<p>my family is just starting to think about college debt so im trying to think ahead to after college. Please tell me if the following makes sense or if im totally off. </p>
<p>I will (hopefully) be attending a five year BS/MS. The college I am (hopefully) going to has a 100% employment rate over the last few years for this program, with the avg salary being 70,000. So lets say after 5 years I have 100,000 dollars in debt. (hopefully less than that but im being conservative in this scenario) If I pay 20,000 dollars a year towards my debt, I will have paid this off in 5 years. I plan on getting an apartment in pittsburgh, and the highest iv seen for a one bedroom is 2000/m. so that comes out to 18,000 a year, leaving me with 32,000 to do with as I please for those five years. To me, this seems like i would be able to live relatively comfortably and pay off my debt quickly while still graduating with such a massive debt. This doesn't even take into consideration a pay increase. So in my scenario, is 100,000 dollars an acceptable amount of debt?</p>
<p>I am sure someone with a lot more energy than I have will give you a much more detailed answer. I will limit mine to two words…</p>
<p>Taxes and Interest. </p>
<p>Okay, lied. I will add 2000x12=24000 not 18000 and of course you might want a phone, heat, AC, an occasional bite to eat, an outfit to wear to work and a way to get there.</p>
<p>What are you missing? How about income tax & other withholding from your salary (you will not be taking home $70,000 a year) & interest on your loan (you will be repaying a lot more than $100,000 if that’s how much you borrow). Also, wouldn’t a $2000/mo apartment come to $24,000 a year, not $18,000?</p>
<p>You are forgetting taxes, insurance, etc in your calculations. $2000/month for rent on 70K salary is WAY too high, $100,000 in debt is WAY, WAY too high for a 70K/year job in a high cost of living area. Go online and find some budget software or examples of a typical budget. Taxes, insurance and contributions to your retirement plans will take half of your take home easily. Then add in rent, utiltites, gas, car payment student loan payments and you have no money for silly things like groceries. I would suggest taking some king of money management/life skills class before you graduate too.</p>
<p>Taxes for one thing. Your $32,000 will be much less when you factor in taxes. Then don’t forget about such things as food, clothing, electric, gas, car expenses, insurance, cable, phone, and everything else. Your rent is only one small piece of your budget.</p>
<p>A good rule of thumb is to not get more loans than you will earn in one year.</p>
<p>ohh whoops i meant to write 1500/m bc i was going to limit myself to that. I estimated really high on the loans to account for interest; if i pay it off in five years is it really going to be more than 10,000? </p>
<p>taxes are what i was missing! how much will be taken out of an income of 70,000 apprx?</p>
<p>hmm i understand the rule about not getting more loans than i will earn in one year, but i felt that it didn’t apply to this situation because i’m also getting a graduate degree. should i still aim for less than 70,000 though?</p>
<p>You should aim for NO LOANS. It’s not always possible to get out with no loans but taking anything over the federal loan limit is just not a good idea. First, YOU can’t take any more than the federal limit, your PARENTS have to co-sign or take the loans for you. Are they ok with that? I know we won’t take any loans for our kid to go to college. What is your degree area and how do you know the salary in Pitt will be 70K and how do you know you will get a job in Pitt? What happens if you don’t get a job for 2 years and have to defer your loans racking up a lot of interest in the process or worse, you have to PAY your loans because you took private loans? No, it is not a good idea no matter how you try to justify it. Find a less expensive school.</p>
<p>It’s a Physician Assistant program. They have a 100% 6 month employment rate, and most of the students have multiple job offers before they even graduate. The profession is also expected to grow 30% in the next 10 years. I understand that things can change, but the odds appear to be very much in my favor. No loans is practically impossible with the competition in admittance for this type of program. From what I’ve read, pittsburgh has a relatively low cost of living. with my (very conservative) estimates, it seems like i would be able to live decently for the five years following my graduation and then be debt free, even with taxes. Am i wrong only for not accounting for the possibility of unemployment?</p>
<p>While you obviously forgot taxes and loan interest as well as utilities food and leisure spending I think a 100k loan for a profession that pays and is in demand is not un-realistic . It’s better to have a loan and a guaranteed(if that is truly so) well paying job than no loans and a degree that may not bring in any job, given today’s market. Just make sure you have your facts correct about job placement</p>
<p>I would look into a rural medicine program if you are thinking about being a PA then. They have loan forgiveness programs, similar salaries and lower costs of living. With merit aid and outside scholarships, getting your UG paid for at close to 100% after federal loans, so a max of $27,000 when you graduate is very possible and done all the time. Add another few thousand for the last year and you should easily be able to graduate with half of your anticipated debt or less.</p>
<p>Let’s run some quick and dirty numbers here.</p>
<p>Assume that you borrow the $100,000, and now it’s five years later and you have your $70,000 job. You’re living in a fairly high-cost area. You’re planning to pay off your loan in five years.</p>
<p>First of all, Social Security taxes will be about 7% of your income, and federal and state taxes will be about 20%. That makes 27%. You’re down to $51,000 a year.</p>
<p>Your student loans are not interest-free. Assume the current interest rate is around 7%. To pay that loan off in five years, you’d have to pay about $2000 a month, or $24,000 a year. Now you’re down to $27,000 a year.</p>
<p>I do hope you don’t insist on $2000 a month for rent, because then you’d only have $3000 a year left for everything else: food, transportation, clothing, insurance, savings, phone, Internet, entertainment, utilities. Say instead you pay $1000 a month for rent, so you have $15,000 a year for everything but rent. How much were you planning to pay for a car? Maybe you’d better buy a bike instead.</p>
<p>why do people seem so against loans? if one person graduates with 100,000 dollars in debt (interest included) and a 70,000 dollar salary, and another graduates debt free with a 50,000 dollar salary, the difference is made up in just five years! is it just the possibility of unemployment?</p>
<p>Everything that everyone else said, and … why $2000 a month rent for a one bedroom in Pittsburgh? You could spend $1000 a month and still be spending more than average in that area.</p>
<p>^You can live in Pittsburgh without a car and there area lots of studio or one bedroom apartments for under $1000. But yes count on at least a third of your income to disappear to taxes.</p>
<p>Sure, if it is just food and random expenses but with that figure you need to get auto insurance-probably $200/month or more, contribute to your retirement accounts at probably 6% so another $4200/year, do you want electricity, heat, air conditioning, cell phone, TV, clothing, gas and upkeep on your car, etc., etc. What about health insurance? Are you planning on getting that? That’s probably $3000/year or so too. </p>
<p>I’m not against loans, I am against a 23 year old kid having that kind of debt thinking that it’s a good thing. Those of us that have lived longer than you know it is not. Now, if you were going to be making say $300,000/year when you graduate, that $100,000 is not a big deal. </p>
<p>It CAN be done without taking on that kind of debt, easily.</p>
<p>How much do you suggest i should have for all of this then? because by your reasoning it would be impossible to live normally when making 50,000 dollars (the median starting salary of college grads) even if debt free</p>