Should you incur substantial debt for that "dream" school? or an arts major?

Parents Forum
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<p>**A note from the moderator:</p>

<p>Taxguy started three threads on the same topic with the same post on three different forums: The Parent Forum, The Parent Cafe, and The Arts Majors Forum. Rather than three separate discussions on the same topic, along with copied posts between them, we have merged all three threads into one and it is featured on our main page as well as in the Parents Forum with redirects from the other two forums.</p>

<p>Please realize that when threads are merged, all the posts are inserted in chronological order. Thus, responses to posts may appear a bit out of sync since discussions are combined.**</p>

<p>Here is a post that I did concerning majoring in art at CMU. However, it may be applicable to any art, design or theater major. It will give you something to think about.</p>

<hr>

<p>Be advised: CMU themselves noted that total cost of tuition, room, board, fees and books will exceed $50,000 per year. This also doesn't count transportation home, medical insurance of $900 per year etc. The admission's officer that I spoke with mentioned that the actual cost is $52,000 per year if everything is filtered in. This also doesn't take into consideration future cost increases!</p>

<p>Sadly, whether you major in computer science, engineering or business, which can command some high paying jobs or art,which usually doesn't pay as well, the tuition, fees and room and board is the same.</p>

<p>Kakle, here is what it takes to amortize $150,000 of debt over 15 years:</p>

<hr>

<p>Principal borrowed: $150000.00
Annual Payments: 12 Total Payments: 180
Annual interest rate: 8.00% Periodic interest rate: 0.6667%
Regular Payment amount: $1433.48 Final Balloon Payment: $0.00</p>

<p>The following results are estimates which do not account for values being rounded to the nearest cent. See the amortization schedule for more accurate values.
Total Repaid: $258026.40
Total Interest Paid: $108026.40
Interest as percentage of Principal: 72.018%</p>

<p>Thus, they would need to pay $1,433 per month just to pay off their college debt! This is in addition to taxes,which takes up about one-third of their salary, mortgage or rent payments, car payments, food, insurance, gifts, travel, entertainment.etc. I think you get the message.</p>

<p>Also, for $100,000 in debt, the monthly cost to amortize it over 15 y ears would be $955.</p>

<p>Interestingly, assuming no college debt, if you take the same $1433 per month and invest the money at 8% for the same 15 years, they would have $273,941 at the end of 15 years! Note, the same $1,433 per month for 30 years would be worth $582,107. For 40 years it would be worth: $808,960</p>

<p>Thus, unless you get some substantial scholarship money, tell me how a person who majors in art, education or other low paying major will be able to afford paying off this debt?</p>

2

<p>Here is a post that I did concerning majoring in art at CMU. However, it may be applicable to any art, design or theater major or other major that doesn't pay well . Before your kid decides to attend that "dream" private school or expensive out of state school, I believe this information will give you something to think about.</p>

<hr>

<p>Be advised: CMU themselves noted that total cost of tuition, room, board, fees and books will exceed $50,000 per year. This also doesn't count transportation home, medical insurance of $900 per year etc. The admission's officer that I spoke with mentioned that the actual cost is $52,000 per year if everything is filtered in. This also doesn't take into consideration future cost increases!</p>

<p>Sadly, whether you major in computer science, engineering or business, which can command some high paying jobs or art,which usually doesn't pay as well, the tuition, fees and room and board is the same.</p>

<p>Kakle, here is what it takes to amortize $150,000 of debt over 15 years:</p>

<hr>

<p>Principal borrowed: $150000.00
Annual Payments: 12 Total Payments: 180
Annual interest rate: 8.00% Periodic interest rate: 0.6667%
Regular Payment amount: $1433.48 Final Balloon Payment: $0.00</p>

<p>The following results are estimates which do not account for values being rounded to the nearest cent. See the amortization schedule for more accurate values.
Total Repaid: $258026.40
Total Interest Paid: $108026.40
Interest as percentage of Principal: 72.018%</p>

<p>Thus, they would need to pay $1,433 per month just to pay off their college debt! This is in addition to taxes,which takes up about one-third of their salary, mortgage or rent payments, car payments, food, insurance, gifts, travel, entertainment.etc. I think you get the message.</p>

<p>By the way, even for $100,000 of debt, the amortization would be $955 per month.</p>

<p>Interestingly, assuming no college debt, if you take the same $1433 per month and invest the money at 8% for the same 15 years, they would have $273,941 at the end of 15 years! Note, the same $1,433 per month for 30 years would be worth $582,107. For 40 years it would be worth: $808,960</p>

