$250K Loan for a Top Semi-Target in a Major City — Is It Worth It? (Hoping to ED2)

I’m really torn about my college decision and could use some advice. I was hoping to apply ED1 to a top semi-target school in a major Southern city that I absolutely love. It’s not Ivy League or the most widely recognized, but it has an excellent reputation in the industry I want to pursue, and the city offers endless professional opportunities. I know I’d thrive there — not just because of the name, but because of the programs, the connections, and the overall vibe. Even if I don’t break into IB (highly likely tbh), I’d still be incredibly happy at this school and confident it would lead to a fulfilling and financially strong career.

Unfortunately, my parents pushed me to apply to a more “prestigious” school for ED1, and I didn’t get in. Now I’m planning to apply ED2 to my dream school, but I’m really anxious. ED2 acceptance rates are basically the same as RD, so if I don’t get in, I’ll feel devastated. It feels like I’d be giving up the school I genuinely love for something that wasn’t my first choice.

The financials are another major issue. I come from a “donut hole” family — not low enough for need-based aid, but not wealthy enough to pay full tuition. Even UConn, my in-state school, would require loans unless I get significant merit aid, which is uncertain. But going to this semi-target means taking on ~$250K in loans (not including interest) or pulling from my parents’ 401k. That’s a huge amount of debt, and I’m struggling to decide if it’s worth the financial burden. My parents aren’t against it because they pushed me to ED1 to a place with the same costs yet have explicitly stated they want me to be happy.

I know UConn is a more affordable option, but many people I’ve spoken to don’t think it would help me get a foot in the door whether for IB or finance. However, this semi-target school offers the right mix of opportunities, and I truly feel it’s the best fit for me and I’d be happy there.

I also want to do my Master’s, and an accelerated program would be amazing, but my fear is that I’ll end up having to do those two years somewhere else because the undergrad wasn’t “prestigious” (I know) enough. Demographic-wise, I’m an unorthodox candidate for IB so that could either work for or against me.

My other choice would be to not go to UConn but a reputationally stronger non-target school like UMD or Binghamton and work hard. Binghamton is much more affordable for me than even UConn, which is great, but I don’t think I’d enjoy it there.

I’m deeply interested in IB - and not one to give up quickly - but if I had to pivot to something with trading or derivatives, I would be a little less upset (but probably continue to do everything I can to break in!).

Any advice would be greatly appreciated!

Hmmm - no, heck no, and no no no.

Just because Emory places (I assume Emory) in IB or whatever field - it’s still going to be a small percentage of kids who succeed.

Here’s the other thing - you cannot borrow $250K. Your parents can buy you can’t - so are they willing to pay it back because they’ll be on the hook.

So at 6% and that might be low, it’s $187,600 to hit $250K total paid over 10 years. But did you add in the 4% the bank is taking off the top to get your loan - so $187K in loans nets you less than $180K?

So that’s $2100 a month - so do you have another $25-26K a year - on top of rent, a car, car insurance, and more.

And guess what - I bankers come from so many schools - not just targets, etc. There was a debate about U Iowa and Indiana the other day. IU is a target school but guess what - Iowa is placing kids in I Banking too. Guess who else has alumni in I Banking - Uconn - at Guggenheim, Deutsche Bank, Goldman Sachs, and more. So yes, it’s possible.

And UCONN has enrichment for this.

Now will UCONN place as many as Emory - likely not. Can you afford to take out that many loans - hmmmm - no, heck no, and I have stronger words than that!!

So don’t forget:

  1. People go in with one idea (like pre med) and change - same with I Banking

  2. You can do I Banking from anywhere - it may not be as easy - but it can be done

  3. Even at top schools, the percentage of kids getting in these fields in small.

  4. If you want a different level of finance (corporate, etc.) the where will matter little.

  5. You would be beholden to loans forever - this is really a nonsensical scenario you are bringing up - sorry. If you said $27K, which is what you can legally obtain, sure - but just a no and hard no.

The other thing - you want a Masters so where you go undergrad matters near zero. But - I would caution before getting a Masters without work experience. Top schools won’t take you without two years.

