<p>Your child’s borrowing should be limited to what he or she can realistically expect to earn in the first year out of school</p>
<p>This is the most important quote from the article. It says. Don’t treat loans the same as grants. Grants and Scholarships are FREE money. Loans have to be repaid. Treat loans the same way you would treat any other loan. Look carefully at your repayment reality. If the student can expect to be making 55k a year the first year out then don’t borrow more than 11K a year. (Assuming 5 year plan, increase in expenses, or a drop in grades) It is simple basic math. It is completely logical. Don’t fall into the trap of thinking that all finanical aid is free money. Treat a loan like a loan.</p>
<p>Time2 thanks for that fantastic input. Ever hear of the housing bubble? And why did that happen? Foolish people signed up for mortgages that they wouldn’t be able to pay back. And why was that? The person “selling” the mortgage was making a commision or meeting a quota on the sale and didn’t give a rip about explaining adjustable rate loans or any other detail that might kill the sale. And what is happening in the student loan/financial aid sector? All right then. Maybe people need a reminder. You can’t expect a 17-18 year old to understand that if he borrows $200k to get a degree that will boost his pay for $7 an hour to $35,000 a year to understand that that means he won’t be able to put gas in his car and food in his stomach. If the Financial Aid department tells him “everybody is doing it” then he is going to sign on the bottom line too. Suze went to the trouble of telling you that the limit is whatever he will make in the first year out. The main point isn’t that you have to repay the loan. The main point is not taking out a bigger loan than the degree will be worth. And just to complicate matters. This is for somebody who is ONLY getting a Bachelors. If you plan on getting a masters, you better look at the funding for maters degrees as well! As livorneo said above, if you blow all your loan money on your Bachelors and find out you need that graduate then what do you do? While you and I might know that loan money needs to be repaid, plenty of “first one to ever to go college” types wouldn’t even think about that part. And I’d bet that you didn’t know what the cut of number/formula was! I didn’t. But in standard CC form, the thread gets hijacked to Is Harvard worth it, totally missing the point of Suze Orman’s article.</p>
<p>You’re saying that the personal connections made by attending a top school to the world’s top movers and shakers in every sector of the economy imaginable are worthless?</p>
<p>Hardly.</p>
<p>The main reason to go to a top school is the address book you leave with … in addition to the superior thinking, research, and communication skills … ALL of which make a rather HUGE difference in improving likelihood for success in life.</p>
<p>Sure, you can sometimes learn academic content just as well at a no-name state school. And academic content is like 10% of the value of a college education. The other 90% is comprised of the partial list of benefits delineated above.</p>
<p>I disagree with her advice. If you have a dream school in mind, you should go there. If your parent’s can’t afford it, you can get loans, and pay them off after you graduate. You can also apply for FAFSA.</p>
<p>Hellokitty- what level of loans do you think it is reasonable to graduate with?
You do know that private loans will be calculating interest the whole time you are in school?</p>
<p>Yes. You can. Part of it is being open about your finances with your kids. Too many parents IMO keep everything secret (costs, income, etc) and therefore kids have absolutely no frame of reference for what it takes to survive in this country. Secondly, students cannot get $200k of loans in their names- it takes a parent co-signer. That parent should have backbone to say “no” to little Johnny or Suzy to prevent them from ruining their 20s and 30s.</p>
<p>It is much more likely that your friends and relatives are having trouble finding jobs because the economy is lousy than simply because their college/university not being “very good in the first place”. There are plenty of graduates of “brand schools” that aren’t employed in the fields that they’d like to be in too.</p>
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<p>So true. My magna cum laude spring 2011 Vanderbilt grad daughter is currently a barrista. She will certainly reap the benefits of her education throughout her lifetime, but she is thanking her lucky stars that she chose the school she could go to debt-free over the one she REALLY wanted to attend (which would have required way too much borrowing - and yes, she turned it down without a second thought).</p>
<p>Romani, if I didn’t know better I’d swear you were raised at my house! :)</p>
<p>Kelsmom, I also have mentored many from underprivileged backgrounds over the years. I think teaching these students how to use the networks is part of their education. This isn’t something most learned growing up, so it can be a disadvantage. I see alum of top colleges and prep schools standing ready to help kids from all corners.</p>
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<p>While that is helpful, it is not the same as running in the right circles from birth. I think it may be hard to see that when you have not been on the other side of the fence.</p>
