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Student Loan Debt: Stupid Decision?

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  • LegHead1
    replied
    I went to community college before attending a UC (University of California) they had a direct transfer program from the college in the same city. All the UC professors taught there as well, as part time work, so it was like you were receiving the UC education at the CC price.

    I was till able to live in dorms and have the whole college "experience." It saved my dad and myself a ton of money, we estimated at least 30k. Plus I had to tack on two extra quarters at the end, because I switched majors twice, so always factor that in.

    All in all, education is one of the best investments you can make for yourself, no matter what your area of study, but there are ways to get a great education for a cheaper cost.

    I agree with Fizgig, a liberal arts degree will most likely land you a low-paying job to begin, and theres nothing wrong with that, as long as it's your passion. However, you mentioned you chose this school for it's "alumni" connections, which I think is a little ridiculous. Its 2010, and with social networking tools like Facebook, LinkedIN, etc......networking is easier than ever.

    In the end, pick a school you enjoy. I think its amazing that you are already this financially responsible at this age, but relax a little. You have the rest of your life to worry about bills. College was the greatest time of my life on so many levels, and I'm sure most here can agree. So enjoy it, don't go crazy with loans, but find out what you are passionate about it and pursue an education in it. Whatever you choose, the money will be worth it.

    Leave a comment:


  • Fizgig
    replied
    I do think it's a mistake to borrow so much, particularly for a liberal arts degree.

    Imagine yourself post graduation. The average starting salary for a graphic designer with a bachelor's degree is $33k a year. After taxes that's about $2200 a month net. $72k on a 10 year repayment schedule will cost you about $800/mo, depending on interest rates. If you pay over 20 years, it'll be around $500.

    Do you really want to saddle yourself with that? Sounds horrible to me.

    I agree that community college is a great idea. That's what I did - paid cash for my first two years, then transferred to a 4-year university to finish up.

    Leave a comment:


  • Mike75
    replied
    Originally posted by akm5231 View Post
    First, a little information:
    My parents make about $70,000 a year. My dad is a high school science teacher and my mother is a teacher's aid.
    They have no debt, own their house, don't spend ridiculously, etc.
    My older sister attends a community college, which is obviously relatively inexpensive.
    However, my twin sister and I both go to Penn State University Park which is about $24,000 a year. We get financial aid though, so it ends up being about $18,000 a year for room/board/meal/tuition.
    My parents had no college savings for us, so we're both paying entirely with loans. That means I'll be about $72,000 in student loan debt when I graduate.
    I am hoping to live off campus my junior and senior year to save about $4,000 a year, so it might be about $64,000 in the end.
    I should probably mention that my major is graphic design (though I may change to advertising) and my sister's is journalism- we both chose PSU because we thought that, for the degrees we wanted, a state school wouldn't have quite as many alumni connections.

    My question is, am I making an entirely stupid decision here? Is this amount of debt unheard of? How much does someone have to make a year to be able to pay that back? I think about this constantly and just figured it was time I got some answers.
    No, I don't think you are making a big mistake. You are saving the money wherever possible, which is very good. Just concentrate on your studies for now. Sto worrying abouty our future. Getting good grades in classes is very important.

    Leave a comment:


  • ActYourWage
    replied
    Originally posted by KTP View Post
    I like this suggestion a lot!

    I also like the idea of actually thinking about what your degree will mean in terms of income *before* you rack up 50K of debt. We have too many young friends who have a degree in underwater basket weaving and complain that they can't find a job that pays more than working at Starbucks. It would seem to me better to make that type of education more of a self study hobby and get a real degree in something that actually pays (finance, medical, engineering). Just an idea...
    I agree too. Keep your debt as little as possible, you will thank yourself 4 years later. And the suggestion to have no more than $120k in debt if you are to start at $40k or even a 2:1 ratio is ludicrous. Remember, the borrower is slave to the lender. Stay away from debt.

    Leave a comment:


  • akm5231
    replied
    That's actually a good idea. I'm thinking of switching to advertising/marketing...I'm not quite smart enough for science/math related majors hahah.

    Leave a comment:


  • KTP
    replied
    Originally posted by floridaharris View Post
    Could you go to community college for the first two years and then transfer?
    I like this suggestion a lot!

    I also like the idea of actually thinking about what your degree will mean in terms of income *before* you rack up 50K of debt. We have too many young friends who have a degree in underwater basket weaving and complain that they can't find a job that pays more than working at Starbucks. It would seem to me better to make that type of education more of a self study hobby and get a real degree in something that actually pays (finance, medical, engineering). Just an idea...

    Leave a comment:


  • floridaharris
    replied
    Could you go to community college for the first two years and then transfer?

    Leave a comment:


  • akm5231
    replied
    Okay thank you that's very helpful! If only I liked math or science, I could be in a major that would make me some money one day, hahah

    Leave a comment:


  • jIM_Ohio
    replied
    Originally posted by akm5231 View Post

    jim_ohio, you said you had 70-90k of debt, started out making 39k, and had no debt after 8 years--how does that work? Did you start making more during those 8 years or did your salary stay at 39k?
    year 1 I made 39k
    year 2 I made around 42k
    year 3 was a big raise- I think around 47k
    and years 4-5-6-7 were good to me- probably was making close to 60k by year 7, but do not know for sure. I make more than that now...

