Prestigious LAC vs Prestigious In-State for Econ/Gov

College Search & Selection
1

I’ll keep it concise;

Background:
I’ll be entering college in fall with different options and I’m hoping for solid, honest advice, especially from people who have gone through this.

I will be majoring in economics with a minor in political theory/government. Additionally, I may enter grad school later on for an MBA but more on that later. I hope to later become a creative director producing digital content for government orgs/ lobbying firms.

I have two main options as of right now with vastly different financial outlooks and don’t know which would be the smartest.

First option
Going to an ivy-level top-ranked private college in New England with the cost of attendance of ~$40k/yr (includes tuition, luxury apartment level rooming, exceptional dining, and health insurance + travel to and from school + other fees). Because of familial circumstances, it would be necessary for me to take out student loans in the range of ~$20-30k/yr. There is a slight chance I could petition for a lower cost of attendance of ~$35k. If money were no object, I would go here in a heartbeat. Location, type of people, values all match what I am looking for.

Second option
Staying in-state and going to UT Austin on full tuition. My father’s military history gets my full tuition covered. I would only be paying room and board, meals, books, the other stuff that isn’t covered for an estimated ~$20k/yr. With additional parent help and personal savings, I could graduate with little to no debt. I’ve been accepted for a major in political communication, however, I have lost some interest in this. Unfortunately rejected to the communication honors program. Switching majors is nearly impossible during my first year. If I could change, it would be more towards business and economics with a government minor.

I’m also aiming to go to grad school for an MBA. With that said, if I choose option one, my tuition for graduate school at UT Austin would be paid for. However, if I choose to go to UT Austin for undergrad I won’t have the opportunity to receive free tuition if I go there for an MBA later.

I am currently working during high school making ~$1k/month and have ~$8k in a mutual fund. I’d prefer to not withdraw from this but if necessary can use it for school.

2

“Top-ranked private college in New England” covers a lot of schools;. UT is a great school, and since graduate school is in the plans, “0” is a wonderful number. Since not enough information to compare, go with zero and UT.

3

The OP is considering a top-ranked LAC in New England (likely a NESCAC). With this as the case, there’s a good chance that this choice lands in the top 10 in its category for the study of economics: https://ideas.repec.org/top/top.uslacecon.html.

4

Twenty to 30k a year in government backed loans is way more than a student would be permitted to take out on their own. So, something needs to be reconsidered. Sounds like there may be an issue with separated or divorced parents. Even if you could cadge that kind of lending, trying to finance three-quarters of your private college EFC through loans would be a mistake, IMH0.

The idea of diluting all that debt by attending graduate school for free or nearly-free is tempting, but speculative. Too many things can change over the course of four years of undergrad.

As the saying goes, “A bird in the hand is worth two in the bush.” I’d pick UT-Austin for undergrad.

5

Unfortunately the LAC is unaffordable for you. You can’t take out that level of debt as a student. And even if you could take out that amount of debt, graduating with $80,000 - $120,000 in student loans would handcuff your life decisions for 20+ years after graduation.

The large debt payments you would have to make to cover your undergraduate loans would interfere with every adult decision you make – you have a very hard time affording grad school, taking that amazing job at a start-up for less pay, getting that new car, taking a nice vacation, getting the home you want etc.

In addition you should understand that the top MBA programs look for student with a minimum of 2-5 years of meaningful work experience with increasing levels of responsibility. So it is unlikely you will go on for a MBA directly after undergrad.

IMO UT is your best viable option.

6

Plus, presumably the money doesn’t go away if you don’t spend it on a LAC. Why not save it for grad school?

7

A state capital is a good choice for someone who wants to produce digital content for government organizations and lobbyists.

8

Keeping it concise, you really have only one financially realistic option out of these two (the second option).

Student loans you could take out on your own are limited to $5.5k to $7.5k per year (and taking out more would be a bad idea for undergraduate anyway). Would you really want to graduate with $100k in debt to start your career (or drag it along through expensive MBA school)? As a prospective economics major, you should be able to figure out how much that debt will limit your future choices.

9

Absolutely follow the money. The jobs you will want to get your career started won’t pay enough to service the debt- which you will only get if your parents co-sign for you. UT-A is a big name for undergrad, but not for an MBA. Put the money into an investment and buy yourself a big name MBA. I get that it’s hard to say no to a fancy name school- but deferred gratification can be sweet.