Why -

  1. You use a Masters for if you have a career you don’t like, you can pivot to something else.

  2. You use it to make more money - but if you go straight through, you get an undergrad salary - or maybe undergrad plus a few dollars.

Here’s an example - at Indiana, the average undergrad salary for finance - $84,520 mean and $80,600 median.

MBA - $128K median so $43,500 more.

Other schools have an even wider swath…

But this scenario you bring up would tie you up for life!!! And fortunately, no top MBAs (and that’s more important than undergrad) would want you sans work experience.

Best of luck to you - but go to UCONN, work hard, get involved with the IB Club, network, and if you bust tail, good things will happen and you won’t be permanently paying student loans.

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:smiling_face_with_tear:

I meant parents doing this – sorry.

Yes and no. Will have to take loans no matter what but it would be ideal to minimize them. At the minimum $40-60k will have to be taken out. Have not gotten my letter yet but even UConn isn’t looking the best. They’ll do full pay for extreme prestige – my ED1 – but are (rightfully) hesitant otherwise. At the same time, they told me that they want me to be happy so a 10k-15k difference won’t make or break anything.

Yup. We put the numbers through and got $400k w/ interest in total if I remember correctly. They’re also suggesting to sell an inherited property so that’s also an option and would cover my brother too.

Can you clarify? Sorry

Didn’t know this - thanks. I have to contemplate because I do want to get a dual degree or at least a minor in CS or something close.

Thanks! I’ll update with more offers and will probably compare schools here by May :slight_smile:

You said $250K including interest. Now you say $400K?

Is this a real question?

No, no, no.

How can they pay for ED1 but have to borrow and spend $400K for Emory…something isn’t jiving.

I forgot to put the link (enrichment).

This scenario is preposterous. Yes, some schools place more or many in IB but it’s still not everyone - so even if a school gave you better odds, they wouldn’t be great - and you truthfully have no idea if in four years this is what you want. Bing can also get you there - not saying it will - but there are Bing alums in IB. I see Mizuho, Citi, Moelis and more.

They too have enrichment. And both have grads in IB roles - maybe not as many as other schools, but nonetheless, you bust tail and who knows. But debt = bad but you are talking about as much debt as a mortgage or medical school. That’s financial suicide for life!!

Investment Banking Society | Undergraduate Programs

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What area specifically of IB are you interested in?

I ask because the amount of debt you are talking about seems potentially crippling if things don’t work out.

Keep in mind even from very prestigious target colleges IB jobs are very competitive, even if you secure an IB analyst role there is a 50%ish wash out rate, not all IB roles pay the same and many people don’t realize that not everyone who works at an IB is a banker so they fail to understand the recruitment process or pay scale. I would be cautious about using LinkedIn to determine a school’s access to IB opportunities.

The sort of debt you seem to be considering juxtaposed against these challenges raises some red flags. I appreciate your enthusiasm for the career (I am an I banker) but would like to understand specifically what you hope to accomplish in the field?

Lastly, please ignore those dismissive of your question. These decisions are complicated and nuanced and you are smart to be seeking out supportive and informed advice.

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I’m going to push back on this. If you knew enough about the financial services industry- and financial institutions specifically- you would know that “pivoting” to trading or derivatives is even harder than getting a job on the IBanking track as an Analyst/Associate. Derivatives and Trading are not backup/consolation prizes.

The folks who work in derivatives often have ZERO training in finance. Never took a business-related class. Didn’t join any banking-related clubs or do mock cases, etc. They are math, math, math students with some solid CS skills.

Trading can be a skootch more generous- just because so many more roles/institutions hire for traders. But again- these are not the “I’m gunning for a role doing M&A and I’m joining every club I can to gain an edge” students. These are math or engineering majors who play bridge, chess or poker in their free time and don’t bother to show up at “mock interviews” because they don’t NEED to. The institutions that are going to hire them have their own tests, exercises, screening assessments and doing well on these is what gets you an interview, not being in the “Banking” club on campus.

So I’ll ask where your “deep” interest in IB comes from, and if you’ve really explored what these careers are like.

