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Recommended loan limits

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Replies to: Recommended loan limits

  • busypersonbusyperson 158 replies0 threads Junior Member
    edited July 2014
    IMHO, I personally would not consider significant debt, unless for MIT or Stanford. Some debt, yes. Needs to be quantified with how much risk is one comfortable.

    CRD and Vladenschlutte sound like they work in industries that are on the cutting edge in technology, ones that have consumer/market high demand. I'm not sure it is typical for all engineering graduates to be hired by similar industries. This is to both CRD's and M2aPG's points. The graduates from the top 5 engineering schools get snapped up by these companies, as well as start-ups. But that is not the typical experience for graduates from all ABET schools.

    For the engineer going to a typical state or private engineering school, i.e., not the top 5 Engineering schools, the engineering outlook, while often is strong, may fluctuate with market stresses. Top GPA engineers from great ABET schools, but not as fancy a name recognition, may not garner top wages or signing bonuses if that particular industry tanks, and there is no way to predict this.

    At the risk of dating myself, but when my friends, brother, husband and I all graduated with top GPAs in EE, the economy had taken a down-turn, and new EEs and MEs were competing with seasoned ones that had been laid off. Some of us were employed right away by local technology firms that regularly recruited from our school, but many others of my peers went on to graduate school or crossed disciplines to attend law school, due to lack of jobs. No one could foretell this four years prior when we entered school. Btw, CRD, we did not go to top engineering schools, just the local one.

    As an interesting aside, those of my friends that went to law school are are significantly more prosperous than those of us that stayed in engineering.

    Hence, from personal experience, a super economy for a particular kind of technology when entering college doesn't guarantee a super economy for that engineering discipline when graduating.

    I agree with both CRD AND Mom2aphysicsgeek. If one is attending the top 5, maybe consider taking more debt as the outlook will be different. Hence, to CRDad's assessment that more of a payoff in higher ROI cutting edge technology jobs may be worth the risk (investment) of more debt. To Mom2aPG's point, I still think a great ABET school, without the name recognition, provides a super education that will serve the engineer all his/her life. This is my personal experience. The engineering education doesn't have to cost an especially large amount of money. I also think many incoming engineering freshman choose engineering schools that are local and known to them. Not everyone aspires to MIT and Stanford, nor to be an entrepreneur inventor engineer in a start-up.

    However, I personally would limit debt because of the unknown future market. I lived through those days with those in my family and friends who had 3.9-3.95 GPA in EE, but the market just wasn't sustaining jobs. It was a tough few years and we only had stafford loans, because we worked while in school and tuition was much cheaper. I can't imagine having a lot of debt today and graduating in a down-turned market.

    It took me a few minutes to type this so this is cross posted with CRDad and Mom2aPG's last posts.
    edited July 2014
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  • MichiganGeorgiaMichiganGeorgia 4389 replies85 threads Senior Member
    " Could you give concrete examples of employers who wouldn't hire a grad from a lower ABET school but only MIT? Or a corp that would pay a new grad BS from MIT a different salary than a student from say NCSU?"

    @mom2aphysicsgeek - Not MIT but DH works for a fortune 100 company that depending on the job basically only hires new BS grads for business jobs from Duke,Harvard and a couple other Universities. Engineers and MBA's may come from Georgia Tech or other well know U's . So depending on where you go to school affects your chances of getting a job right out of college at that company.

    It doesn't matter of where my kids go to school I wouldn't want them to take out more that the Stafford loan limits. At the end of the day there are no guarantees regardless of what their major is.

    As far as sign on bonuses. I think they come and go depending on the economy. I wouldn't count on them.
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  • sevmomsevmom 8865 replies62 threads Senior Member
    MichiganGeorgia, Your husband's company may not like kids from other than the most elite schools but there will be plenty of other companies out there eager to snatch up good kids from these schools. This is from 4 years ago but the WSJ asked recruiters to rank schools. A lot of them like big schools because they gave the recruiters more bang for their buck and liked the focus on teaching more practical skills.

