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Please do not take enormous loan for undergraduate college eduaction (or even graduate degree)

nynycasino1234nynycasino1234 Registered User Posts: 243 Junior Member
I made this thread as I see many kids asking about taking huge sores of loan. I have two wonderful daughter who work in finance field, What they have taught me about finance, and what I understand that parents/kids please please do not take huge loan that are unmanageable and may make you a debt slave.

Prestige is good but not that good with huge amount of debts. If one wants to take risk and want to pursue what they would love to do after graduation, debt can make those plan in jeopardy. Debt may forbid you doing something that you love, take ample risks but no too much loan. Borrowed money that one can not pay is very dangerous. Do not rely on future income as you do not know what life brings, interest may change. Therefore do not take a huge loan there are some exception like a Doctor where one can pay money easily . And if you still do, please think long and hard. good luck in your college acceptances.

Disclaimer: Sorry for my unwanted advice, do not want to offend any one.

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Replies to: Please do not take enormous loan for undergraduate college eduaction (or even graduate degree)

  • nynycasino1234nynycasino1234 Registered User Posts: 243 Junior Member
    edited April 17
    prior to 2008 people borrowed cheap money and bought real estate, paid dearly as whatever small amount they have was siphoned by loan sharks.
  • younghossyounghoss Registered User Posts: 3,021 Senior Member
    edited April 18
    Your college debt advice isn't unwanted advice. It is sound advice that has been said here many, many times in many, many threads.
  • hannuhyluhannuhylu Registered User Posts: 256 Junior Member
    Advice is only so good without metrics, so define enormous?

    Some on CC are debt allergic and say any loan, others 40k UG, others 20k UG, so what do you say OP?
  • GoNoles85GoNoles85 Registered User Posts: 781 Member
    College sneaks up on no one. You can start planning and saving before they even hatch. 529's, Ed Ira's, etc. You can go to a CC for the first two years and TF. You can go public not private and still get a quality education, the student makes the degree valuable, not the school, and get into honors colleges and so forth. If you go public and play your cards right you might not pay much more than the public which can be very attractive.

    If you wait until the kid or kids are 18 and have saved a grand total of $.35 you really do not need to be advising anyone else about financial planning and should you do that I would advise anyone listening to not put much stock into your advice. Not saying you OP; just saying.
  • DadTwoGirlsDadTwoGirls Registered User Posts: 2,638 Senior Member
    edited April 18
    Wanted or unwanted, this is very good advice. This is also very timely since right now (in April) is when most students decide which university they are going to attend from among the various offers they have received.

    There has been a lot of discussion of how much the cost of university has increased over the years. There has been some but a lot less discussion of what we might call "degree inflation". Today in many cases people need a Master's degree for what used to require a Bachelor's degree. With this in mind, I think that students should try to ensure that they can get as far as a Master's degree with a debt that is no larger than their expected first year annual salary out of college. Long ago my debt out of college was about half of my first year's salary (and I had a practical degree), which is significantly more manageable. Twice your first year's salary will be quite painful. Anything greater than that has a risk of being catastrophic. Also, students need to be cautious when predicting what their first year salary is likely to be: Getting any job at all can be quite difficult for someone straight out of university.

    One thing to ask students as they choose which university to attend: After graduation, do you want to be so far in debt that you will have to live with your parents for years after graduation in order to save money to pay off your debt? In looking for your first job, do you want to be constrained to working within an hour's drive from your parents house so that you can commute from there?