The sums you are throwing around for loans are staggering. Your first assignment as a prospective finance major is to calculate- by hand- what your payback schedule looks like. It will take you half an hour- a good investment in your future. Don’t plug and chug the numbers into a loan payback calculator- a fifth grader can do that. Do the analysis by hand- your first task as a brand new analyst at a top tier institution-- and really understand how interest rates work, what a sensitivity analysis looks like, what the marginal impact on YOU a half point fluctuation would have.

Your first year in I-Banking will involve making powerpoints and doing excels (and pivot tables… lots and lots of pivot tables) of this exact problem but involving billions of dollars, not a quarter of a million. If figuring out your OWN payback is a dreary and boring problem (something that will impact your life for the next decade plus) imagine doing it for the electric utility trying to acquire a smaller competitor, or for the trucking company which is deciding whether or not to sell or refinance their refrigeration division which has been less profitable for the last few years.

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Are you saying you aren’t eligible for any need based aid?

And are you saying you are a strong enough student that you could possibly get merit aid someplace?

Please please…$250,000 in loans for undergrad is not something you should do, in my opinion. Having your parents pull this amount from their retirement account seems unreasonable to me as well. BUT these are my opinions.

If you didn’t apply to UMD CP early action, it’s not likely you will be accepted as they accept 90% or more of their income one class from the EA round.

Since it seems finances are a consideration, why not just apply RD so you can potentially compare financial aid offers!

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I am not sure that maryland or binghamton are more prestigious than uconn. You need to consider costs. If binghamton will really be more affordable oos than uconn, and serves your needs as well, then it is an option.

Your parents taking on 250k in debt for college for you is not a good idea.

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I love the enthusiasm. But you made a list of schools. That list should be where you would be happy to attend or the school’s shouldn’t be on your list. Period.

My kids would never ever expect me to take out loans for $250,000. Let alone sell an inherited property on top of that for their education. Period.

Sure they want you to be happy. We all want our kids to be happy. My daughter got into her #1 dream school and could of gone there. But she would of been left with large loan payments. She went to her #2 that gave generous merit. We have some of her 529 money left over she is using that for grad school. BTW - she changed majors twice. Transfered to another school her Junior year. Got Presidential merit the last two year’s. Graduated during the height of the pandemic. No jobs. Luckily she can “pivot” and made more money then her business school friend’s without jobs, nannying a few families and being paid to help 3-5 year olds on computers at three different schools at the same time. Those physician parents had no one else, had to work when everything was shut down and in 6 months was on track to make 6 figures,if she stayed doing that for the year. Lol, that’s pivoting. What happens if something crazy happens and you can’t work.

I tell you all this because as stated above, take a step back and evaluate your situation. As stated as a real business problem. You have determination. You seem to have drive. Use that at any school to succeed. If you said your family can cleanly afford to send you to school my answer probably wouldn’t be that different. What if something happens to them and they can’t pay back the loans? Now your parents are losing the house and affecting your sibling’s education also.

So if your asking if it’s worth it? No. Not worth it.

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No, I said without interest for 250k. 400k with interest will vary depending on the time to pay it back and interest rates – we assumed 7.5% because many private ones are starting at 5%.

Unfortunately, yes.

Because they’re willing to pay for the ED1 by any means for its reputation and name. Some loans would have to be taken out either way.

Thank you!

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Good luck - but please don’t give up money that they don’t have and wreck your financial future - for an unknown and an unlikely.

You’ve probably read a lot about doctors and others who regret the debts they’ve taken on - regretted their lives.

That’s a similar parallel here.

I wish you the best.

Go where you can afford - be active - network with alumns in the industry - and hopefully good things can happen for you.

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I love educational loans. I could point you to at least 50 people I know IRL (including myself, spouse, cousins, etc.) whose professional and financial success is directly tied to their having taken out educational loans.

BUT-

Not this kind of money (even when corrected for inflation, COL, etc.) Not for this type of professional goal. AND not for undergrad.

I have yet to meet the 17 or 18 year old who is savvy enough about different career paths to know “This is it”. And none of us can predict the future- hiring trends, economic head winds, and the so-called Black Swan events.