    The general rankings:
    1.PSU 2.Texas A & M 3. Illinois 4.Purdue 5.ASU 6. Michigan 7. Georgia Tech 8. Maryland 9. Florida 10. CMU 11.Brigham Young 12.OSU 13. VT 14.Cornell 15.Cal 16. Wisconsin 17. UCLA 18. Texas Tech 19 (tie) NCSU 19 (tie) UVa 21.Rutgers 22. Notre Dame 23. MIT 24. USC 25(tie) WSU 25(tie) UNC

    For business:: 1.Michigan 2.OSU 3. Rutgers 4. Harvard 5. Penn 6. Cal 7. CMU 8. Northwestern 9. UVa 10.Illinois

    For engineering:1. Georgia Tech 2. Purdue 3. Maryland 4. Illinois 5. Virginia Tech 6. Michigan 7. Cornell 8. MIT 9.PSU 10. Minnesota

    For CS: 1.CMU 2. Cal 3. Michigan 4.Georgia Tech 5. Virginia Tech 6. MIT 7. PSU 8.Purdue 9. Illinois 10.Maryland

    Of course, there are firms that will only recruit from certain elite schools, like in some of the finance and consulting areas, but luckily they are in the minority.

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  • VladenschlutteVladenschlutte 4292 replies37 threads Senior Member
    Could you give concrete examples of employers who wouldn't hire a grad from a lower ABET school but only MIT? Or a corp that would pay a new grad BS from MIT a different salary than a student from say NCSU?

    The company I'm at does hire from lower-ranked schools, but there's definitely a focus on higher ranked schools. If you look at the schools that most people went to from here, they're mostly the most prestigious few from the Midwest. But yes, they don't want to miss out on a genius just because they went to some no-name school, so they will of 'course hire someone from there. The big difference though, is that they won't actively recruit there.
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  • sevmomsevmom 8865 replies62 threads Senior Member
    Vladenschlutte, Just curious then- if your company does decide "they don't want to miss out on a genius just because they went to some no-name school," do they pay them the same as the person from a more prestigious school, provided the school is ABET accredited?
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  • VladenschlutteVladenschlutte 4292 replies37 threads Senior Member
    Vladenschlutte, Just curious then- if your company does decide "they don't want to miss out on a genius just because they went to some no-name school," do they pay them the same as the person from a more prestigious school, provided the school is ABET accredited?

    Yes.
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  • calmomcalmom 20885 replies168 threads Senior Member
    @ClassicRockerDad
    Hence the term RISK. Just because something is risky doesn't mean you shouldn't do it. I take a lot of calculated risks and usually come out ahead, but sometimes I don't. That's life. There is risk involved in not taking any risk.
    For professional gamblers and the stock market, the general rule is to never risk more than what you can afford to lose. So let's say that a couple has $1M in assets in retirement accounts that they don't want to touch-- but they have a relatively modest income and can't afford to pay full cost for their kid's college. can that couple borrow $100K to finance their kid's college? Their risk is 10% of assets -- so it's probably quite acceptable.

    Imagine another kid who knows that he is the beneficiary of a trust fund with $500K of assets, but the fund is set up so that the kid can't touch the assets until age 25. Can he afford to borrow $150K for his undergrad education? Of course.

    In those example the families will still be well off even if the investment doesn't pay off -- if the kid drops out of college and ends up drifting from job to job, earning $35K a year at best..... no problem, they have other assets that can be used to pay off the loans and they will survive.

    The problem is that most families don't fit the "afford to lose" part of the equation. So the risk is not really tenable when looking at high end debt. You have to ask what's the fall back position if things don't work out as planned?
    If you have much greater ambition and are willing to take risk in exchange for potentially far greater reward, then it might make sense to borrow money.

    You are missing multiple parts of the equation here. People can have very lofty goals, but they are more likely to reach them if they plan well, exercise good judgement, lay a good foundation -- and plan for the worst as well as hoping for the best. They are aiming for Plan A but they've got a Plan B. They take risks, but they also allocate those risks.

    That's why I come back to: the debt decision should be based on the person's ability to shoulder the debt at the time the debt is taken on, not at the future time when the thing the debt is buying is paying for. I didn't sign onto a mortgage for a house based on what I thought I would be earning in 30 years, or what my house would be worth that far down the line - rather both I and the lender were looking at whether I could meet payments out of current pay and what my house was worth at the time of the loan.

    The point is, the OP is not the parent of an engineering grad from an ABET-accredited school. She's the parent of a high school senior who thinks he would like someday have a job in engineering and finance. That is the person doing the borrowing.



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  • Mom2aphysicsgeekMom2aphysicsgeek 4744 replies56 threads Senior Member

    My dh works for a chemical company that is highly ranked globally. They consistently recruit local/regional grads, wherever in the country that may be. They pay their engineers extremely well. Ditto for ds.