<p>I still don’t think it takes a rocket scientist to realize you shouldn’t send your son/daughter to a college you can’t reasonably afford. Well informed parents should help their child understand the financial realities of going to college.</p>
<p>That is not what I said. I said that except for a few jobs like investment banking it is not worth it. The investment and debt for undergrad is too much. </p>
<p>I know several Ivy and Tier 1 grads out of work. Why can’t they just pick up the phone and get a job? Because its about what you do with your education, not where your degree is from. </p>
<p>I’ll say it again (and others have confirmed). You never get asked where your undergrad degree is from in the real world. It is a check box on an app that is all. I am speaking from 25+ years hiring experience and the experience of my peers. In the real world the “good 'ole boys” network means very little. </p>
<p>Iron Maiden–it is my understanding that certain firms (Goldman Sachs?) do all of their hiring from a short list of big name schools and the old boy network certainly comes into play there.</p>
<p>But who wants to be one of the derided 1%? ;)</p>
<p>Apart from the question of whether or not “top” schools give graduates a boost in employment, do you think that such schools make for a more enjoyable college experience? A young person can’t spend four-plus years focused only on post-graduation job prospects, after all.</p>
<p>My company is currently focusing on hiring Ivy League for their internship program. We are not investment bankers. In the past, they kept to Top Tier schools as Ivy League had other choices. I never saw many hired form lower tier schools for this program unless they were exceptional. This paid program leads to a permanent job offer after two years. </p>
<p>I guess, due to the economy, employers can be picky. I am sure in the past Ivy League graduates could write their own ticket to the best employers. Now there is so much competition and not so many opportunities. I saw the resumes and cannot believe the stuff these kids claim to have already accomplished. </p>
<p>For candidates with at least three years experience, they don’t really care about the school. They look at where you have worked before. That is, companies of the same caliber or competitors. </p>
<p>So… I gather, the right school might matter to those who are trying to get their first real job. After that, you need to make sure you are working at the right places getting the right experience in your field.</p>
<p>Of course, getting into substantial debt does not make sense and that is where it becomes difficult for your average middle income parent. This is where you have to be creative. For example my D went to a flagship state school OOS that accepted her AP credits. She will be able to graduate within 3 years, saving a full year of tuition. This was cheaper than sending her to less impressive but more expensive schools that offered scholarships. She will still have some student loan debt but as minimal as possible. However, with tuition rising every year, I can see how hard it is going to be to cover D2 when she goes in three years. </p>
<p>Years ago, a student with an associate degree could get a clerical job and the employer would pay via tuition reimbursement towards a BS. I don’t see a lot of this anymore. They were building experience and getting a degree. Many of my colleagues did this back then.</p>
<p>Re the expectation that 17-18 year old kids should be able to understand the ramifications of significant student debt:</p>
<p>Honestly people, we live in a nation where the federal government doesn’t clearly understand the ramifications of debt (look at how it chose to pay for the wars in Iran and Afghanistan) and where a significant proportion of the wage-earning adults don’t understand the ramifications of debt (as clearly demonstrated by the home-mortgage crisis, soaring credit-card debt, etc.). Why would it ever occur to any of us that the average college freshman would know what he or she is signing on for? Yes, some of us do a better job with the young people within our own spheres of influence, but the simple fact remains that nation-wide, most young people (just like their parents) are clueless.</p>
<p>Right, go into debt to have a “more enjoyable college experience.” That’s what’s truly important.</p>
<p>I hope that over the 10 or 20 years it will take to pay off that debt that the student has some really fond memories of that enjoyable college experience.</p>
<p>Sorry! I had forgotten that this thread was supposed to be about costs. I guess I was thinking whether “top” schools are “better” than lower-ranked ones, all else (including cost to the student/family) being equal.</p>
<p>“Top” schools are not necessarily more expensive, given their resources, but I think that’s been mentioned.</p>
<p>“I disagree with her advice. If you have a dream school in mind, you should go there. If your parent’s can’t afford it, you can get loans, and pay them off after you graduate.”</p>
<p>And if you don’t get a job or don’t get a job that pays enough for living expenses and your loan payment, join the Occupy Wall Street movement with a sign complaining about your massive undergrad debt.</p>