Who called the meltdown of 2008 correctly? Not all those kids lined up 12 deep for I-banking interviews after every institution slashed its hiring targets once Lehman and Bear Stearns blew up. Who called the hiring freezes/slowdowns after 9/11? Which masked the fact that I-banking hiring targets were already down-- decisions made in the first quarter of 2001 when business slowed. But 9/11, as horrific as it was, gave a lot of global companies “cover” to cut their numbers even more…

And who predicted Covid?

Please don’t contemplate this type of debt for a career which may or may not be there in 5 years when you graduate. Will the bulge brackets still be hiring in the same way? Doubtful. And the line of private equity firms which has been forming to make offers to I-banking analysts early in their career (which makes the analyst jobs that much more attractive to college students since it’s an early off-ramp without paying for an MBA)-- that’s beyond anyone’s predictive capabilities.

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This is a huge amount of debt. This is an insane amount of debt for any degree that does not say “medical doctorate”. Interest will of course grow this amount significantly. There is a lot that could go wrong with this much debt. This is a HUGE risk. One risk is that you could get part way through your bachelor’s degree and discover that you can’t borrow enough money to complete your degree.

I do have to wonder. How much do you know about investment banking, and what draws you to it as a potential career? Another risk by the way is that you fail to get into investment banking, or any career that makes paying off way over $250,000 in debt possible. Another risk is that you do get into investment banking, and discover that you hate it.

I used to know someone who got a bachelor’s degree from MIT in mathematics, then got a law degree from Harvard, passed the bar, got a job at a prestigious New York law firm, was there for one week, discovered that he hated it, and pivoted to a different career. He however was fortunate that he had no education debt at all so he could afford to pivot to a different career. If you have the debt, then you are tied in.

Well, I did my master’s degree at Stanford in a sub-field of applied math, and specifically a subfield that could be of interest to finance people (Operations Research). It would be difficult to find a university that would be more “prestigious” for this particular major. The other students in the same program came from a huge range of different universities. With one exception it was hard to find two people from the same undergraduate university. The exception was probably a coincidence, and was NOT ranked in the top 50 in the US.

For admissions to graduate programs, what you do as an undergraduate student is going to be more important than where you do it.

Also, a master’s degree represents more potential debt, if you can manage to borrow the money to pay for your master’s degree.

I would be very, very reluctant to borrow this much for a bachelor’s degree.

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I’m going to +1 @blossom comment above.
Educational debt isn’t always a bad thing, but this seems like a not great idea. Also agree that at 17/18, your exact career plans may well change.

I DO want to add to the conversation a few other points:
If you DO end up going into IB, the school IS actually quite relevant. IB isn’t like other fields where it kind of “doesn’t matter” where you go as long as you are scrappy. Finance is one of the few industries where the school DOES move the needle. That is the only reason I would even consider this scenario for even a hot second.
BUT also – where you get your MBA will matter FAR more. FAR FAR more.
So, save your money for the hot MBA in my opinion.

For a moment, I’m curious if you have any merit-seeking type schools on your list? Out of state flagships are not usually the cheapest options. If not, can you do some googling and get some apps in? I would think some private schools would give you a bunch of merit to go there, since I’m guessing you are a stellar student. I’m a mom of four and all four of my kids’ cheapest options were schools where they were slightly above their median academic profiles so they got a ton of merit offered. Why not pursue one of those, go for very little money, work hard, and then knock it out of the park for your MBA?
NOTE: it will be very hard to look at MBA tuition bills in a few years if you have 250k in debt already racked up. What a shame that would be since the MBA is what matters in finance, not your undergrad. (Side note: I did undergrad at a state school, MBA at T-20 and MFA at Ivy League. My undergrad isn’t ever mentioned in anything about who I am professionally…ever.)
I love your enthusiasm for a career!
Can you find one more pocket of pushing through this application process and line up some cheaper options?
Finally I’ll say: your ambition for your future will serve you well no matter where you go! I’m excited to see where you land over the next decade. I’m super optimistic!!