    So, while some corps might only seek top uni grads, my pt is that that is not an industry-heavy corp universal reality. Plenty of companies have similar positions. If a uni is respected by local industry, they will recruit on the campus. International companies included. Hiring locally does not mean having a career locked locally (as my cross country, international moving children can attest.)

    Great employment opportunities exist even from unknown to general public schools. Students should do there homework and know which companies recruit from schools they are considering. Contact HR depts and and ask where they recruit. If it boils down to $100,000 in loans for a name brand or under$10,000- $25,000 in loans for a good ABET education, unless a student has specific goals like CRD describes, ultimately in the typical industry job, there will be little difference in career and pay. It will boil down to job performance. (I know nothing about business hires, etc. I am talking in terms of the engineers who keep plants in production.)
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  • busypersonbusyperson 158 replies0 threads Junior Member
    @Wyanokie‌, in your posts you mention Penn, MIT, Michigan, and Cornell as potential engineering schools for your son. In what type of engineering is he most interested?

    When the OP checks back in, @Calmom, @ClassicRockerDad‌, @Mom2aphysicsgeek‌, @Vladenschlutte‌, and others, any forecasts on what the future markets will be like in 5 years for the industries that the OP's son is interested? Does that help inform the debt risk?
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  • calmomcalmom 20885 replies168 threads Senior Member
    It doesn't matter what the employment market is like in 5 years for a particular industry, because there is no guarantee that the kid will graduate with a particular major or degree. If OP had said that her son had his heart set on a particular major or career, then it might make a little more sense to assume a particular end goal - but the OP wrote that son was " probably engineering, possibly finance" and " focused on working towards a high paying career path".

    Translation: kid doesn't really have a clue as to where he will end up. He very well might find a new passion or goal in college. Too much debt could be a huge barrier if the new goal is something that requires additional years of education beyond undergrad to achieve.
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  • VladenschlutteVladenschlutte 4292 replies37 threads Senior Member
    When the OP checks back in, @Calmom, @ClassicRockerDad‌, @Mom2aphysicsgeek‌, @Vladenschlutte‌, and others, any forecasts on what the future markets will be like in 5 years for the industries that the OP's son is interested? Does that help inform the debt risk?

    No idea, but from what I can see it looks like there's potentially a tech bubble going on now (when one individual could make 50% more by majoring in CS instead of a non-EECS engineering field), and I expect software development pay may drop at some point in the near future. But I have no idea when, could be in 2 years, could take 10. But EECS pay has probably climbed into what might be described as "unsustainably high" territory, with jobs extremely abundant. Can't really speak about finance. If he's GS IB material though he'll be fine even if the market is poor though.

    Non-EECS engineering fields like Industrial, Chemical, Mechanical, etc are usually fairly stable (in comparison to EECS and Finance), so they probably won't look dramatically different in 5 years than they do today. The one thing I can see from UM is that Industrial Engineering is graduating more students, and Mechanical fewer, I don't know if that's in response to the market or if there will be a correction somewhere with pay for Industrial Engineers dropping and for Mechanical rising, but pay for the those two majors have typically been pretty similar from Michigan.
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  • busypersonbusyperson 158 replies0 threads Junior Member
    @Calmom, and @Vladenschlutte, terrific insights!
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  • sevmomsevmom 8865 replies62 threads Senior Member
    Agree, doesn't matter what the forecasts are for 5 years from now. Good luck to the OP and her son.
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  • ClassicRockerDadClassicRockerDad 6202 replies163 threads Senior Member
    any forecasts on what the future markets will be like in 5 years for the industries that the OP's son is interested?

    Sorry, I'm waiting for the OP's son to invent a crystal ball.
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  • HannaHanna 14866 replies42 threads Senior Member
    My two cents: yes, of course borrowing to do CS at MIT is a lot less risky than borrowing to do comparative religion at Whoville College, and my maximum loan tolerance would be higher in the first instance than in the second. The thing is, in engineering, there are some outstanding programs that will give generous merit aid to a kid who's MIT material. So even though I might think it's reasonable to come out of MIT CS $60k in debt, I might think it's even smarter to come out of Ohio State CS with $100k in the bank.

    Finance is a completely different story, because that industry cares a lot about pedigree where STEM employers care much, much more about skills.
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