We are at a point right now where daughter is deciding between a state school who offered her about 30% of total cost in scholarship plus honors program, and a private school who also offered about 30% of total cost, no honors. With what we can provide her in cash, she could potentially attend the state school with zero or very limited debt. With the private school, PLUS loans would be required, and the debt load would be about $16,000 per year.
I am not comfortable with that amount of debt. That said, I do want her to make the right decision. She is currently leaning toward the state school, but it makes me second guess myself a little. I want her to be happy, to get a good education and have a good experience, and be safe of course. She was also accepted to a bigger, more prestigious state school which would also be affordable due to parent employee discount, but she is not even considering it because it’s too big and too close to home.
Is it ever worth it to take on this kind of debt for an undergrad degree? I think not, but I’m asking for broader perspective.
My son just graduated debt-free and I have to tell you that it is a wonderful feeling. Not only did he receive an excellent education, he was in the position to take his dream job even though it is not high paying.
If she is leaning towards the no debt option, support her and look forward to her debt free future!
The average college student borrows approximately $28,000. In my opinion, borrowing even that much requires some serious thought and borrowing twice as much requires extremely serious thought. The problem with having that much debt is that it constrains your future decisions. It’s harder to borrow for grad school if you already racked up $60K for undergrad. It’s harder to choose whatever job you want (as pugmadkate describes) if you have those debt payments; not only do you have to worry about how much the job pays, you also have to worry about living expenses – young people often have to move around when hunting for jobs but if you have that $700 a month loan payment monster on your back it’s harder to do that because you can’t afford to live away from your parents (or else live in a poor-quality neighborhood).
Borrowing isn’t always bad, but it’s not something I would push someone into if there were other options. If your daughter wants the no-debt option, that’s good news for all of you. People sometimes assume that the more expensive something is the better it is but that’s not always the case for colleges. Sometimes the more affordable option is just as good or even better than a more expensive option, so you’re not necessarily choosing between a ‘good’ school and a ‘cheap’ school.
Private school costs, in particular, tend to go up each year. And there are additional costs to attending school, as well. So the $16K could easily become $80K by graduation time.
For me, there would have to be an awfully compelling reason to take on that amount of debt. If your D wanted to pay the loan off in 10 years, that would be $667 for principal from every single monthly paycheck, plus interest. That is a significant financial burden for someone just starting out in a career.
We had to have my D turn down university of Chicago and Michigan, it was much too expensive and not enough aid. If she gets into grad school then we will pay but undergrad couldn’t swing it.
$16,000 per year ($64,000 total for four years, more if she needs extra semesters, especially if the scholarship ends after eight semesters) is significantly more than what a student can borrow without needing a cosigner (usually the parent). Cosigning student loans is often a bad idea for both the student and parent.
Private versus public alone is not a useful distinction in terms of which school is better for the student (in ways other than cost). It depends a lot on the specific schools and the student’s interests.
I personally is more willing to help pay for UG than for grad/prof school. For one thing, there is a chance that he or she may not be willing to attend a grad school 4 years later. In some career path, the nature of training at the UG level may be quite different than that at the grad level. Depending on the major, the career prospect of a student with a grad degree is not necessarily “better” than that of a student with “merely” an UG degree. (I think some of you have heard of “being overqualified”, or even worse, being accused of being overly academic. i.e., another way of labeling somebody as being impractical or the real reason is that the company, being “cheap”, is unwilling to pay for your additional training/education.)
On the other hand, depending on the situation, the debt of $16,000 a year is something to be concerned about. (But we paid for a similar amount of additional cost (maybe even more) many years ago, and some CCer from our state back then said we were “crazy”. LOL. But we had some money saved in our 529 so our child did not have to accumulate the student loan debt starting at the UG level.)
^^ @mcat2 The OP didn’t say that…that is another person’s quote.
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and the debt load would be about $16,000 per year.
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that is too much debt…period. And it shouldn’t be the D’s choice. Your D should not be deciding how much debt her parents take on. It sounds like she’s leaning towards the state school, so good. let her go there.
An undergrad’s school name means very little unless she’s pursuing a Wall Street job.
I wouldn’t take the big school off the table just yet. My daughter thought she wanted a smaller school, about 3000, and ended up at a flagship (abet a 10000 UG one). She loves it. Most big schools have a way to make them smaller - honors programs/housing, freshmen interest groups, freshmen dorms of special interests.
If she’d be happy at the smaller state school, that should be her choice. If she decides to be happy, she will be. Don’t choose the debt just for the name of the school.
Also, wanting to be farther away from home may seem very appealing at 18, but 10 years after graduation, passing up opportunities for that reason will seem a bit stupid. Tell her she can study-abroad (and be far away from home) even if she goes to the big prestigious state school.
Seconding guessing yourself for not taking on debt doesn’t make much sense to me. You haven’t said what the schools are or what her interests/majors are. Big difference (IMO) if the choice is between WMU and DePaul or between WMU and Yale.
I’d be taking a third and fourth look at the bigger state school just to make sure she’s not rejecting an excellent academic and intellectual option because she’s worried that her parents will be dropping by at 9 am Sunday morning for brunch.
Yes, college is a three ring circus. But it’s primarily an academic and intellectual experience, and before I encouraged my kid to head off to a second tier public institution (if in fact that’s what you’re describing- too hard to tell from your description how big the gap is) just to avoid the close to home option, I’d be making sure that you’re not all looking at this with the eyes of a 17 year old.
