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Thread: For those with Student Loans
10-03-2006, 02:43 PM #1
For those with Student Loans
I would like input from those with student loans or those who chose to not go the student loan option.
My son is planning to graduate a year early. I still have a year but we are not agreeing on college costs.
DS is a very good student. High GPA and High SAT scores. He has chosen two schools that he would like to go to. One is $35,000 a year and the other is $43,000. Now he will get some scholarship money from the $35,000 a year school ( it is in our state) - we figure that we will have to pay about $20,000 a year with about $10,000 being paid in cash and $10,000 in student loans. His student loans would be nearly $40,000.
The $43,000 is an out of state college and he would be lucky to get $10,000 in scholarships. After the money that we will pay cash he would still have student loans of $80,000+ after graduation.
I totally disagree with both of these options. He could attend our state university and with the scholarships he would get - we would only pay out about $4000 per year. But he would not have any student loans.
His other choice would be a public university about 1 hour from home that will give him a full scholarship. We would not have to pay out anything other than normal living expenses. THIS IS MY CHOICE.
Here is the question? Do you think coming out of college with student loans is okay or would you take the "free" education over the big name university?
We do have college funds but he plans to go to graduate school and he will need money then.
- 10-03-2006, 03:24 PM #2
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From someone who has student loans, I would advise the cheapest way possible. What if he can't get a decent job right out of college? Those loans are still due. We'll be paying our student loans for the next twenty years. My dh has $60,000 in student loans. If one of the more expensive colleges is going to offer him a better chance (meaning a more respected college program) then I would take that into consideration, but there is no way I would choose a school that's 35 - 40K a year when there was a "free" option. I guess it really depends on what field he wants to go into. Some colleges can offer a lot more than others and offer more experience and opportunities and thus, may be worth the extra cost. Good luck with whatever you two decide to do. He sounds like a really bright boy. Also, I would really sit down with him and evaluate what he wants to do and research where he could likely work, what he would make starting out, where it could lead him, etc... Better to know before he gets a degree doing something he doesn't like and then has a ton of student loans to pay off.10-03-2006, 04:01 PM #3
For me college was much more than the classes. I learned so much from being around the other students and the faculty. To me, that is a huge consideration.10-03-2006, 05:07 PM #4
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i wish i had chosen the less expensive option. i have been out of college 11 years and still am paying on my student loan. i hate this thing with a passion. i thought it was more prestigous to have graduated from the University of Rochester as opposed to SUNY- Brockport. what an idiot i was. no one cares where i graduated from, just where have i worked and the quality of work i provide. don't let peer pressure ruin your childs finicial future.10-03-2006, 05:09 PM #5
I went to a $33,000/yr school and graduated in 2000 (I just checked the homepage, and its now $44,000/yr). I graduated with only the maximum allowable subsidized Stafford Loans (4 loans, one for each year, totalling $17,625). I have been sending them extra ever since the first six months of payments, and while I could have had them paid off last year, we chose to work on other financial goals instead because they are at such a low interest rate (3.75% - I consolidated and got a rate lock 2 years ago).
In my personal experience, it was easier to get my first three jobs because of the name of the college on my resume. After I had some work experience, it didn't matter nearly as much (although it did still impress some people, but mostly those who found out after I was hired). I think that this helped me considerably starting out, in part because my degree is a liberal arts degree - I'm not sure if "school name" matters as much for some technical degrees.
Also, I'd wait for the financial aid packages to come in - they can be a lot different that what you expect and can vary widely from school to school. I was accepted at 4 different schools and for the first year, the amount of money I/my parents had to pay varied from $8,000 to $16,000 - and the school that was the least expensive would have cost us the most out of pocket. And even if you think you make too much to qualify for financial aid, apply anyways. It only takes about an hour to fill out the forms (most of the info is from your tax return) and the worst that they can do is say no - and sometimes they say yes.
Also, once you get the financial aid packages - go back to the financial aid office and ask for more. After my 4 acceptance letters, I narrowed it down to two schools, and went back to ask for more money. One school didn't change their offer, but the other one increased their aid package by $2,000.
