I honestly and truly understand where you are coming from.
But try a thought experiment- not this August when you are dropping him off, or four years from now when you are sitting at graduation bursting with pride.
But 6, 7, 8 years from now- when college is in the rear view mirror and you are STILL paying off college loans. EVERY SINGLE MONTH. You want a few days at the beach with cocktails and massages with your girlfriends? No. You have college loans. Your muffler falls off the car… OMG, where’s that cash coming from, I have college loans. Better put it on Visa and pray I can pay it off in a couple of months. But oh no- a couple of months later you STILL have college loans.
Yes, he could get lucky and land a great job and indeed- take on your loans (in addition to his own) and start to chip away at them. Or, he could graduate into a recession. Ask the kids who graduated from Babson (or anywhere else) what their job search was like in 2009, 2010. Economists recently examined the earnings of young people who graduated into the financial crises in 2009 and 2010- and believe their earnings are STILL depressed, almost 15 years later. They basically never recouped.
You cannot predict the economy five years from now.
Your son wants a finance degree? Fantastic. Now is time for his first homework assignment. Do the loan payback schedule (by hand, with a calculator if if truly wants to understand how a long term loan works, or using an online calculator if he just wants to see the answers) and model out:
1- the loans he needs for Providence for four years. What does the payback look like, and how much will he need to earn, after rent and food and taxes and whatever else he needs to survive in order to pay back those loans every month.
2- The additional loans for Babson. Again- how much does he need to earn to pay those back.
He will likely be shocked. Most kids don’t understand that a 80K per year salary is NOT 80K after taxes. And the loans? EVERY SINGLE MONTH.
I looked on the Georgetown 10, 20, 30, 40 year earnings report and Babson shows double that of PC at the 40 year mark. The ROI is defiintely higher in the short term for PC but long term potentially for Babson. But that is a very interesting point re: a down economy. I was imaginging if he wasn’t working they were paused…but perhaps I am dreaming and I still need to pay them FOR HIM in that case?
It is torture when so many people tell me their children are deferred or wait listed at Babson and he is accepted…and to have to turn it down because the aid isn’t sufficient is rrough.
I’m sure there are folks on here who are better qualified to make that assessment than I am. But what I understand is that Babson is tops for entrepreneurship, in particular. For finance, I don’t know how big the differential really is. IMHO, if he gets top grades and hustles for internships, the doors will open for him at PC, and he can save the taking-on-of-debt for a top MBA program. (Whereas if he is saddled with debt from undergrad, he may not be able to manage grad school financially even if he gets in!)
That’s exactly my calculus. But he’s drunk the cool aid that with a Babson undergrad in finance an MBA may be redundant/not needed unless it were from an even better school. So yes, he’d have to delay ever getting an MBA if he goes that route.
vs. at PC he could jump into the MBA a couple of years out and the debt would be HIS, not mine.
Exactly! And honestly, I don’t think we can infer much from those 40-year numbers. It was a different world, a different economy, and a much different higher-ed landscape. (PC was far less competitive 40 years ago than it is now.) I would weight the short-term ROI data much more heavily.
The irony here is that he wants to study finance, and this is his first big “finance” decision… but he doesn’t yet have the foundation to make it wisely. However, it’s your decision before it becomes his, and the short-term pain of pulling the plug on a bad decision may be much less than the long-term pain of living with one.
In your head they are his loans. The legal reality is that they are yours.
Neither of you know enough about educational debt right now to make a good decision IMHO. You both need to get up to speed on how these loans operate, what happens if god forbid something happens to the borrower, what the grace period looks like, what happens if you pause your payback and then restart… etc.
There is a reason why the federal government caps undergrad borrowing. It will be annoying but possible for him to pay these back. Taking on anything beyond that? You are treading on thin ice. Financially, psychologically, etc.
Well that’s interesting and the kind of feedback I’m craving on PC. My BFF went there 30 years ago and it was “fun”. I’m struggling to understand in what ways it has changed. It seems party focused when I look on Youtube (lots and lots of parties). While Babson is much less so and much more my son’s liking in terms of being with other serious students. He and I are both very worried about the party scene at PC (will there be much else to do?). Seems like 30% don’t return after year 1 which is also concerning. I want him to be happy wherever for 4 years and not be forced to transfer/have more disruption in his life.
Also curious about Grad school paths under the scenarios…is one more likely than the other. I imagine there could be a nice Catholic MBA path to Villanova, BC, etc. out of PC, but that’s just conjecture on my part.
I believe the Babson loans are Parent AND student co-signing on the loans. Not just the parent, for whatever that is worth. So legally they are in his name too which I imagine is a motivator to pay them off for him.
The really interesting thing to me is if you dig into the WSJ ROI list of schools. The ROI is based on the cost of attendance for a student receiving financial aid. So those numbers do not apply to us at Babson. So the ROI ranking moves way down from #10 for us to closer to PC is my guess.
Really?? When I Google retention rates, everything I see for PC says 91-92% retention rate after the first year. Where does that 30% number come from? Could there have been a pandemic aberration that’s showing up in the data you’ve seen?
