Most of us here (I'm assuming) look at these student loan debt people are taking on as insane. What some of these kids are taking on for debt will be with them for life. I was watching 'The Price is Right' and drew carey asked the girl spinning the wheel what she did for a living. She said she just finished her 2nd degree at i believe pepperdine and now she is going for her graduate degree. Drew Carey laughed at how much she has probably already racked up in debt and that HOPEFULLY she is getting a going for a law degree or to become a MD. She laughed and 'no im going to be a social worker'. She had already racked up $100K in undergrade debt and now (i think she said) 60k for her masters. How in the world does she expect to pay off 160k on a 30-50k a year salary!?!?!
So I'm wondering what everyone thinks about student loan debt. What do you think is acceptable? Any?
Ben Bernanke's kid is getting his medical degree (dont know where, but im assuming one of the best schools in the world) and when he graduates he will be 500k in debt. Is THAT stupid? Do we really doubt 500k in debt for a Harvard medical degree to be brain surgeon wont pay off?
I'm asking because im thinking about taking on some debt for student loans in 2 years. I served in the military so all my school is free for 36 months of schooling (not including months off, so anyone can get a 4 year degree on it). My degree plan is accounting. Its a 5 year degree plan and you get your degree and masters in accounting after 150 credit hours. Right now i will get that and a minor in business economics at no charge. However I am looking at having two degrees a bs/ms in accounting and a bba in business economics. This will require me to go outside the GI Bill for an additional 24 credit hours. Or to put in terms of monetary value $7000-$10,000 . Technically i have savings/investments so i can absorb these costs, but that will leave me with almost nothing upon graduation. I am also not 100% sure on my career path though I'm around 90% sure about how i intend on achieving my goals. i havent knocked out a masters in finance, law school, or even medical school (though this is long shot and id really only be interested in the business aspects of running a medical business). The state of Texas has something called the Hazelwood act (for veterans), so if i goto a state school then the schooling would be paid for, but i would need to take out a loan to live on. $1500 a month in living expenses for 2 years or $36000 total (ball parking it here).
So what do you think about taking on $10,000 in debt for a second degree (yes i believe business economics will be beneficial to my career path), when a minor in business economics is free.
Also what do you think about taking on $36k for a masters in finance or law school.
Assuming all my degrees will be from the univ of Texas. So its not like i will be getting any degree from some obscure school.
On a side note my little brother is getting his masters in finance at UT and took on a $110k loan to get it. I am getting a hell of a discount! haha.
I'm no expert, but IMHO unless you can connect the dots very clearly and show how exactly the knowledge you gain from those courses will pay for itself, then skip it.
An engineer, for example, makes his money by actually using the skills he learned in engineering school. Is that the case with the courses you are laying out $36,000 for?
Ask your profs about it. They probably know, and probably will be happy to tell you. And if not, maybe you can ask potential employers. "Would you pay me more if I take course X? $36,000 more? Why or why not?"
You said you want to be an accountant. So you need the minimum to be an accountant. If that is a degree that is being funded by your GI Bill then great for you. ( I am assuming that your certification exam in accounting is paid by the GI Bill) Anything else not directly related to becoming an account seems to me to be just wasted time. There is very little value in extras to a Bachelors Degree without getting the Masters Degree. And even then the value of a Masters Degree is decreasing fast. I certainly would not recommend going into more than the value of a cheap car for the Masters Degree.
As for your brother being in debt vs you being paid with deferred compensation from your GI Bill. To me I would think that your brother got a much better deal. He is only risking future labor and the ability of politicians to change the pay back law while you took a huge risk with your physical health, mental health or worse, your future existence by being in the military.
PS: I was an officer in the Army with my college paid via ROTC. My siblings always note that their loans are just money while I could have easily been injured or killed in one of these pointless wars.
Grant,
It all depends upon what the return is relative to the amount of debt that one is likely to strike up, costs vs. benefits. I disagree with a lot of people around here when they criticize colleges. While I disagree a lot with the current structure the fact is that it's pretty hard to get a good paying job without a fairly high degree of education, the market has little use in our day for people with few skills.
So in your case here are the things I would look at:
1. What are your chances of failure, either in getting a job or completing your educational process?
2. What is the total that this will cost you in loans and what does the interest cost you over the years?
3. What is the realistic pay for the job you intend to have? What is the realistic starting pay and how fast does this go up compared with the needed payments.
4. What are the psychic benefits to you of the job? Do you enjoy the work and the conditions? Does the nature of the job increase the "real wage" you are receiving or decrease it?
5. How will this job effect your lifestyle? Are these changes positive or negative?
6. What are your other options in these various areas?
7. Are there any ways that you can minimize costs or payment time like working while in school? Are the consequences of these things worth it?
So that's my advice for you. I'm afraid that I don't know much about the pay for the careers you would be looking at, and I think that the questions you're asking here are better answered by yourself and someone who knows a thing or two about jobs and the employment market for what you're looking at. It's your life, time, money, and vocation, so you are the ultimate judge here, and it's hard for us to even give you a vague answers when all of these things have different answers for us. Someone neck high in debt that will last them the rest of their lives could have done the wise thing if they truly love the job that they got because of this.