<p>Thus, unless you get some substantial scholarship money, tell me how a person who majors in art, education or other low paying major will be able to afford paying off this debt?</p>

3

<p>Should you incur substantial debt for that "dream" school? </p>

<p>Here is a post that I did concerning majoring in art at CMU. However, it may be applicable to any art, design or theater major or other major that doesn't pay well . Before your kid decides to attend that "dream" private school or expensive out of state school, I believe this information will give you something to think about.</p>

<hr>

<p>Be advised: CMU themselves noted that total cost of tuition, room, board, fees and books will exceed $50,000 per year. This also doesn't count transportation home, medical insurance of $900 per year etc. The admission's officer that I spoke with mentioned that the actual cost is $52,000 per year if everything is filtered in. This also doesn't take into consideration future cost increases!</p>

<p>Sadly, whether you major in computer science, engineering or business, which can command some high paying jobs or art,which usually doesn't pay as well, the tuition, fees and room and board is the same.</p>

<p>Kakle, here is what it takes to amortize $150,000 of debt over 15 years:</p>

<hr>

<p>Principal borrowed: $150000.00
Annual Payments: 12 Total Payments: 180
Annual interest rate: 8.00% Periodic interest rate: 0.6667%
Regular Payment amount: $1433.48 Final Balloon Payment: $0.00</p>

<p>The following results are estimates which do not account for values being rounded to the nearest cent. See the amortization schedule for more accurate values.
Total Repaid: $258026.40
Total Interest Paid: $108026.40
Interest as percentage of Principal: 72.018%</p>

<p>Thus, they would need to pay $1,433 per month just to pay off their college debt! This is in addition to taxes,which takes up about one-third of their salary, mortgage or rent payments, car payments, food, insurance, gifts, travel, entertainment.etc. I think you get the message.</p>

<p>By the way, even for $100,000 of debt, the amortization would be $955 per month.</p>

<p>Interestingly, assuming no college debt, if you take the same $1433 per month and invest the money at 8% for the same 15 years, they would have $273,941 at the end of 15 years! Note, the same $1,433 per month for 30 years would be worth $582,107. For 40 years it would be worth: $808,960</p>

<p>Thus, unless you get some substantial scholarship money, tell me how a person who majors in art, education or other low paying major will be able to afford paying off this debt?</p>

4

<p>Even engineers or CS graduates can't afford to carry that much of a debt. High Debt = BAD.</p>

<p>and as sybbie would say, Dreams are Free. Make another dream.</p>

5

<p>Thanks for addressing so directly what lies latent in every parent's mind. We met with my son's acting coach for the first time this week; great guy. He started by discussing in vivid detail his career, which resembles that of the majority of those that he graduated with - lots of bartending. I already had this conversation with my S, but his reinforcement of the reality of the Biz was invaluable.
We have saved a substantial pot of money for my S's education, but that $$ is reserved for whatever he does after he completes a BFA, assuming he gets in: MBA, MFA, Law, etc. I would not want him to be in heavy debt exiting a BFA program. This eliminates NYU, CMU, BU and some others (we have some opportunities for tuition exchange with some colleges). I want him to 'follow his bliss', but we are not going to 'bet the store'.
Note, however, that the issue you raise does not just apply to the theater arts, but applies as well to any undergrad major, short of those that open a guaranteed stable income (i.e., Nursing, Accounting).
This issue is particularly salient for those of us who had kids late in life and are not far from retirement.</p>

6

<p>insert my canned speech here ==></p>

<p>(on the evils of student debt, how student loan debt is above all other debt, except perhaps IRS debt, and will follow you to the grave)</p>

7

<p>Taxguy....well, I guess we have gone against your way of thinking. Each person is different and we look at things differently and that's fine. The value of my kids' education is not tied whatsoever to me to the potential earning power of their particular majors. I do not care one bit what they choose to major in and would pay the same for college no matter the chosen major. As it turns out I have have one child in college earning a BFA in Musical Theater and one in a liberal arts type Ivy studying architecture, planning on graduate school for architecture. I value that they obtained an education, no matter the area of focus (and both have studied subjects beyond their major anyway) for its own sake. I also think having an education will enable them in the long run in terms of their careers, no matter what path they may take. I also believe they are equipped to do MORE than one thing.....my musical theater kid is skilled at and able to do more than perform. My arch kid is well versed and skilled at many things too. Their education will enable them in the future. Besides the future, I value the experiences they are having for their own sake. Being educated, regardless of career or income, is what is worth it to me. </p>

