do?</p>
<p>If it goes this way, I will be 12k in debt by the time I graduate. Is it worth it?</p>
<p>According to my daughter it seems like a few kids she know would be willing to go into heavy debt($200K) to finance their dream school like Harvard. The parents are not paying for it, but I think for school like Harvard it might be the only reason. Some of her friends are thinking of taking out $15K of debt per year to go to schools like BU and USC.
I would not do it but apparently others are seriously thinking.</p>
<p>I absolutely would not recommend taking on 200k of debt for undergrad for any school. Have your daughter's friends look at one of the loan calculators at somewhere like finaid.org to see what their loan payments and the recommended salary to support that payment would be.</p>
<p>FinAid</a> | Calculators | Loan Calculator</p>
<p>$200,000 at 6.8% for 10 years = $2300 a month with a recommended income of $276,000. EVen over 20 years it would be $1500 a month with a recommended income of $183,000. </p>
<p>And that is based on the assumption that someone is paying the annual interest during school. If not the debt will have grown to $230,000+ before graduation making the payments even higher..</p>
<p>These kids need to take a realistic look at what they want to do for the 10-20 years after their 'dream school'.</p>
<p>
[quote]
so Hopeful Dad, in my case, I've narrowed it down to UNC-Ch or Georgetown. I will have to pay about 17k for UNC, and I just got my aid package from GU with a 27k scholarship, 3k work/study, and 3k loan for one year, where my family is required to pay 20k (minus ~$100). I'm going into the medical arena. What do you think I should do?</p>
<p>If it goes this way, I will be 12k in debt by the time I graduate. Is it worth it?
[/quote]
I am comfortable with my son taking on up to $20,000 in school debt; his school actually caps student loans at $14,500, and he has an outside scholarship to offset some, so will graduate with <$10,000. Does your school cap loans? How will the loans rise over time? This is an important question to ask, since most schools increase the loan size considerably each successive year. You should email the colleges and ask how much loan they will package in years 2-4. So.... if it's less than $20,000 - you should be able to handle repayment without much problem. More loan than that is a definite "no-no" in my opinion!</p>
<p>Looking at the numbers in your situation, either choice would be fine. Both schools are EXCELLENT and it comes down to personal choice at this point. If those are for all 4 years, not yearly, you will be fine. I think where we have to think hard about the debt is for $50k or more, certainly $100k or more warrants a hard look. UNC-CH is one of the BEST public universities in the US and you can't go wrong there. Georgetown, excellent school. You will have a great future coming out of either school with that level of debt! Good luck.</p>
<p>I just want to expand on what I have said and most of you other parents I think understood what I said, but for the students: DO NOT underestimate the difficulty of paying off the tuition debt. When you are 20, spreading it over 20 years or so sounds great, after all, you will have income and many years to work, but the reality is, jobs come and go, incomes fluctuate and family life and needs get in the way of paying the debt. For $1500 month, a likely payment scenario, many of you could buy a condo or even a house in some parts of the US. These kinds pf payments will strangle and affect how you can live your life for years to come. Don't bet on the 'come' as they say...Most majors will not generate the large incomes to make the payments possible. Imagine racking up $120k in debt to go to Yale and majoring in liberal arts, etc. which will not generate the six figure plus income you will need just to service the tuition debt. On the other hand, if you are CERTAIN you can go on to law school or medical school and that Ivy or prestige school credential means that much to you, take your chances; you will still have large payments for grad school too! If you end up out of work for a stretch, as even many people do, the situation gets worse! These days grad school is critical and almost necessary, in my opinion, for most fields and that is where your money needs to go after attending good school with minimal debt..Believe me, I have learned this stuff the hard way and now my own kids are going to be approaching these decisions too.</p>
<p>I agree with HopefulDad - total debt above $20-30k can be quite debilitating. There are plenty of debt calculators out there. $60k paid off in 15 years is $500/month with an interest rate of 6%, $573 with a rate of 8%. Now assume that straight out of school the starting salary is $50k/year, an assumption that is generous for many majors. This works out to around $35k/year after the federal and state taxman taketh what they think is theirs. One is left with $3k/month in take-home pay. </p>
<p>Seems like a lot, right? Not so fast... Subtract $700 in rent, $300 in car payments, $300 for health, car, and other insurance, $200 for gas, $100 for utilities, at least $100 for "subscriptions" (cable, internet, cell phone, etc), $200 for groceries, $100 for lunch at work, and you are down to $1100. Give $600 back for debt payment, and you are down to $500. Chop off at least $200 for "nights out" (you do want to have a life after college, don't you), and you are down to $300. A bit of rounding error and overspending here and there bring your disposable income very close to $0. This means no savings for a home, retirement, or a nice vacation once in a while.</p>
<p>The funny thing about income is that "necessary" expenses seem to grow faster than the income. Once you have $100 extra to spend, HBO starts looking more and more like an entitlement than a luxury :D</p>
<p>To the original poster: Making 80 grands a year seems a lot to you now, but it's not. Taxes, insurance, 401k etc. would easily eat up about half of it. Other expenses have been pointed out by others so I don't repeat. Be careful. Very careful.</p>
<p>Don't do it, go to a cheaper school, my friend is 47 and has 73K in debt yet to pay! abour $700 per month.......</p>
<p>drmold, I feel his pain...</p>
<p>So the general consensus is to keep student debt under $30k by graduation?</p>
<p>My top-choice school caps four-year maximum debt (from loans) at a little under $9000, but our EFC is $10-15k/year more than we can comfortably manage.</p>