Student debt

It's a real problem.

I chose UW-Madison largely because it had a reciprocity agreement with the University of Minnesota. That is, Wisconsin residents didn't have to pay out-of-state tuition to go to the U of M, and vice versa. (The reciprocity tuition was slightly higher than resident tuition, but much lower than out-of-state tuition.) Might be worth checking out if Illinois has any similar situations.

I got a few scholarships and a paid (fellowship? paid to work at the dept. during grad school + free tuition, forget the term), and am still paying $300 a month. Will finally be done next year -- man will it be great to have that particular monkey off my back.

I pay about $300 a month on my loans, which are about $40,000, over 20 years. I have a good interest rate. You can defer your payments after graduation for something like 2 years, which is nice while you wait to get a decent job.

$1200 sounds like a lot to be paying...which school did she go to that cost that much?? Her education must be expensive. Why is she paying it off in 10 years? Take the long way...they don't hurt you and why are you in any hurry to pay back the government their money? If they could wait 20 years to give you your tax return, they would. Yes, you are paying interest but setting a realistic monthly payment is just as important as getting a good deal.

Consolidate consolidate consolidate. After graduation, consolidate any federal loans. They offer you a good interest rate (currently around 4.5%) and it can reduce your payments.

I'm paying mine back in 10 years -- I have a good interest rate, but it's such a large amount to start with that the interest is quite significant. I made double payments for a couple of years early on (when I had a good job but no kids yet) that put a significant dent in the interest. Plus I plain want to have as few debts as possible.

Bella, it might have been 20 years. I remember thinking it was outrageous to be paying for college until one is in their 40s so I assumed it must be ten. If 20 is the standard payback, then that's what it was. She was attending Michigan at Ann Arbor as a non-resident. Her parents used up all their college savings to help cover the sophomore year and the final two years had to be fully financed. This coming year's total non-resident costs are over $50,000. So she was probably looking at $120,000 in debt or more when you add the next two years to what she already financed for her sophomore year. Ridiculous!!!

The in-state school she has transferred to has a total annual resident cost of about $12,000.

Yikes...that's all I have to say.

Yikes.

I can't believe she would even qualify for that much in loans as it would be impossible to pay back at that rate. Mine was about $150 a month. I did receive grants, scholarships, and work study that all help pay.

Don't automatically discount the "Name" schools. They are generously endowed with scholarship money.

I know the child of a friend of a friend who was accepted at both Berkley and Smith--and Smith offered a full tuition scholarship with discounted room and board.

Hopefully this isn't putting this off the subject....But I sincerely want to know....

Do you feel that the amount of student loan you took out, the payments and the interest were worth it in comparison to the amount of pay you are making?

I'm not asking for statistics. Or personal passion for learning, or taking off time to raise a family.

I mean for each of you personally, in the field you are working in, have you recouped economically what you are putting in?

How long did it take, or do you expect it to take to break even financially?

Definately worked out for me. I certainly have made more than I would have, however, I think it takes many years before you do make out. After being promoted a couple of times that is when you start to see the benefits - the first entry level job - no way - you barely get by.

I also paid off more than what was due so I paid it off early.

It still took me a while though - over 10 years. I know it was a while because I was still paying it when I bought my first home - I am some one who hates debt (unless you get a benefit like writing off the interest on a mortgage). When I applied for my first mortgage the woman was shocked that my only debt was my school loan - so it sticks in my head how long it must of been.

I graduated from college in 1960 without debt, thanks to scholarships and doting parents.

Of course college costs (including room and board) were $3,000 a year in the last 50's.

The For Pay jobs I've held have been in teaching which was not a terribly well-paid profession.

Still, four years of a Liberal Arts education has given me hundreds of thousands of little velcro stickies for life-long learning.

In terms of money earned vs. money spent on school, I recouped it within the first year or so of the repayment period. That is, I graduated, didn't find a good job within the grace period (before I had to start repaying), then found one just when I did have to start loan payments. The annual salary exceeded my total loans.

In more complex terms, even just in the three years that I worked at my "good" job, I made much more than I would have if I didn't have either of my degrees. (As near as can be figured anyway -- I'm going by same field, same geographical area. People do make money without advanced degrees, after all, it's just harder.) I think that amount -- how much MORE I made in those three years than I would have if I didn't have the degrees -- surpassed the cost of loans. (My parents contributed a small percentage of the total cost of my education, and as I mentioned before the total was also brought down by scholarships, grants, etc.)

So I think it's already been recouped, and next year (fall 2007, when sozlet enters 1st grade), I probably will start working outside the home again, and will likely be doing that until I'm at least 60. Again, I plan to use my degrees for that (teaching deaf preschoolers looks like a possibility), and get a higher salary than I would otherwise (if I could even land the job in the first place without those qualifications).

I didn't mean recoup as in, "my education cost 25,000 and I made 27,000 the first year out there." Unless of course you did earn in your first year what your education cost, plus a decent wage, in this simple example, $52,000.

I mean compared to if you had another job you were qualified for, but had no degree.

I'm not talking about dishwashers compared to physicians...
Let's say you didn't work during school, and your education cost 40,000.


If you went to work with let's say some school training for whatever you chose, and lets say your starting pay was $25,000
Year 2 $26,000, Year 3 $27,000, Year 4 $28,000 (this is round figures passed on 4% increases.