As far as paying on the loans for a long time - if your son's going to go to graduate school in a lucrative industry, I wouldn't worry about it as much (doctors and lawyers generally make enough to cover all the costs of graduate school). As much as it is nice to be debt free, educational loans are an investment in your future earning potential (IMHO). I'd willingly take on $80,000 in loans if I knew I was going to be making $200,000 per year. My only concern if how set is your son on this career path - lots of people change their mind while they're in school. I know that my career has absolutely nothing to do with my degree.10-03-2006, 05:12 PM #6
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give it to him this way - give him what you can (the figure, not the actual money ) and let him play with the figures for a few days. he needs to know that the loans will be his responsibility. make him add the figures up and realize that by the time he graduates, he'll have a degree but will be 75 plus THOUSAND dollars in debt. -- show him how long it will take to pay this amount back (even when youre sending hundreds of dollars in monthly payments). -- a degree is a degree out in the work field. whether you graduated from texas state @ rio grande or NYU.. if you dont interview well, youre not getting it. the job market is very competitive with more and more young (and not so young) people graduating from college. when i was interviewing, theyd have us sit in waiting rooms, every single person had a degree. every last one. jobs are scarce, so why spend so much money for something that you can get for less? -- i agree that the "college experience" is one that is unlike any other and that he should have it, but for 40 thousand dollars a year, they better be providing textbooks and an entire meal program and a single room that is larger than 7 by 10 feet.
i think that letting him do the math will make a difference.
when he graduates, does he plan on getting his own place? a car? utility bills and other expenses that come up. all of this will need to come out of his paycheck from the job he gets with his degree. how much of that is going to be left over to go towards loans? that means no savings. unless he pays the minimum, and then he'll be paying forever! -- what about getting married and buying a house and buying a car that HE LIKES and can buy for himself.
im sorry to go on and on. but even with my college debt of 7500.. its hard to get more than 100 out to them a month. i have a car payment now, insurance, rent, utilities, groceries, and extras (being furnishings for the apartment, clothes, eating out) i have to watch every penny, and i make decent money!! but the cost of living where my job is is higher than where home is. so even though i make good money, not very much of it do i get to keep. student loan officers DO bend over backwards though, to help students pay on their debt. but a 75 thousand dollar debt is still a 75 thousand dollar debt.10-03-2006, 05:31 PM #7
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My advice is to sit down with your son, and together make a list of all of the benefits of each school. Include things like class size, graduation rates, graduate employment rates, enrollment numbers, career prospects, programs offered, education level of professors, diversity of population, etc, but do NOT include cost in your factoring. Including cost might cause you to ignore the more important things that a school offers.
Now look at your lists, and throw away the school that will offer the least benefit.
Now that you are down to 2 schools, factor in cost. Factor in things like trips home, food costs, gas, textbooks, any other cost you can think of.
This is what I did, and I selected the cheaper of my 2 final choices. I could have gone the "free" route, but the free school just couldn't compete with the benefits the other two offered. Going to university was not something I wanted to do twice. I don't think that an education is something you should be shopping the "loss leaders" for.
I have 60,000 in student debt to pay off, and I will be paying it off for the next 10 years. But I would do it again in a heartbeat, because while the debt may last 10 years, the education lasts a lifetime. There is nothing that will offer you more choices in life than an education.
I would never, ever, ever, have taken the "free" education over the higher quality universities. For me, the free education was just not what I was looking for. Every time I tried comparing it to the other schools, it came out in last place. With a good education, unless you refuse to move where the work is, there is no reason why you will not get a job once you are finished. If you are worried about this, you can check out the employment rates in that particular field for where you live.
I invested 60,000 in myself, and the future of my family. That was the greatest investment I could ever have made.10-03-2006, 05:32 PM #8
I would go for the FREE education.
If it's me, I would go to the Public University (FREE) for a year or two, and see how it goes. If after going to the public University for a year or two, and he still wants to go to the other college and is serious about his major, he can always transfer to the other college. After transfer, he will still graduate under the other college, but won't cost as much.
I changed my mind twice the first 2 years, while attending college. This cost me a lot of money. (I'm still paying for this debt)
BF also change his mind after attending a more expensive college for a year, and we're still paying for this debt.10-03-2006, 07:22 PM #9
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Well, I had college loans and I just finished paying off one loan. I still have student loans. The interest rate is low and the payment is manageable. I went to a private school so my cost was higher compared to going to a public university. However, every year I was there, I received more grants and scholarships.