<p>As far as debt, yes, we've got it. But I do not believe our payments will be as high as you stated. The kids are on financial aid and have the student type loans and we have Parent Plus loans. They also received scholarships and grants. We will pay for all of their loans, out of choice. We want to pay for our kids' education. Money I used to spend on EC activities/lessons and summer programs, etc., I don't have now. While that is not as much as college costs, some of the loan payments take the place of what we used to spend on these other things. Obviously it still costs more than that, and we'll be paying for about ten years. </p>

<p>For us, it is worth it and to others it may not be. But also, I don't see the issue, for us, anyway, as related to their college majors. They sought colleges that fit them and majors that fit their passions and interests. That was all I cared about. Yes, it is worth it to me. I recognize this doesn't mesh with what others may choose.</p>

8

<p>Susan: You have a very rational way of thinking (and the way you described the situation your kids will not be burried under debt). The taxguy is alluding to very high - almost 100% of the cost of very expensive school. There is a debt and THERE IS A DEBT.</p>

9

<p>A lot depends on whether the parents are going to pay back the debt (as seems to be assumed in soozievt's case) or whether the student will pay it (as taxguy seems to assume).</p>

10

<p>No, it is not worth $150,000 in debt. It is not worth $100,000 in debt. Is it worth $50,000 in debt? maybe. Is it worth working your ass off at part time and summer jobs to lower that amount? Definitely. </p>

<p>I don't think, however, that this eliminates the option of applying to programs like NYU, CMU, RISD, Pratt, etc, because of the possibilities for scholarships and grants. Just make sure that your kid applies to a couple of schools that are financial safeties as well as academic safeties.</p>

11

<p>We have very close friends whose D went to CMU to major in art. The kid was extraordinarily bright, could have majored in anything but art was her passion. She graduated with high honors and on applying to grad schools, including Yale, was rejected from all. She went to work at a major museum cataloging works of art, then a gallery, then back to the museum....still no real income.</p>

<p>She applied to and was accepted to Penn's grad program and will graduate this Spring but is now headed to the Peace Corps for two years to round out a resume that will hopefully get her a University teaching opportunity.</p>

12

<p>Marian...that's true. In my kids' cases, we are assuming the debt and I originally read taxguy's post, being that he is a parent, as to whether debt was worth it for a degree in a low paying field, from the parents' perspective. But of course, the dynamics are different if the student pays the debt back him/herself. But for us, the amount of debt is not related to potential earnings on our kids' part. Also, I'm not worried about them finding some kind of work in life. We saw our job as providing the education and their job will be after they graduate. Our parents did it for us and so we pass that on.</p>

13

<p>I went $45,000 in debt. I'm down to about $6,900. I am in my forties. I went to two private colleges and one state college. I would advise any applicant to: </p>

<ol>
<li>apply to the college(s) of their choice.</li>
<li>attend a state college and take all the general studies requirements in anticipation of transferring them and at a significantly reduced cost. And even drawing I or life drawing, etc.</li>
<li>transfer to the college of choice into which you were accepted.</li>
<li>focus focus focus on doing everything possible to earn a scholarship, academic or portfolio-based.</li>
</ol>

<p>Going over $100,000 in debt is sheer lunacy unless you are going to med school or something I guess. I would say $40,000 is a limit for anyone in the design arts...some very talented individuals will quickly handle the debt, but it may become a burden for the mediocre or average individual.</p>

<p>Just my opinion...and NEVER pay art school tuition for English 101, etc. Always transfer the credits in from a cheaper state college. But you must work with the schools of your choice to understand what general electives and liberal arts courses are appropriate and how quarter systems match up to semester systems, or the other way around.</p>

14

<p>
[quote]
Thus, unless you get some substantial scholarship money, tell me how a person who majors in art, education or other low paying major will be able to afford paying off this debt?

[/quote]
</p>

<p>Three ways:
1) They have very rich parents
2) They go to a cheaper school
3) They borrow that much and regret it for a very long time</p>

15

<p>One way to evaluate it would be to determine whether the CMU degree will bring in at least an additional $16,196 per year (after taxes), over the second choice.</p>

<p>Then it would be worth the risk.</p>

16

<p>Weenie, I agree with your methods. However, my post assumes that you don't have rich parents or grandparents, and you take out loans.</p>

<p>Eadad, my post isn't knocking the quality of top schools. It is simply analyzing the payback vs. cost of taking out a lot of loans in order to attend these schools. If someone has wealthy parents who can easily afford the tuition, sure, go for it.</p>