So you've earned $106,000 working without a college degree. Add on another 4 years at even 3% raises, and you've got close to $250,000.

In the first 4 years after graduation, let's say you earn, $30K, $34K, $36K and $38K....that's 138,000, minus the $40K you owe.

Of course, there are many jobs you would make massive amounts more, and some will get stuck out of high school not ever getting much over $11 bucks an hours.

I'm not at all putting down getting a good education, but, sometimes I just wonder...like when J_B starts a thought provoking thread like this.

I'm not sure many analysts of pay look at the lost opportunity for wages over the education years and the effects it has on the bottom line, especially for parent who have scrapped by for this, only to have an adult child living at home. Unpleasant for everyone.

Also, the mental stress of having to budget for all those payments over all those years.

I'm just musing....just talking to myself. I guess I could figure out, using the above scenerio how many years post graduation it would take to get to the point where you've recouped it all.

Chai, remember tha many places won't even consider you if you don't have a degree so I think that is a motivating factor.

This is very true, and that's unfortunate...my method isn't scientific, I realize the world doesn't run that way.

That's why when considering what people would do if they graduated or not, I made the assumption they could find something that paid decently to start. Maybe not what a graduates job would be, but something that pays OK and goes up from there.

I'm just considering raw #'s...here, just for fun, I ran the scenerio I mention above, 40,000 loan debt, starting at 25K with no degree, 30K with a degree. I totally made up 2 people lives, one where they slowly make more year by year, stay the same for a couple years sometimes, and the other person who graduates, experiences some moderate, jumps, and all the while always grows at a bit higher rate. It looks like, on the surface, a person like this would have to work for 19 years to recoup the 4 lost years of wages, plus the college expenses. I didn't even include the interest.



Starting debt _____ _____ -40000 _____
1 _____ 25000 _____ 30000 _____ 1
2 _____ 26000 _____ 34000 _____ 2
3 _____ 27000 _____ 36000 _____ 3
4 _____ 28000 _____ 38000 _____ 4
5 _____ 29000 _____ 40000 _____ 5
6 _____ 30000 _____ 42000 _____ 6
7 _____ 31000 _____ 44000 _____ 7
8 _____ 32000 _____ 46000 _____ 8
9 _____ 32000 _____ 48000 _____ 9
10 _____ 32000 _____ 50000 _____ 10
11 _____ 33000 _____ 52000 _____ 11
12 _____ 33000 _____ 55000 _____ 12
13 _____ 33000 _____ 58000 _____ 13
14 _____ 34000 _____ 60000 _____ 14
15 _____ 35000 _____ 62000 _____ 15
16 _____ 36000 _____ 64000 _____ 16
17 _____ 36000 _____ 66000 _____ 17
18 _____ 37000 _____ 68000 _____ 18
19 _____ 38000 _____ 70000 _____ 19
20 _____ 38000 _____
21 _____ 39000 _____
22 _____ 39000 _____
23 _____ 40000 _____
24 _____ 40000 _____
25 _____ 41000 _____
26 _____ 41000 _____
27 _____ 41000 _____


926000 923000


Anyway, this isn't meant to be anti-education, anti anything...just sort of makes you think.

I have a college degree, but 25 years later, am I any smarter than someone without one that has been doing the same thing?

One thing I do know, if I had kids, they WOULD be paying me back.

Chai, I addressed this:



in the second paragraph of my post:

Does that include the money you would have made during your college years if you'd gotten a real job instead of going to college? This could be an even higher cost than what you pay to the university.

I remember doing those numbers with an American physicist I know. We found out that a bachelor in physics is worth it in terms of money, but a doctor's degree is probably not.

In Germany, the numbers are different because you don't pay tuition for college. (Our students are currently taking to the streets because some states plan to charge $600 / semester, and they think that's scandalously expensive.) Here, even a doctor's degree is probably worth getting, even if you're only in it for the money.

Chai - that is how I calculated mine compensation after considering what I could be paid at another job (without a degree) and how much I would make over the 4 years with increases. I think the major difference between having a degree (for the average college student not the superstars) is the future potential. When I started out, I probably did make less than my peers that did not go to college - they already had 4 years full time work experience. However, after just a few years or so - and you start getting promoted that is where the differences start - also you start getting benefits that a typical non-degree person would not have - like a good bonus plan (talking 25% of your annual salary or even higher depending).

That's a good point. For my bachelor's years (4) I didn't work at all, but also had a terrible time finding jobs. It took me quite a while after I graduated to find anything, and I wasn't applying at high-falutin' stuff, just bookstores and such. (The ADA passed about midway though but hadn't really trickled down yet, I was told straight out, "Well, if you weren't deaf..." and not for essential functions, either.)

I did work during master's degree years (2), but I probably could have worked more (and made more) if I wasn't also getting the degree.

With those things taken into account, depending on what kind of a job I get, it'd probably take another 3-5 years to recoup.

That's not going into the other benefits because Chai specifically asked us not to, I do think the other (non-pure-monetary) benefits are significant though.

$600, wow!!

I also didn't include the cost for my master's degree as work paid for the majority of it. I worked full time and went to school part time (another benefit of having a professional college degree type job - many will pay for your master's degree tuition or at least a portion).