    Also, if a student is going to do require a Master's degree, then where they do their Bachelor's degree becomes less important. If you get a Bachelor's degree from a "pretty good" university (say, top 200), and then do a Master's from a top 20 university, it won't matter much where you got your Bachelor's degree. Thus having the grades as an undergraduate to get into a top Master's program is going to be a lot more important than the name of the university.
  • LBad96LBad96 Registered User Posts: 3,499 Senior Member
    What if your parents are paying your loans off for you?
  • HImomHImom Registered User Posts: 29,510 Senior Member
    edited April 18
    Depends--how big are the loans? What is parents' household income vs debt? How old are parents and how healthy are they? How secure are their jobs? How many other children also need to be educated? What other options are available?
  • MomOf2BysMomOf2Bys Registered User Posts: 2 New Member
    What you pay for an education is considered an investment. It's like anything else. A degree won't necessarily guarantee you a great job. The student should research the field they are interested in to understand the demand for the degree and the kinds of jobs they might be eligible for and what salaries they could potentially be earning. Some jobs could earn you six figures in no time while others will never get you to six figures. I would never advise anyone to forego an education because a degree will get you further ahead and in many cases a loan is the only way to go. Doing your research will allow you to make better decisions about what schools you could attend that will provide the greatest value. This is why State schools have become so competitive because you're better off with in-state tuition and there are many great in-state schools to choose from that will keep the cost down. I do not agree with the Masters degree comment above. A bachelors degree should be sufficient to start with until you have gained some experience. The only exception to that is where a Masters degree may be required such as teaching. You can decide later if a Masters will help you get ahead with your career. I wouldn't waste my money on a Masters degree right away. There are sooooooo many jobs you can get with just a bachelors and again it all depends on the degree.
  • DadTwoGirlsDadTwoGirls Registered User Posts: 2,638 Senior Member
    edited April 18
    "What you pay for an education is considered an investment."

    Absolutely. However, with any investment you should give some attention to how much you pay for it.

    "I wouldn't waste my money on a Masters degree right away."

    Whether a Masters is needed will depend upon the field. A Masters tends to be quite focused on the major and maybe a few very closely related subjects. Thus, you need to be pretty sure that you are studying the right subject before you go for a Masters degree. Working for a few years first can help to clarify in a student's mind just what Masters they might want to consider, and whether they need one at all.

    However, I do think that if students want to study in a field where a Masters is reasonably likely, it is a good idea to budget for it (in the same sense that parents with a kid in grade 8 might want to budget for university at some time in the future). We have seen on CC some posts by students who are sure that they want to get an MBA, but are considering universities for undergrad that are going to put them so far into debt that a Masters seems quite unlikely to happen.
  • roethlisburgerroethlisburger Registered User Posts: 1,670 Senior Member
    edited April 18
    It's difficult to generalize. If you're residential at your in-state flagship, list price for tuition+room and board can still be $20k-$30k/year. Some states have generous need based aid(ex. CA, NY), but others don't. Some students will qualify for significant merit based aid. For students stuck paying something close to list price, perhaps the new normal is family debt(including student and parental loans) being 1-2x the expected first year salary. In some states(ex. CA), even the directional universities can be fairly good. In other states, the school quality and availability of courses and majors can be lacking outside the flagship.
  • LBad96LBad96 Registered User Posts: 3,499 Senior Member
    @HImom a student with $39k in debt at an OOS public university who certainly can't transfer to a more expensive university but dislikes any cheaper options because that would mean a downgrade in academic quality and a return to a home state which has painful memories for said student.
  • HImomHImom Registered User Posts: 29,510 Senior Member
    Again, you and your family have to consider the questions in post #8, and any others relevant to your situation. There is no ONE right or wrong answer.
  • scotlandcallingscotlandcalling Registered User Posts: 195 Junior Member
    edited April 19
    Since kids can only take out very little in loans (like Staffords) I assume this is targeted at adults? You cannot imagine how exciting it is to see another thread with someone telling others how to spend their money and what to borrow/not borrow. If people want to borrow to invest in their kids - go for it. Kids, if your parents want to do this, let them. They are adults and can decide how they choose to spend their retirement. Let go of the guilt, go to college and work your tail off. (@Lbad96) Respect what they do for you. The most successful family I know sent several kids to private colleges and spent or borrowed (idk cause it's none of my business) a million+ bucks to do so. Everyone of those kids is highly successful and has a great life ahead, strong social circle and earning power, and their parents are happy knowing they did all they could for their kids. Those parents knew what they were doing and did what they wanted. Others don't spend nearly as much and could have same success or flop. Some families can't see beyond the station they are in, and their kids remain there with them - maybe they are happy there, maybe they are not given chance for anything else. Point is, it is up to each family to decide. Sometimes borrowing for an undergraduate education is the best thing you can do for that kid - setting their course and setting them up for the rest of their life.

  • LBad96LBad96 Registered User Posts: 3,499 Senior Member
    @scotlandcalling the slight issue is that my parents may want me to transfer to a school back home (even though I didn't apply anywhere and the app deadlines have mostly passed) if they don't feel I've done well enough for their standards.
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