The debt- too hard to tell without knowing what your D plans to study. One of my nephews had comparable debt- he paid it off early by living like a college student during his first few years in the working world (no car, roommates, entertainment was making chili and having friends over, not eating out or going on ski weekends). He landed a high paying job, and is very glad he “traded up” with his education at a college that suited him very well and got him launched professionally. If he’d had expensive tastes during his first few years of work, or had opted to become a nursery school teacher, the story wouldn’t have such a happy ending.
So YMMV. You need to evaluate what you are getting with the debt. A significantly better education? or just a fancier dining hall. Strong relationships with professors who can arrange a study abroad fellowship (fully funded) with one phone call? or just more treadmills in the athletic center and fluffier towels.
I can’t tell you how happy DD1 was to graduate with no debt. Her first job was low on the salary scale and the lack of debt made it workable. DD2 graduated with very limited debt ($13K) and paid it off in a year because she just didn’t want it hanging around.
@blossom, what a refreshing perspective that runs counter to the stream!
The idea that college is transitory (4 years), while your first job could set the stage for a lifetime (each subsequent job application will ask what your salary was at the last job, and give an incremental increase over that). Sometimes it is better to take a more expensive college experience in order to reap the rewards. Sometimes, the rewards will end up being the same, and you may as well have spent a week in Vegas with that money. It is hard to know in advance.
In this case, going with one of the public options sounds like the best bet. If the private school is not meeting full financial need for the student, it is not likely a very good choice!
The private school might also be a second (or lower) tier (by whatever definition) school as well. Given that none of the schools are named or described in any way other than private or public, no one else can know.
We’re in Ohio folks. The big one with the discount that she’s saying no to is OSU. So, it’s not 10K big. It’s 50K big and quite urban. And it’s not for everyone. She’s admitted to engineering, plans to study chemical engineering. The private school is not HYPSM. It’s in Ohio and not Case. The other state school is more moderately sized and frankly, her stats will put her at the top of the class rather than in the middle. My personal opinion is that the state school and the private school are relatively equal in prestige w/r/t engineering. The public requires a co-op too, so should help with job prospects (although chem e’s usually don’t have trouble finding work). That said, as long as she makes it through, her income should be decent.
She seems completely sure of saying no to OSU, and I’m ok with it. I’ve told her that if she’s unhappy and she wants to transfer, she WILL transfer to OSU because that’s what we can pay for after she loses out on merit money. She also received another merit offer from another Ohio public eng school which would make it affordable as well, but she was not open to it at all. I don’t know why except for maybe location.
Our eyes are wide open on all of this. We are intimately familiar with the engineering world and what it will take for her to make it through (especially everyone who always say, ohhh, chemical engineering is the hardest one!). Both of her top 2 programs seem relatively good at helping students succeed. My gut feeling about OSU is it is more about the student himself/herself than the school worrying about their success. While she is definitely intelligent and disciplined, I think OSU would not be the culture that would make her happiest, but it would suffice if need be.
My spouse personally took on about $40K in debt 20 years ago for a prestigious engineering school, but he had financial need and his parents didn’t need to take out the loans. We made it ok, but those 10 years were lean years and we lived in an area with a very low cost of living (though with also relatively lower salaries). His education has paid off now, 20 years later, but it required moving from job to job to see that growth. But, I tend to think the world is a little different now than it was then. Hence my hesitation. We have explained to her that she does not remember what it was like to scrape by because she was too little to know the difference. Sure, it builds character and resourcefulness, but if I had to do it over, I’d choose a little better income/disposable income situation. I also took on a small amount of debt for grad school as an adult (about 12K or so) and paid it off in a few years, after having zero undergrad debt going to a second tier public school on scholarship (but got a great education). But, in both these time periods, we had two incomes paying the bills. There’s no guarantee that she will have that luxury.
So you see, I do see both sides of this situation. I think that’s what makes it more difficult to weigh the options.
You know your child best. If she’s the kind of kid who cheerfully accepts trade-offs in her life (like if she takes skating lessons this winter, it means no money for for a pool membership in the summer; or “pick one- prom or senior weekend, but not both”) then she’s a good candidate for the lean years once she’s paying off her loans. If she’s the kind of kid who has trouble not being able to afford what her friends are doing, then the paying off years could be very tight.
I can’t comment on the schools themselves not knowing what the options are. And obviously, even kids accepted into engineering programs with a good idea of what’s involved switch majors all the time. So I’d be making very, very sure that there were good non-engineering options at any school my kids were considering even if the kid was 100% convinced of his/her path.
When is the private school education worth it? When you’re willing to pay for it with your own hard earned money. I have been asked since my child was in K whether or not her pricier private school was worth it. Now she is at Yale and I hear the same. My threads are clear - my H and I decided to spend our money on her. And yes, we are blessed to have these options.
Parents who choose not to spend, no matter what their income, are well within their rights. I just strongly believe that kids should know the parameters up front. I have a friend who allowed her son to apply to a school ED and now she is unwilling or unable to pay for it since he did not get any scholarship money. Now the poor kid is scrambling to find scholarships and may not be able to go to his “dream school”. To me, this was poor decision making. But, this is America and we all have the right to make decisions we have to live by.