As for your other question above, I don't think that it's stupid for someone to take out 500K to become a brain surgeon. I think that it is insane to do so when you're going to be making starting pay and more importantly that 500K is taken out AT INTEREST. I'm worried enough about the 80-100K minimum I'll probably be racking up to complete my education, 500K is just a scary number when it's going to be increasing at even 1 percent per year.
*edit - lots of replies while i was typing that. was just against the first comment. reading others now.
but its not always that clear if at all. Its obvious to say specific type of engineer has a median salary of X, that same type of engineer makes X+Y with a masters.
It becomes a very grey area when you have someone with business admin degree from some 3rd rate university and you are competing against someone who has an elementary studies degree from Harvard. If they are both applying for the same job id be more inclined to hire the Harvard grad.
I plan on being an accountant, hopefully at a large accounting firm, and to work their for as short of time as possible. I will be looking for a position as a CEO or CFO type job at another firm, and if i cant find one open a business of my own. A economics degree wont help me at an accounting firm, but will help in operating a business. (this is a goal not expectation)
So the question is what is the acceptable risk to take on in terms of debt when predicting your future? So while i agree that specialized degrees like engineering, accounting, law degrees, or if you know what career you want for the rest of your life can have predictable median salaries i will disagree that it is always as clear as that. MOST degrees have people are looking for a job anywhere you can find one. Most people have really no idea where they will work or what they will do.
If we can agree that $200,000 is an absurd amount of debt to have to be a social worker then what is not absurd? I mean that girl on the 'price is right' even laughed and was embarrassed at the size of her debt, but she STILL did it.
I am asking strictly for opinions. How can i justify $1 in debt vs $10,000. $1 vs $45,000. If you took out student loans how did you reach your decisions? If you chose not to take out loans why? If you plan to/ or plan not to why?
I am almost positive that i will end up choosing to go for the 2 degrees and eat the 10k. I will justify 10k as a really expensive vacation to the islands of knowledge. I will not pay 40k for that vacation unless it is finacially justifiable.
bogart - haha so true. I WAS TRICKED WITH A SENSE OF PATRIOTISM! I also had the ego that i could of won the war myself! Which i still believe i could.... if there was an actual mission that we are going after.
neo - its hard for me to figure out the benefit (as stated in my above post). Any further education outside of the accounting degree would be for my own personal entrepreneurial benefits. I wouldnt be going to get a specific job. The only specific job i would be going after initially is accounting. I'm almost 30 so going back to college later in life is doubtful.
1. accounting - im going to guess as close to 0% as it can be. I'm not going to accept any other job.
2. Dont know right now, because the loan would be taken out in a couple years, but i would need to alter my classes now.
3. median salary is around 50k. I will be looking to do auditing which requires lots of travel and they typically make more than other accountants. I will also have an accounting degree from 'the best accounting school in the country'. (tons of credited places rank UT #1 in accounting)
4. thats a hard one, because a lot of the work is awful to me. Though i really enjoy the aspect of seeing the 'inner workings'/finacial side of how the business operates. If I get a job auditing companies i am going to really enjoy it. If the only job i can find is a tax accountant i will probably blow my brains out. Though i think the knowledge you get with an accounting degree is 2nd to none in teaching you how to run a successful business. So there will always be options out of that work and into a lower paying job in HR which i could live with.
5. any job that puts me on an actual career path is going to be positive. Meaning any job outside of the necessity of having a job is a boon.
6. Other options would be in the banking world which would pay more. Then HR/office manager that would pay less. I believe accounting has the highest versatility out of any degree available so there are endless amount of jobs available. Any company that doesnt have an accountant would benefit greatly.
7. I could work, but im choosing not to. Nor do i think it would make much of a difference in the overall debt. I'm choosing not to work because i dont think i would make a 4.0 (actually like a 3.9) without it.
I agree ultimately its my decision, but id like to be educated on my decision. If its so obvious to everyone else that 200k to be a social worker is absurd then there should be opinions on 50k.
500k is an insane number, but daddy ben taught him that he can just print it when he is ready to pay it off. I'd probably do it too if i got into a harvard type medical program, but i would have to LLOOOVVVVEE the idea of being a doctor.
I wasted a good 40k euros on "education". Money I will never see back. Luckily, being a fixed euro-denominated loan it might ust blow up one day. Personally I do wish I'd studied Finance or Accounting, as both comport with the professional direction I am currently interested most in. My degree has helped me in landing jobs but this being the UK many employers will not even look at you without one. It still bugs me that it wasn't in a subject I find beneficial to my career and other financial aspirations (S -> B/I quadrant shift.)
You don't need a degree to be rich or know what you're doing. Most stuff is learnt on the job. A degree is a pricy rubber stamp to show that you can be trained. Some are worth it and really are necessary but very few people actually need a degree.
Freedom of markets is positively correlated with the degree of evolution in any society...
what was your degree in if you dont mind me asking? and did you originally intend to go in that area of work? or were you just going after 'any' degree.
Philosophy minoring in economics, followed by Management (with more economics and a mishmash of other subjects.) I initially did Law but hated it.