<p>How much debt is reasonable for an undergraduate education in computer science. (We are fairly certain that even if he doesn't stick with CS, he's destined for a technical/science/engineering degree that will make him fairly employable.)</p>
<p>He has 4 schools that are still seriously in the running. He has a full-tuition merit (NMF) scholarship offer to one school, where he could graduate with no debt. He has merit-based offers for 2 other schools that would require about $6K/year in loans (or less if he can make more in future summers/co-ops than the $1300 he'll be making this summer). And he has a need-based offer for yet another that would require $7500/year in loans (again, or less depending on what he can earn over the summers). </p>
<p>So... is $30K a reasonable loan load for a student who can (I believe quite reasonably) expect to make at least $60K right out of school? Seems to me that if he's willing to live the student lifestyle for that first year or two out of school, he could come close to paying that off completely within 1 year, and definitely within 2, assuming of course that he will find employment, etc...</p>
<p>The school with the highest loans is the most "prestigious" which he doesn't particularly care about, but we're guessing that he may find a more comfortable peer group there. Is that worth an extra $30K? Tough call but hopefully our upcoming visits will help him decide where he wants to be and whether he wants to go into debt for it or not. </p>
<p>So, is there some rule of thumb about what is "reasonable" in terms of debt load?<br>
Thanks!</p>
<p>I am going to be a little bit of a wet blanket (where did I get that term? no idea…). Anyway… I work in IT, and have seen MANY jobs at the company I am with offshored in the past three years. When I started with this company in 2008, there were about 2,000 IT jobs at our location in the US. Now we are down to somewhere around 500 – almost 1,500 jobs have been offshored to India or Argentina or the Phillipines in the past 3 years. There are still many IT jobs onshore, but it is not the golden ticket it was to a job 10 years ago.</p>
<p>I am guessing he will get a job, but he may not get $60,000 right out of school. Depends on the market and his areas of specific knowledge.</p>
<p>That said, the rule of thumb I routinely hear these days is don’t take out more than you expect to make in your first year out of school. Assuming he will still make more than $30K, he could attend any of these colleges. But if it were my kid, I would go with one of the smaller loan amounts. And, he should work hard to find internships in the IT field during his years in school to improve his employability on graduation.</p>
<p>I have about $40K in debt, and on my salary (let’s just say over $60K), I get by, but I’m not exactly always as ahead as I’d like to be.</p>
<p>Granted, I support a med student spouse and live in NY, so my costs are kind of odd. A single grad making $60K could get by with $30K in debt, but it’d be a pain.</p>
<p>Think about all of the factors. For example, if there is an older sibling in college, then the FA will decrease when he/she graduates. Also plan on costs going up. </p>
<p>If the loans are Subsidized, that is the best deal (deferred interest, deferred payments). Other loans may not be as tolerable.</p>
<p>I think it’s a little on the high end. I personally don’t think it makes sense to borrow based on the anticipated earnings post-graduation – a lot can happen along the way. I think that borrowing should be based on what the student could earn as of the time he borrows. Because sometimes students change majors; sometimes they don’t do as well as hoped within the major and find that employment options aren’t what he thought; and sometimes the job market isn’t what was hoped. I don’t think any kid out of college, in any major, can reasonably <em>expect</em> to start at $60K – I think that while it is certainly reasonable for a computer science major to <em>hope</em> to earn that much, there are probably many more students graduating every year with any particular major than jobs available. So some new grads are going to get that $60K job, some are going to get jobs that pay more – and some aren’t going to end up with jobs that pay substantially less. </p>
<p>I don’t think $30K is impossibly high – just that I think that given the array of choices, he might be a lot better off to take any one of the far more attractive offers he now has.</p>
<p>Personally, I set a limit of the maximum federal loans. I don’t want to have any more debt than that, and I do not want to deal with private lenders.</p>
<p>Taking on debt is a very personal decision. Only you can help your student decide what an acceptable amount is. Based on $30k with simple interest at 5% the following are rough estimates of monthly loan payments.</p>
<p>$318/mo for 10 years
$566/mo for 5 years
$1,316/mo for 2 years
$2,526/mo for 1 year</p>
<p>If your student is gainfully employed out of college at say $60k*, they then pay taxes, rent, utilities, insurance, auto loan, etc. As a new professional they will have expenses to purchase work clothing, set up an apartment, etc. The first few years can be very lean even with a decent salary. I think the added stress of a loan payment of $1,300 - $2,500 is pretty great. You also need to decide if you are going to be in a position to help pay any of these loans if he doesn’t find a job right away and loan payments start.</p>
<p>I can’t tell you what a reasonable amount is. I do think a repayment term of one or two years is very aggressive for that amount.</p>
<ul>
<li>The US Dept of Labor lists the average starting salary for Computer Engineers @ $61,738. [url=<a href=“http://www.bls.gov/oco/ocos027.htm]Engineers[/url”>http://www.bls.gov/oco/ocos027.htm]Engineers[/url</a>] I won’t question others who have stated this is a high estimate. Personal experience of what they are seeing in the workplace, and that of new grads is probably more accurate then government statistics. I simply used this amount for my example.</li>
</ul>
<p>The higher salary estimates are possible, but it is often the case that higher salaries only apply in areas with high costs of living. </p>
<p>We figure the federal government has already figured this out. They think $22k is the maximum they can offer in subsidized loans over four years, so I think that is a reasonable limit to contemplate.</p>
<p>The loan amounts I gave were maximums. He has no older siblings, and a younger one who will (most likely) overlap with him for a year. And this assumes virtually no summer or co-op earnings, which is a worst case scenario. </p>