17

<p>Actually, the costs that I mentioned are the same regardless of who is paying back the debt.</p>

<p>Simba, actually, I am NOT assuming that 100% of the costs are paid back in debt. I asssumed that at least 25% of the total costs are paid in cash. Also, I didn't factor in inflation costs charged by the college.</p>

<p>Soozievt: my post is not really meant to take a position. It simply analyzed the financial pros and cons comparing the future cost of the debt obligation vs. the financial benefit of no debt and using the money for savings. I also didn't opine on the value of attaining an expensive ivy or name brand education. I am an accountant and not a career or educational consultant. I simply presented the financial pros and cons.</p>

18

<p>

Susan, whereas I am delighted for your children and your family that you are able to adopt this stance, it is not a very realistic one for many families. It is a true luxury for some people to be of the financial means to be able to view higher education with this persepctive. Others of us are forced to look at the cost/benefit ratios a bit more closely. </p>

<p>The fact is that the connections that your D is making at Tisch and the future benefits of those connections are immeasurable in worth. However, what if she had chosen to attend Oklahoma City University (OCU), which is, around these parts, quite esteemed for MT? If the cost were in any way similar, you mght be in a position to have to consider the benefits of that education a bit more closely.</p>

<p>By the same token, your older D, being at Brown, will also have the immense benefit bestowed by an Ivy league education. This is nothing to scoff at and yes, the debt incurred from this will most likely be "worth it" in terms of the many benefits she gains from this down the line, including any edge this gives her in graduate school admissions.</p>

<p>I doubt that there is a parent on this board who would NOT like to view higher education from this wonderful perspective---that <em>any</em> educational setting that offers "fit" and "interest" is, in and of itself, worth considerable debt even if the kid were studying a major with a less-than-lucrative potential. But again, there are many of us who are forced by circumstance to apply a reasonably logical formula to determine which debt is or is not doable. </p>

<p>We are in the unique position of being able to view this from both sides of the fence. My son, who has a level of academic talent, intense passion, over-the-top drive and determination, and HUGE dreams is attending a school that will help him make the most of his future. I can say without guilt or reservation that I would <em>NOT</em> take on the same amount of debt for my daughter, not because I don't love her and care for her every bit as much or because I don't value her education as highly as his, but because she, at this moment, has NO idea what she wants to do with her future, has no specific major ideas, and does not have nearly the motivation or determination that he carries. </p>

<p>In one sense, this has been a nonissue for us as she had no desire to leave the state and is perfectly fine with her college choice, despite the fact that it is also the most economical one for us. But were she have wanted to, say, attend a small, out-of-state LAC at considerable cost, I'd most likely have had to put my foot down as we'd have been forced to consider cost and future earning potential in her case. After all, we have four MORE kids after these two to provide college for. ;)</p>

<p>As I said, I'm really happy for you and for your family that you are able to disregard thoughts of earning potential and cost in the educational decisions for your girls, but for many people, this is simply not an option....and it's not because we do not value education in the same way. It is out of sheer necessity.</p>

<p>~berurah</p>

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<p>Most kids don't really know what they want to do at 18, but if they really do know, and it happens to be something that is low paying and requires a specific school with a high tuition then the student damn sure better bust their ass and prove that they want it by getting a scholarship. It doesn't make much sense to pay 150k for an art degree. That student better marry rich, because otherwise his/her kids are going to be SOL when they want money to go to college.</p>

20

<p>First, my post takes current costs into account. At some top schools, debt of $50,000-$100,000+ at graduation is very realistic unless the student has substantial parental contributions or they get scholarships.
I can assure you that my numbers for the top, brand name schools are sadly realistic.</p>

<p>Larationalist notes,"Is it worth working your ass off at part time and summer jobs to lower that amount? Definitely. "</p>

<p>Response: Sadly, undergrad students usually don't make that much per hour. Thus, working their ass off in the summer, as you noted, won't produce that much income net of taxes. They might gross $5-6,000 in the summer,which would net them about $3,500 if that. Yes, working helps. However, it won't change the result that much unless they can earn a high hourly rate such as from starting a successful business.</p>

<p>Finally, I am not opining that all expensive schools aren't worth it. I am an accountant and not an educational or career consultant. I just wanted to provide a realistic appraisal to parents and students of the future value of a lot of debt vs. the benefit of going to a much cheaper alternative and investing the difference. </p>

<p>I should note that my analysis does NOT take inflation increases in room, board, tuition and other costs into account. Thus, my number may be a bit low, as hard as it is to believe.</p>