Every school will have other students who aren’t like-minded. That doesn’t mean there won’t be a strong cohort who are serious students and not there to party. He’ll find his tribe.
So Babson COA in WSJ ranking is $31K, Providence is $36K. Babson gets the #10 spot for ROI, PC gets #135 spot.
But these cost of attenance numbers are misleading to most people because majority don’t pay $31K at Babson. I believe some get full ride/100% need, but most do not so can’t use that COA. Funny how numbers can skew our perception, need to delve into the rankings. and recalcuate based on your own COA it seems.
Also, this is a bit misleading for a business student as the earnings at Providence for Business majors are higher than some other majors. $65K starting salaries at PC vs. $75Kish at Babson year one. Then you could narrow by finance on top of that which is likely a smidge higher.
All depends as you say on the state of the economy. Which even now for grads from good schools can be challenging from what I hear anectodally.
Are you looking at private parent plus loans or ones offered by Babson? I did one of the former and it was only my name on the loan.
And are you comfortable saying how much the loans would be for? Are they more than the federal loan limit of $5500 first year, $6500 second year, and $7500 each for years three and four?
There is only one COA number which is relevant for your family- and that’s the cost to YOU guys for four years at whichever college you are considering. And rankings? Is there someone at these publications who is going to rank YOU and your peace of mind and quality of life after you’ve signed off on a boatload of loans?
Dad won’t sign. That’s sad, and problematic, and I get it. But you CAN’T sign without mortgaging whatever financial and mental stability lies in front of you. Too risky. Too expensive. Too many variables.
I feel like I know you after reading your story. And I know your need to “make things right” for your kids comes from a genuine and honorable place.
But anything over the federal loan limits is a bridge too far IMHO.
I checked on Collegedata.com, which aggregates reliable data.
Here’s the Providence College info:
First-Year Students Returning: 89.9%
Students Graduating Within 4 Years: 83.0%
Students Graduating Within 5 Years: 85.4%
Students Graduating Within 6 Years: 85.6%
And here’s the Babson College info:
First-Year Students Returning: 95.0%
Students Graduating Within 4 Years: 89.9%
Students Graduating Within 5 Years: 91.7%
Students Graduating Within 6 Years: 93.0%
There’s a difference, but it isn’t as stark as you’ve been thinking. (Even the six-year grad rate is much better than 70%!!) The incremental difference will have a small impact, in terms of experiencing slightly more peer attrition… but I would anticipate very little difference within the actual friend-group your son would attract.
I am saying a couple of things with love, truly, because I want the best for you and your son:
– Don’t buy things you can’t afford. This applies to college as much as any other consumer product. Doing so causes unnecessary risk and stress.
– Avoid debt wherever possible. Leverage only works when everything works - equities continue a bull run, the employment market is strong, everyone is healthy, the unforeseen is avoided. But add a couple bumps in the road and the story turns sour.
– Babson or PC - if one is significantly more affordable, choose that one. The ROI on the degree is based off the cost. (IMO the marketability of the two are not so different, but I will defer to others on Babson, as I am more familiar with PC)
– Graduate degree (MBA, or Math Masters etc) or certs (CFA, CPA etc) will be required in the high paying areas of finance that it sounds like your son is aiming for. It is not worth debt for an undergrad if that prevents paying for a masters. The only exception I would concede is a top prestigious UG business school, i.e. Wharton, where you arguably don’t need a masters. There are only a handful of schools that fall into that bucket, and PC and Babson aren’t in that bucket IMHO.
College loans are a bad, bad thing. They create indentured servants b/c the debt can’t be discharged. Some people are able to pay their loans off quickly, but many are not. I have several friends being chased by that hound now, they are in their 50s, their own kids are going off to college, the interest paid is now more than the original loans.
Best of luck to you and your son. Congrats on the acceptances. HTHs.
PS: I want to add, that your family has been through a lot. Your DS24 will be successful not because of the college he goes to, but because of his own dedication and resiliency. It’s just a college, and undergrad at that, keep your powder dry for other expenses.
Also, there’s a lot to be said for being among the most dedicated cohort at a college. Those students are the ones who get the fellowships and research positions and awards and faculty attention. It’s a great way to stand out!
Pinging @Catcherinthetoast (an investment banking expert) who may be able to weigh in on the ROI of a finance degree from Providence College with only federal loans vs one from Babson with significant parent plus loans from a family with a lot on their plate, including a medically fragile sibling of the applicant.
@Mommytothree did i characterize that correctly? It’s been a while since I read the whole thread and I don’t want to misrepresent your situation.
Congratulations on the acceptances. I would suggest both schools offer similar IB opportunities.
I hear great things about Babson for entrepreneurship but rarely (if ever) see alum IB. Providence isn’t a target school but it does have some local familiarity and alum network particularly for the Boston area from what I have seen. These roles however are more buy side opportunities in my experience.
Again both great school but I don’t think there is a real IB advantage of one vs the other so I would focus on fit and finances. Sorry I can’t be more informative but I dont want to make it up😀