<p>Even if he makes a little less, or wants to live a little better and pay over 5 years, that doesn’t seem unreasonable to me. (I’m a big fan of paying down debt faster than “required” though and will encourage him to live frugally and pay down as much as he reasonably can ASAP.)</p>
<p>I keep hearing that CS undergrads are able to get internships paying in the $20 - $35/hour range. Unfortunately he probably can’t get one in commuting distance from home, so he’d have to pay living expenses out of that, so not sure how much would be left to go toward the next year’s school expenses.</p>
<p>A lot depends on the quality the CS program. But I think that $30K is very easy to carry at any solid CS degree program - that could easily be paid back, and quickly.</p>
<p>At the top schools, you can can accommodate far more debt that folks here would recommend. For very successful students, the opportunities can be amazing. </p>
<p>I think that a current range of $25-50k is OK without too much strain. </p>
<p>DS still lives in a communal housing arrangement, bikes to work, drives '97 Camry when necessary (repair bills has been a bit much this rolling 12). We expect him to be in some type of group housing until the day his future spouse says differently. He’s two years into the workforce.</p>
<p>DS’s engr/tech, internships provided housing, local transportation needs, and transportation fares to-from internship locales. The exception is the job that he had with his advisor where he had to pay double state taxes, and net out-of-pocket living expenses.</p>
<p>An “average” is just that – an “average” – some people earn more, some less. If it were a <em>median</em> rather than an average, then we would at least know that 50% make at least that much – but an <em>average</em> can be skewed by a high end tail. </p>
<p>I’d also point out that “average starting salary” only counts those people who actually got hired – among recent college grads in the field, some won’t get hired at all for those positions, and will ultimately have to settle for some other type of job that probably pays less. </p>
<p>Again – “average” is a very reasonable target, it just doesn’t make sense as an assumption. You’d want to at least apply some sort of discount to that, based on appropriate actuarial risk factors – and I have no idea what that might be. But if a person is going to base a decision to borrow a large amount of money based on some sort of quantitative assumptions… at least try to get the basic math right.</p>
<p>I never encourage a lot of debt, so I don’t want it to sound like I am doing so here, but I agree with a couple of Mister K’s comments. First, a CS degree is not IT. (It isn’t the same as computer engineering, either.) Second, my son is graduating in May with a CS degree and has had a job lined up since the end of last summer. The pay is far, far higher than 60K. As it happens, he will graduate with no debt, but I wouldn’t be wringing my hands if he graduated with as much as 30K. </p>
<p>I should note a couple of things, however. The job is in a high cost-of-living area, so you can discount the salary a bit–although a lot of CS work is in this area. And, he did double-time during his undergraduate years, and will finish with both MS and BS in CS (four years) and a second major in math. (Lots of AP credit, some university credit during high school.) I don’t know how much the salary reflects the MS degree, or the math background. I suspect the math degree is irrelevant for the pay scale.</p>
<p>As Mister K stated above, a lot depends on the quality of the program, and I think a lot also depends on the ability of the student to land good internships–the kind that lead to job offers.</p>
<p>It is hard to gauge future earning potential for any field, and even harder for any individual student, so prudence is a good idea. </p>
<p>Very true that one cannot count on an “average” salary or any job at all. I think an actuarial analysis would likely give my son a high probability of earning an above-average salary, because he’s a pretty bright/talented kid compared to the “average” CS undergrad, but I realize that there are of course no guarantees in life. </p>
<p>And he might very well go on to grad school. This would not likely incur additional debt in his fields of interest, but his original debt (the loans would be mostly unsubsidized) would be accruing additional interest during that time.</p>
<p>I think it argues for caution, but overall I’m still not feeling like an upper bound estimate of $30K in loans is totally unreasonable to consider. (I’ve already taken into account likely tuition increases, which would be an issue everywhere except possibly the school with the full-tuition scholarship offer.)</p>
<p>mathmovt - What kinds of schools are we talking about here? Is it a really solid program?</p>
<p>Also, be careful about assuming that your son would be brighter/more talented than the average CS undergrad. That field draws some some really sharp people - some of the very best, especially if you’re at a strong CS program. He’ll see lots of national merit students.</p>
<p>By the way, I’m speaking from experience about the loans, and the field. The $30k loan will be gone in a very few years if he wants to be rid of it. Honestly, i wouldn’t flinch at twice that. If he enters a PhD program in CS, it will be free, plus a monthly stipend that will cover living expenses. Even many MS programs are free, or heavily subsidized.</p>
<p>All 4 are solid programs, but the one with the highest debt potential has a top-10 CS graduate program and is highly ranked overall. He certainly wouldn’t be among the top CS students there, but he’d be competitive, and he’s definitely among the top CS students in the country when considering all the many programs out there. He would almost certainly be near the top of the class at the somewhat lower-ranked schools where he has substantial merit aid and honors college invitations.</p>
<p>I’m a computer scientist myself, so I’m not totally ignorant of the field, though I am admittedly somewhat out of touch with the current opportunities for interns and new grads.</p>
<p>Unsubsidized loans:
We started paying the Stafford on the second month of his attendence. So if the 1st semester is $2250, we paid in October, fist installment on the ten year schedule, full 1st year expected $5500 loan. We never capitalized the interest. On his graduation, the balance was ~$18K; We consolidated the Stafford to a 15 year schedule. Its a lot easier to pay a reduced loan over 19 years rather than the full amount + Interest over 10 to 15 years.</p>