10

@collegemom3717 Both P&Q and USNWR have UT at #18 in MBA rankings. I would consider that a big name.

11

Really? I am out of touch! I thought it was in the 30’s…

…Just went back & looked- you are right on USNWR. Economist has it at 36. Must be the difference of US v International.

12

I’d say that UT-Austin is about the same tier for undergrad and MBA. Outside the Ivy/equivalents and M7. In the top tier of publics for undergrad and among the 30 or so MBA programs in the top 20 (15 or so inside the top 20 but outside the top 10).

But I would save the money for grad school and aim higher there. I’ve found that a M7 MBA makes a much bigger difference than Ivy-equivalent undergrad.

13

The types of careers that currently have listed likely don’t have high starting salaries. You really don’t want to be in a position to have to turn down a job that would be a great experience because you have to make debt payments.

14

UT for undergrad. You may not even go to grad school, MBA or otherwise. Plus, if MBA, some employers pay for your MBA.

15

@PurpleTitan, sorry I should have clarified. If I go to UT for undergrad, the possibility of free grad there will no longer be open.

16

@CheddarcheeseMN while I agree with you in that, the New England school has a stellar reputation within those on Capitol Hill where I ultimately hope to end up.

17

Let’s make sure you understand what an albatross $100K in undergrad debt would be.

A monthly payment for $100K at 5% over 10 years is $1,060. Again, that’s per month, every month, for 120 months in a row. In total, you will have paid nearly $160K, in after tax dollars, for your student debt in the first 10 years of your career.

What do you think a starting salary for a newly minted undergrad working on Capitol Hill is? $40K? $60K? Probably not $70K. And probably not different based on undergrad school.

Take that salary number and figure out what a typical budget would look like. Reduce your earnings by taxes. Then pay your rent. Health Insurance. Utilities, Food, clothing, car and related expenses if you intend on having one, incidentals.

Is there $1K in that budget, every single month to make your debt payment? I doubt it.

18

So, let’s summarize the financial differential between the LAC and UT.

In direct costs, you would be paying (or borrowing) approximately $15-20K additional each year to attend the LAC. Perhaps the differential might grow somewhat over time. So, let’s say $80-85K over a projected four years.

By attending the LAC, though, you are gaining the value of the likely option to attend UT for an MBA without paying tuition. Hard to quantify that; so much depends on how good a student you will be and the likelihood that your first jobs will be substantial enough to keep you in the running for a really top-tier MBA program (Wharton, Harvard, Booth, GSB, etc.). For completeness you should also discount the value of that likely option by the possibility that you can get your MBA funded by a company at some point down the road. Your guess is as good as mine on the value then of this option - I’d ballpark it at 25% of the instate tuition for the MBA at UT, so roughly $25K all in for the two year degree.

Thus, in present value option adjusted terms, I’d ballpark your incremental LAC costs today at $55-60K. Personally, I think the sheepskin from a place like Amherst or Williams is worth that, but my bias is east coast finance, not creative directing. Other NESCAC? I’m not too sure about that. Maybe if the fit was perfect.

Good luck with your decision!

ETA: there is a discrepancy in your numbers that you need to button up. You said that LAC would cost ~$35-40K, requiring loans of $20-30K, while UT would cost ~$20K but would require no loans. If you can afford $20K for UT with no debt, why couldn’t that same $20K be used to reduce your need to borrow at the LAC? Maybe I am missing something here?

19

UT makes the most sense. It’s an excellent school, you can eventually change your major, and if you still want an MBA for grad school, you can potentially get employer to contribute or fund depending upon your job. And it’s affordable. As someone who is almost 50 and only became debt free for the first time in my adult life 2 months ago, do not go into unwieldy debt for an undergrad degree. It is oppressive and restricting. It’s just not the smart thing to do.

20

If OP is doing undergrad in Econ/Gov and MBA in a few years after college, another possible scenario is working at a consulting/banking gig and paying off the $80k debt in a few years after college while being sent to a prestigious MBA program by an employer.

Depending on the “elite” college OP is talking about and its track record of sending graduates to $100k+ consulting and banking jobs the LAC route can still work to his/her advantage. But if OP’s plan is to work at government jobs right after college UT Austin would make more sense.