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Student Loans

ZeehatZeehat
edited November 2008 in Everything Else
How much is too much?

If a person is planning a career in technology (CE/SE/CS..etc) how much borrowed money is generally acceptable. This meaning you can pay it off in a mannerly fashion, without living like a bum. It may help if you wish to share how much you have or will take out in loans, and the method of payback.

Here is the situation. Imagine a person has two options for an undergraduate degree. One option is to go over the border to a State school, on close to a full ride (excluding books). This person would receive renewable scholarship based on their contribution to their respective varsity athletic team, and from their strong academics in high school. This school is about 14 hours away on a bus. Unfortunately, the possibility to study engineering or another technical field may not be there. Should the person take the scholarship and take something else? This person's passion is technology, and would not be too happy doing something else (ie: science). I should add, this University is just average. Nothing too special about it.

The other possibility is to go to a very strong, and well respected local University. They have a plethora of technical fields of study, and the person can get into all of them. The student can receive academic scholarship, but will need over an 80% average to renew them each year. (Is it THAT hard to do in engineering?) The student will not take part in the varsity sport, however as a result, more time will be available to do his coursework leading to a higher GPA. Option 1 may cause the student to get low grades, due to the rigor of athletic training/ performance. Also take into account, with a higher GPA and a respected degree from a very respected University, job offers may be abundant. Thus loans may be paid off quickly, and the student may make more $$$ in the long term. The student likes this choice more, but everybody is trying to make the student take the larger scholarship offer.

The catch? The student needs to give the final answer to the coach this weekend, because the NLI (national letter of intent) would be sent out early next week. The student is having a huge dilemma over this, and is not sure what to do. The student wants to go locally, but is scared the approximately $30,000 (or a bit more) student loans debt at the end of their undergrad will sink them in life.

Option one, the student would live in dorms, which is not appealing. Option two, in a bachelor apartment. Public transportation will be the method of travel, but, it will be free.

Help the student in need FRC, you're it's last hope.

Comments

  • csrjjsmpcsrjjsmp
    edited November 2008
    Is 'the student' you?
    Location matters a lot. So does willingness to work summers or part time during the school year, where/how you expect to be living after graduation, what field you plan to go into, etc.
    The conditions of the loans also matter. There are special interest-free student loans, some of which even give you a grace period after graduation, and some loans which are not so nice.

    As for how much is too much, I would be unwilling to take on more debt than I expect to be able to pay off in 3 years after graduation and finding a job. Exactly how much this would be varies widely.
    Post edited by csrjjsmp on
  • snookernetsnookernet
    I would go with the second choice, considering you'd probably have a better experience there.

    Option 1
    Pros:
    -cheaper
    -get to play sports

    Cons:
    -dorm life
    -average university
    -long bus rides
    -lack of programs

    Option 2
    Pros:
    -apartment life
    -local university
    -programs you want
    -well respected
    -free public transportation

    Cons:
    -more expensive
    -more demanding (probably is a pro)
  • ZeehatZeehat
    edited November 2008
    That's similar to what the student is thinking sneakernet. The student has pages of pro's vs con's for each option. The biggest thing is everybody who has influence says that $30,000 in student loans will completely ruin your life. No car, house, family- ever. etc. The student wants to know if this is an average amount of loan, very little, or if it will ruin their potential career and life.
    Post edited by Zeehat on
  • csrjjsmpcsrjjsmp
    That's similar to what the student is thinking sneakernet. The student has pages of pro's vs con's for each option. The biggest thing is everybody who has influence says that $30,000 in student loans will completely ruin your life. No car, house, family- ever. etc. The student wants to know if this is an average amount of loan, very little, or if it will ruin their potential career and life.
    It is not an average amount, but that does not mean it's impossible to deal with. My friend got a MechE BS while building up a $24,000 debt and paid it off in a year and a half while living with his parents. However, this is in the San Francisco Bay area. That question is very difficult to answer definitely without more information.
  • Kate MonsterKate Monster
    That's similar to what the student is thinking sneakernet. The student has pages of pro's vs con's for each option. The biggest thing is everybody who has influence says that $30,000 in student loans will completely ruin your life. No car, house, family- ever. etc. The student wants to know if this is an average amount of loan, very little, or if it will ruin their potential career and life.
    It won't ruin your life, you just need to budget for it. Go into it knowing what your monthly payments will be. Pay more that your required minimum (effectively lowering the interest rate you have to pay and paying it off faster so that you can take on other monthly bills if need be). Do not take more student loan money than you actually need. Attempt to pay for you living expenses or part of them at least by taking a job or working something out with your folks (is possible). Realize that student loan debt is some of the easiest debt to manage as far as deferrals and hardship suspensions go. They are also a wonderful way to build up some decent credit (as many students have no credit at all - which can be worse than bad credit. $30,000.00 for a four year undergraduate degree seems a bit high, but it all depends on where you are going to school, what scholarships are available, what your cost of living is, and if you are bringing in any dough. Also, I went to a State school with crazy scholarships and an inheritance to pay for the rest. Also factor in if you plan on attending and graduate/post graduate programs that will also add to your debt (if you do not get scholarships or work for a company that will pay for graduate/post graduate work.
  • NuriNuri
    edited November 2008
    Also, keep in mind that with a technology degree you are likely to be able to obtain a pretty good salary. If you keep your lifestyle minimal when you get a job, you shouldn't have too much problem paying off your loans. I make 36k a year and I can afford my car payment, rent, and other bills. The difference in our loan amounts makes it look like your monthly payment would probably be somewhere around $350-$400 (just a guess), whereas mine started out at $100. (They sometimes go down as you pay them off, especially if you pay more than the minimum.) However, if you have a job making 50k a year, you can afford that kind of loan payment, especially if you live frugally.

    The key people don't understand is that once you get a job, you need to continue living at a reasonable level until you pay off a good bit of your debt. You can get a reliable 5-yr-old car for a decent price. Buy groceries and cook your own meals. Cook in bulk so you have leftovers that you can take for lunch or eat when you're feeling lazy, so you don't eat out as much. It's really not that difficult...people just get caught up in our culture of spending.
    Post edited by Nuri on
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