It sounds like you have an intelligent son and the college experience is important. I imagine that you've visited all the universities. I think it's important that he attends a university he really feels comfortable with. For me, by going to a smaller school, I was actually taught by the Ph.D's, not a teaching assistant. Also, my professors were American so I could understand them.
There is really a lot to consider. The cheapest college/university isn't always the best choice.10-03-2006, 08:09 PM #10
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Having just put our #3 graduate through (with no student loans) college I can speak from experience from your point of view. All 3 of our dk's went to state colleges, got lots of scholarships and did very, very well in college. They lived on campus, had the whole "college experience" which I have to say is part of the growing up part of college. I wouldn't change that even though it would have saved us money for the kids to live at home and commute. The 2 oldest kids have their full degrees and work in their chosen fields and do very well. The oldest works in a computer related field. Our son is working as a communications director (read Toby on the West Wing...only not for the president) for a congressman from Washington state. The youngest graduated cum laude' in May and has since returned for a 1 year secondary nursing degree. She is doing this on loans b/c we chose not to payroll masters, ph.d.s, secondary degrees, etc... thinking that we need to save this money for retirement now and we imagined that we could be funding college for the rest of our lives if we so chose. Now, having said all this...... In our situation, we didn't give our kids the choice of all colleges. If we were going to be paying they had to choose a state school. One that would provide lots of scholarships, etc.... . Personally I wouldn't take away the choice of living on campus. Honestly, that's the part of college that the kids actually look forward to. You have to do what you can live with, afford and I believe it's important not to saddle the graduates with lots and lots of debt. Our ds who lives in D.C. said recently that if he had student loans like his wife does that they wouldn't be able to afford to live there b/c of the cost of living. In closing I have to say that I don't think the name of college is important as what the student achieves in college is.10-03-2006, 10:26 PM #11
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I'd say it depends on the career path. Not a financially good place to be a social worker with $80,000 of debt.
It's still all monopoly money to high school kids.
That being said, I went to a small private college on scholarships and loans. Once all the aid packages were in, it was actually cheaper for me to go to the private school. I paid off the 10 year loan in 7 years. I was taught by the professors, I never knew what a TA was, and my classes were small, all professors knew all their students well. I thrived at a small school.
Part depends on what a particular school is known for academically. Many public schools have a better reputation for a particular field than a private school. So one question is how good is the school in the particular field your son wants to study. This is more important than the status of the entire school.
After graduation, the name on the diploma helps with the first job and possibly with contacts in getting that job. After that it's all on merit. And the only other thing the name does gets used for after the first job is the Joneses factor - name dropping, status, snob factor etc.10-04-2006, 11:17 AM #12
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It really depends on what degree he is planning on doing. I went to an itty bitty university in Quebec for my degree because it is known for its strong alumni network (I could almost say it's notorious for the level of its alumni support). I was accepted and although I could have received scholarships at larger universities (keep in mind we don't have the public and private university system you have in the US), I chose to go to my school because I was interested in going into a profession where a lot of things depend on "who you know". The gamble on my choice of schools paid off, I graduated with a really impressive network (considering I was in my early 20's) of alumni contacts who have been very helpful at various times. That being said, if I was interested in sciences...my university wouldn't have been as strong a choice.
I decided to move across the country and that cut my income by $25k a year. I've been rather fortunate in the last 4 years and that made me lazy but we'll see if I can get my frugal ninja skills back.
Monthly No-Spend Challenge - January 0/15
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Money Booster challenge - 0/$2500 **this will change dramatically if I get a 2nd job**10-04-2006, 01:52 PM #13
10-06-2006, 03:20 PM #14
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Thanks for all of the input. There were a few things that I really hadn't thought about. Basically, I don't think we qualify for financial aid that is need based. So I have only been looking at the merit based financial aid. He has 1400 on SAT and is in the top 10 percent of his class.
But for the two private schools he has chosen 1400 is just the average SAT - so he wouldn't be considered a super student. Also, his eventual goal is to be a political advisor or ambassordor. I know he will either need a law degree or a master's degree.
Also, no matter what college he choses he will be living on campus.
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