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One other thought:
Confirming that you know for sure you won’t get Financial aid at a private meets-needs school?
I say this because if your own state school would require loans, it makes me feel like your family would qualify for a fair amount of financial aid at a CSS school. (Note – private CSS school and meets need schools are a whole different ball game in terms of financial aid from state schools.). Meets need and CSS schools could very well be way cheaper than a state school for your family.
and yes it’s January 2 so it’s late, but you could buckle down and knock out a few apps this week and still make many RD deadlines.

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It’s more accurate to say that in some areas of finance the undergrad school is important…and IB is in this group. There are many non-IB finance job opportunities for those who don’t attend highly rejective schools.

Regarding an MBA, for many who work in IB and similar roles out of undergrad, there is often little reason to get an MBA. But, if OP doesn’t get into IB after undergrad and still is looking for that career, then getting an MBA at an M7 school could make sense. I agree that having $250K in undergrad debt will likely take a top school MBA off the table because MBA programs are expensive (plus the opportunity cost of missing out on 21 months or so of income, bonus and possibly a promotion.)

For OP…I don’t support students taking out $250K in loans for undergrad. That will impact your parents’ credit rating, ability to save for retirement, and ability to take out other debt. It will impact OP’s possible choice of career, their credit rating (if they cosign the loans), their ability to save/take on other debt. It may even limit the set of people who would date OP (my kids and their friends talk about this.)

Monthly payments on $250K in student loans at an (estimated) average 8% interest rate (current parent plus loan rate is 9.08%) is $3K per month. Every month. For 120 months months straight. Even one with an IB analyst salary may struggle to make that payment on top of other living expenses.

OP did say the family is a donut hole family, and won’t qualify for need based aid. Running some NPCs would make sense to confirm that though.

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I’m just going to throw in another vote for what others have said.

There is an old joke–there is a time and place for everything, and it is called college.

But in my view that joke is wrong as applied to large educational loans. To the extent there is a time and place for those, it is when you are going to some sort of specific grad or professional program, knowing exactly how that will advance your career goals.

And although there are a lot of kids encouraging each other to believe they are already in that place for undergrad, we KNOW most of them will end up wrong. Too many people end up changing their minds in college, for a long list of good reasons, about what they want to do.

So a little in loans for undergrad, OK. A lot? I say no.

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Good point. Not ALL finance careers benefit from school-bump equally. Totally true. I worked in corporate finance and while we definitely all had MBAs from a small pool of schools, they weren’t quite as limited as the recruitment school list from my days in consulting.
So a strategy could be: undergrad in smaller merit-driven school + a few years working in finance in some capacity, or a small consulting firm even…then MBA at top spot and then IB. (if still desired. I know sooooo many people who thought they wanted IB until they saw it up close, including myself, and my husband, but I digress…).

Yes, the donut hole – I’m suggesting that perhaps OP may not be fully understanding that the donut hole is defined a little differently depending on the school – state, small private, meets-need private, etc. Donut hole families as defined by some meets-needs schools are not typically needing to take out a ton of loans to attend their in-state school option. Some loans maybe, but not a lot. So it was just a hint to me that perhaps OP family may NOT actually be in the donut hole for some of the higher endowment meets-needs schools. Lots of relatively high income families get financial aid at, say, USC for example. (that said, I know nothing about Emory’s calculations, so if they are known to be super generous and meets-needs and OP family got nothing, then of course, that’s a great tip-off that perhaps they truly are in that high end of meets needs donut hole range. But since I didn’t know this I thought it was worth mentioning to OP in case it’s new info). :slight_smile:

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should you or ANYONE for that matter take out $250K in student loans? Econ 101 would say Hell-to-the NO.

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I’m interested in both Sales & Trading (S&T) and M&A advisory, which I know is a bit of a mix.

For S&T, I’m specifically drawn to equity sales and trading (that’s where the derivatives come in to play).

What would you suggest using? Finding something to determine general outcomes (obviously, there’s going to be outliers with a super smart person going in IB from an extreme non-target) is super important for me so I’d really appreciate an answer.

Exposure to impactful transactions - being on a team advising on a merger and able to see my work have a lasting impact, learning capital structure/financial modeling (from the very basics to the detailed), application, and experience of what I learn into adjacent fields.

Thank you so much.