I intend to major in Chemical Engineering, which is a potentially high paying field. I’m not sure how much in loans I would have to take out to attend my top choice (UMN) since not all scholarship offers have been announced (I should be getting a decent amount of outside scholarships), but if you/ your child were in this position- where you either have to choose a school that you don’t like (little to no debt), or your top choice with a great program for your major- how much debt would you consider to be reasonable?
Really, it all depends on each person’s personal situation. Only you can answer that question for yourself.
Given that many would-be engineers change their majors before Thanksgiving, I’d recommend that you stick with the federal loan maximums: $5,500 freshman year, $6,500 sophomore year, $7,500 junior year, and $7,500 senior year.
If you do end up graduating in Chem E, and you do land a well-paying job fresh out of college, having only minimum college debt will give you more options.
When projecting loans, be sure to figure that all those outside awards are likely only for ONE YEAR (frosh year)…once they go away, you’ll be left with a much larger amount to cover.
Is this school instate for you?
BTW…do not base your debt on a projected income. Who knows if you’ll stay with eng’g. That is one of the hardest majors and many, many change their majors
Someone else did this but… if she takes 40k in loans and has 60k salary(42k take home) $3500 a month, then she has to pay $800 a month to pay off the loans in 5 years. If she takes 24k, she has to pay $500 a month.
Personally, I would try to stay somewhere south of $30,000 in total but of course that is a personal choice. In order to borrow more than that, you would need the assistance of a parent; in addition, large debt service payments can make it hard to move around for jobs or get on with your adult life. It’s up to you if it is worth it but I think it would be worthwhile to sit down with a calculator and a spreadsheet and think hard about future living expenses and lifestyle choices. It is easy to look at some of the eyepopping salaries that chemical engineers can pull down a few years after graduating, which make the debt payments seem puny; but when you are actually living your life it can be painful to look at your paycheck after taxes and realize that you have to stretch whatever’s left to cover rent, groceries, utilities, car costs, entertainment, etc. and service that debt.
On the other hand, I wouldn’t undervalue a strong program in your major either. Not all schools are created equal, and while I think College Confidential students over-rely on a single school to make all their dreams come true, it’s also true that some schools have better education, better alumni networks, stronger on-campus recruiting, and a more rigorous environment for certain majors and programs than others. The main issue I would have with that is to make sure that the school you are choosing is really that much better than the free one before you try to talk your family into loading themselves up with debt. Too often, it really doesn’t make that much of a difference where you get your undergrad and the difference between a rank 21 and rank 33 is often not worth the extra $80,000.
This school is not in-state, but I will get reciprocity tuition (equal to in-state). I know engineering is difficult and a lot of people don’t stay with it, but I honestly don’t see myself going outside of the STEM umbrella, so hopefully I will find a decent job in whatever area I choose. My parents have agreed to co-sign loans if needed, and I’ve found a lender with a relatively low interest rate.
Also, the other school my parents have suggested as an alternative is instate, and not very well known for its academic programs. UMN is vastly different in my opinion and I do feel as though I would benefit academically by choosing this school.
Remember that different STEM majors have different job prospects at graduation (biology and chemistry being worse than most others).
Also, check whether you are in the major or if you need a high GPA to enter the major. Minnesota apparently needs a 3.2 GPA to assure entry into the major, although students with lower GPAs are allowed in on a space available basis.
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Your justification for loans is the prospect of a later large salary. There are many STEM careers that do NOT pay well.
As noted above, if you became a bio or chem major, you would not earn the big salary.
How much would you be borrowing each year?
How much money will your parents be contributing each year??? If they can’t contribute much, how do you know that they’ll qualify EVERY year for those loans? Do you realize that they have to REQUALIFY each year, and each year their credit rating goes DOWN because of these loans?
What would you do if your parents suddenly couldn’t qualify and it’s your junior year ?? You’d have a bunch of debt and no degree.
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should be getting a decent amount of outside scholarships)should be getting a decent amount of outside scholarships) <<<
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Why do you think this? Because you applied for many? Even if you were lucky to cobble together a few small awards, those would be for freshman year ONLY.
In another thread, you say that you’re LOW INCOME and that your parents won’t be contributing.
HOW will they qualify for these cosigned loans with a LOW INCOME???
You need to proceed very cautiously. you need to find out NOW if your parents will qualify to cosign big loans. With a low income, it’s doubtful. They might qualify the first year, and then get rejected the following.
Note that ChemE is the strongest field in UMN engineering and it would be very competitive. In addition, it is a tough major itself. I notice the difference in the class sizes between sophomore and junior in ChemE of another university to be around 2-fold. Many students drop out from it before graduation.
I’m not sure how much I would have to borrow, which is really frustrating. A lot of the scholarships are announced April-July, so I probably won’t know for sure how much I’ll have to work with when picking a school before May 1st. My parents probably won’t contribute much, but they said they might help me some now, which is nice. Also, my parents should be able to co-sign the loans with no issues (I’ve already looked into this matter).
BUT have you considered all 4 or 5 years? Can they qualify to co-sign every year as the cumulative debt grows?
Also note that the majority of outside scholarships are for one year. So don’t count on much for subsequent years.
From the information that you have given us, UMN appears to be unaffordable. What, exactly, is/are the cost difference between UMN and your other option(s)?
If you do choose UMN, and don’t get any of the big scholarship money that you are competing for so that you can’t afford UMN after all, do you have a back-up plan for the fall?
My kids did borrow the Stafford loans that they were offered. I think one had $20,000 and the other $23,000. One has a payment of just under $250/month and the other around $280/month. They are both engineers and the payments would not be a problem for them. We, their parents are paying them though as it was our mission to pay for their college.
This was to give an idea of payments from someone who is paying them currently.
You have reciprocity with MN…so have you considered your instate options, and the affordability of those schools?
On another thread, you say your parents are lower income $65,000 a year. But they have very high assets resulting in a very high EFC per FAFSA estimations. Are any of these assets liquid assets that can be tapped for college costs?
I agree with Happymomof1. Right now, from what you have posted, UMN does not sound affordable.
@deb922 But when will the loans be paid off?
Between my lowest cost option and UMN, there is about a 10k difference per year. Yes, some of the assets are liquid, but my parents have both been injured on the job and have various other medical conditions, so those assets have always been earmarked for retirement (they are NOT lenient on that).
OK, so you are looking at approximately 40k in difference.
Would that mean that you would need to borrow an extra 10k each year in order to attend UMN? Or is the lowest cost option so cheap that you don’t need any loans at all to cover the costs there?
Rule of thumb: take on no more total debt than you can reasonably expect to earn for your annual starting salary after graduation. Expect to pay 10% of your gross income towards student loans, for 10 years.
So, if you are confident that you can get a job paying $40k right out of college, then rule of thumb is you could take out $10k/year in student loan debt and pay it back over a 10 year period without impoverishing yourself. If you can reasonably only expect to make $30k out of college, then you’re looking at a maximum of $7500/year in student loans. And so on.
If employment prospects are sketchy in your major, try to avoid any debt at all.