I’m in a bit of a predicament. My dream school is the University of Michigan at the Ann Arbor campus. I love everything about this school except the price tag. At roughly $28,000 a year, I don’t see how I am going to avoid taking out student loans. Even with my credentials being a 4.00 GPA and a 32 on the ACT I do not see Michigan helping me fully cover the cost.
On the other hand, the University of Michigan-Dearborn has offered me a full ride and I will basically have to only pay for my books. This takes a lot of stress off my shoulders and allows me to start off my life after college debt free.
But which is the better option? Do I go to my dream school and deal with the debt, or settle for the school that will give me all the money I need to go there? Both are good schools but of course, the Ann Arbor campus is much more prestigious. I am looking to become some type of engineer and am currently leaning towards one that deals with computers.
Any advice will be greatly appreciated. Thank you!
@TomSrOfBoston
That would be the in-state cost. For my FAFSA I only have the estimate of the loan that is $5000-$6000 a year. My parents make $99.5k a year but they have stated that they can’t help me too much with the cost. Probably up to $10,000 a year and my mother is EXTREMELY against me taking out any type of loan since I already have a full ride. I have not received a financial aid estimate from UMich yet.
We are facing a similar dilemma with my D. She has an almost free ride (everything but books/supplies and incidental expenses), but it’s at my husband’s alma mater, which is a small regional school. We are debating the debt vs. quality of education/experience issue too. Hubby thinks the cheaper the better. I think we should send her to the best school she is admitted into and just deal with the debt. She is comfortable somewhere in the middle. Really, we have no idea which choice we will go for until we see what the scholarship offers are at each school in the spring.
It’s okay to take out a moderate amount of loans (I always hear that it should be less than your expected starting salary) to fund a better education than would otherwise be available. I would wait until you get your aid package from Ann Arbor, but it currently sounds like you and your parents would be taking out more than $50,000 in loans and most people would say that’s too much. If you live close enough to Ann Arbor that you could live off-campus, that might be an option.
If your mother contributes $10,000, that still leaves $18,000. If you do not get financial aid or scholarships, then it would be unrealistic to cover the other $18,000 yourself with just federal direct loans and some work earnings.
Ann-Arbor does not seem affordable. You can only take out about $5K in loans per year on your own, but after your folks help out you still need $18K. They would have to cosign for the remaining $13K or take them out themselves.
It also sounds like their giving $10k is maxing them out. Ann Arbor will require them to take out and guarantee the balance. That is a lot to take on, especially if they are close to retirement age, you have younger sibs, or other financial restraints.
Does UM Dearborn offer engineering? Would you consider co-oping? What is your EFC? I thought I read somewhere that UM will meet the need of Michigan residents. If your EFC is less than the COA you may be eligible for some assistance from the university. You likely will not know that until your FA package comes out. It may not be much (or it could be more than you think) but anything helps.
What is included in the Cost of Attendance? Often things such as travel and living expenses are inflated or less expensive as you live nearer. Would your parents be eligible for an education tax credit? Can you work while on campus and over the summer? A rule of thumb by some is to have no more debt than you could reasonably expect to make in the first year of a job in your chosen field. Here is the way I see it.
COA 28000
Parental Contribution -10000
Federal Student Loan -5500
Education Tax Credit -2000 This is a refund your parents would get. Unfortunately they will not receive it until after your first year. We applied ours to our D’s education each year. It also depends on their tax situation if they owed taxes they might not receive it as a refund merely a reduction in what they owe.
Balance Needed 10500
The balance needs to come from evaluating the true COA for you. Getting a summer and part time job on campus (make it minimal because engineering is tough). Possible outside local scholarships. You could consider future co-op earnings in the calculation but you have to be VERY sure that is your intended course of study. Work earnings of $4000 and Co-op earnings of $26000 (not unreasonable) over the course of your education it could be covered by the cost of your un-subsidized Stafford Loans.
It wouldn’t be easy but and it wouldn’t give you much wiggle room for changing majors. You do not need to make a decision until April 2017. By then hopefully you will have more information concerning all of the costs. Good luck.
What is your EFC? I believe Ann Arbor meets full need for instate students. It’s unfortunate that the financial issues were not sorted out before you applied to Dearborn. It is hard to turn down a full ride. My kids both took out loans and paid them off fairly quickly but they did not have more than $20,000 in loans and were engineers(as you say you might be). Loans can be manageable as long as you don’t go overboard. It sounds like you have worked hard for the opportunity to attend your state flagship. Hopefully, you will get some need based aid that could make attendance a possibility. Good luck.
I was wondering that kind of thing as well, looking for merit at other schools besides Dearborn. Flagships or good schools outside Michigan that would give merit and/or good need based aid . Maybe it’s getting too late for the best opportunities?
What about Michigan State? It may not have the “cachet” of Michigan, but it does have good engineering programs (if Dearborn doesn’t have what you’re looking for).
Yes, and Michigan State should have more of a collegiate experience (sports, school spirit, loyal alumni, etc. ) than I would imagine Dearborn might have.
Run the online Net Price Calculators for any colleges that interest you. You’ll probably find that with a $100K family income, you’ll be offered need-based aid from some schools (including Michigan-AA). But you need to run your own estimates, then assess whether you and your family are willing to pay that much more than you would for UM-Dearborn.
If you’re going into CS or engineering and you’re a very high caliber student, then I’d take the debt for University of Michigan-Ann Arbor. It’s perceived as a first-rate engineering school, while UM-Dearborn is not known outside of Michigan. Above average engineering majors make > $80,000 out of school. If you are in CS, then companies like Google or Facebook offer six figure starting salaries, along with tens of thousands in signing bonus and stock. The name, reputation, and rigor of University of Michigan-Ann Arbor will help you get these jobs. It’s not impossible, but significantly more difficult to get these same opportunities from UM-Dearborn, even if you’re near the top of your class.
The debt may seem daunting, but you’re investing in yourself. It’s a much better investment than say, a BMW. And if you make the most out of your opportunity at Ann Arbor, your investment will pay off. Of course, having this option depends on you getting into Michigan.
IMO, a good rule of thumb is to borrow no more than the federal student loan limits ($5500 for your first year). https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized
With a $100K family income, your Expected Family Contribution might be around ~$20K/year for some selective colleges. Subtract $5500, then another $2500 for work-study (up to $8K in “self help”). Your resulting parents’ contribution then would be about $12K.
Are these accurate numbers for YOU? If so, is it “worth it” to stretch for these amounts, compared to a full ride at Dearborn? Maybe. It’s possible that at some selective private schools, your EFC would be lower than $20K and that the aid package would not include loans. Among prestigious colleges, Michigan-AA is not necessarily your most affordable option. Have you run the numbers for private schools such as Cornell, Notre Dame, or Northwestern?
If you really are very strong at math and science and have good study habits, go with University of Michigan. For a well above average engineering grad, $60,000 of debt is nothing. With the kind of jobs you can get from Michigan engineering, you can pay off that debt in two years.
However, if OP changes his major or is weeded out if engineering, $60k in loans may be a challenge to pay. And OP won’t be the only one on the hook for them. Parents have to cosign if students want more than the federal student loan.