<p>Should you incur substantial debt for that “dream” school? </p>
<p>Here is a post that I did concerning majoring in art at CMU. However, it may be applicable to any art, design or theater major or other major that doesn’t pay well . Before your kid decides to attend that “dream” private school or expensive out of state school, I believe this information will give you something to think about.</p>
<hr>
<p>Be advised: CMU themselves noted that total cost of tuition, room, board, fees and books will exceed $50,000 per year. This also doesn’t count transportation home, medical insurance of $900 per year etc. The admission’s officer that I spoke with mentioned that the actual cost is $52,000 per year if everything is filtered in. This also doesn’t take into consideration future cost increases!</p>
<p>Sadly, whether you major in computer science, engineering or business, which can command some high paying jobs or art,which usually doesn’t pay as well, the tuition, fees and room and board is the same.</p>
<p>Kakle, here is what it takes to amortize $150,000 of debt over 15 years:</p>
<hr>
<p>Principal borrowed: $150000.00
Annual Payments: 12 Total Payments: 180
Annual interest rate: 8.00% Periodic interest rate: 0.6667%
Regular Payment amount: $1433.48 Final Balloon Payment: $0.00</p>
<p>The following results are estimates which do not account for values being rounded to the nearest cent. See the amortization schedule for more accurate values.
Total Repaid: $258026.40
Total Interest Paid: $108026.40
Interest as percentage of Principal: 72.018%</p>
<p>Thus, they would need to pay $1,433 per month just to pay off their college debt! This is in addition to taxes,which takes up about one-third of their salary, mortgage or rent payments, car payments, food, insurance, gifts, travel, entertainment.etc. I think you get the message.</p>
<p>By the way, even for $100,000 of debt, the amortization would be $955 per month.</p>
<p>Interestingly, assuming no college debt, if you take the same $1433 per month and invest the money at 8% for the same 15 years, they would have $273,941 at the end of 15 years! Note, the same $1,433 per month for 30 years would be worth $582,107. For 40 years it would be worth: $808,960</p>
<p>Thus, unless you get some substantial scholarship money, tell me how a person who majors in art, education or other low paying major will be able to afford paying off this debt?</p>