    My student loan payments were

    $190/mo on private loan 1- about 13k borrowed at rate of 11% variable
    $190/mo on private loan 2 about 13k borrowed at rate of 11% variable
    $95/mo on private loan 3- about 9k borrowed at rate of 10% variable
    $325/mo on stafford loans 1-12 I think... about 50k borrowed for 6 years of school, 5% type rates variable

    I just rounded those first 3 payments up- sent $200-$200-$100 to each payment
    within 2 years I was only sending $150 to the first 2... and soon after was only sending $125 or $100 and that was more than the minimum.

    I received a couple of bonuses and made a big lump sum payment on one of them, then snowballed that into all the others.

    My student loan payments were more than my rent for about 4-5 years after school.

    Leave a comment:


  • akm5231
    replied
    I'm paying in-state tuition. I couldn't even imagine going out of state, in-state is bad enough in Pennsylvania.
    And to minnie1928, I'm only a freshman but my sister and I both entered with a lot of credits, she had 24 and I had 12 which is more than most students I know. Also, we took a summer session which was 6 credits. My sister is actually expected to graduate a semester early which is good news.

    jim_ohio, you said you had 70-90k of debt, started out making 39k, and had no debt after 8 years--how does that work? Did you start making more during those 8 years or did your salary stay at 39k?

    Leave a comment:


  • jIM_Ohio
    replied
    Where you get your Bachelor's degree from matters little... just get the paper and some entry level experience, be good at what you do, and your career will take off.

    If you need an advanced degree- like teaching, doctor, lawyer, or take on an advanced degree to help you- like engineering, MBA or similar- the school you get the advanced degree at matters much much more.

    The biggest issue is do not debt scare you when you are 22 years old. Respect it, but do not fear it. I had somewhere around 70-90k of student loan debt when I graduated, and my starting salary in engineering was "only" 39k. Debt was gone within 8 years...

    Your biggest risk in getting 100k+ of debt is whether you have chosen a field which can pay well. I think my ratio of debt:starting salary (2:1) is moderate, do not go any higher than 3:1 is my suggestion.

    If starting salary is 40k, then you want "no more" than 120k in debt. This is based on a Bachelor's degree... because generally what more education does (masters, doctorate, phd) is increase your earning power later in life... it might not actually be in your starting salary (doctors could finish med school with 200k in debt from 7 years of school, their starting salary as a resident or fellowship will not be 70k for the 3:1 ratio... but 5-10 years later their earning power will be much higher than the 3:1 I suggested).

    Leave a comment:


  • Beppington
    replied
    I listen to Dave Ramsey on the radio a lot, & while I can't rattle off exactly what he'd say or how he'd say it, I "think" he usually tells people that loans for college are not necessary, & that "you're nuts" to take on big debt. (He talks like that!)

    I can only suggest you try his website or books to find out the reasons and what he thinks the alternatives to school loans are. I'm sure grants, but anything else I don't know. He'd probably tell you to live on "rice & beans" and "beans & rice" while in school (& maybe even afterwards, especially if you graduate with debt) to keep your expenses down.

    I know $64K or $72K coming out of college would depress the heck out of me. Of course, if you like a challenge, that'd be one!

    Leave a comment:


  • minnie1928
    replied
    How far into college are you? If you are under 60 credits have you considered CLEP tests to get some cheaper college credits? If you do enough of them, that could knock off a semester (or more) at a huge savings!

    Leave a comment:


  • wincrasher
    replied
    Unfortunately you are both picking careers that pay very little in the first years.

    There are other threads on this site grappling with the same issue, is it worth it? Often you don't really know until you are neck deep in it.

    There should be a dept in your university that deals with placing graduates in jobs. They had one at my school - they had on campus interviews, etc. Talk to these people about what kind of companies are interested in your school's graduates and see what kind of information you get.

    For sure, you can expect to struggle those first 5 years making ends meet and paying off your loans. Don't dig the hole any deeper with credit cards and car loans. Expect to continue living with a roomate in an apt for those first years as well.

    Investigate your loan options and also look for grants and scholarships - there are many available to you as an ongoing student, not just going in.

    Good luck!

    Leave a comment:


  • Broken Arrow
    replied
    Is Penn State in-state or out-of-state tuition for you? It does seem a bit high to me.

    I do applaud your willingness to save where you can though.

    Overall, I don't think it's a stupid decision at all. If this is truly what you want to do for a future, there is no better investment to make for yourself than a career path.

    I went to an in-state university that, at the time, had the degree I was looking for and the tuition (minus room and board) was $7000 a year. I still ended up with about $40k in student loans, but that was largely because I was fairly oblivious about money at the time. If I was, it could have been even lower.

    Bottom line, if you are certain, stick with it. If not, I'd say take the community college route. I don't see anything wrong with that either. It's a cheap way to build up your pre-reqs.

    Leave a comment:

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