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Wow this one is tough one for me. Many of my friends are SJSU graduates, and I took a degree from there.
However, as an ex-engineering hiring manager I have told every HR person I have ever worked with, if the resume says Cal Poly we interview the candidate. I have tremendous respect for their teaching program, their hands on attitude and the skill and determination of the people who graduate.
Also I don't see being in San Jose as a big plus (aside from that's it's a great place to live), because if the engineering firms need you, they will move you from anywhere. And the trip from SLO to SJ is only about 4 hours.
Is 40-60K a big debt? Yes and no. For an engineering degree at a top notch school definitely not, this is actually dirt cheap. Compare this to the car many young engineers buy after only a few years out, you're not going deep in the hole, provided, ... provided you do well and end up with the degree. But if the market isn't there, and you do not fare so well, then that's a bunch of bucks to pay back.
Both schools are heavily impacted right now. You might want to see if there is someone you can contact to see if you can realistically graduate from either school in 4yrs (might change the financial question).
My choice, I'd bet on myself and go to SLO, but you should end up happy with either choice.
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