What do you consider a lot? Student debt?

HeatherC

Alas...these people I live with ...
Joined
May 23, 2003
Just curious....what do you consider a lot of student debt?

We have three kids...one graduating college in May without any loans(commuted), one working (no college...yet...still hopeful) and youngest applying to colleges now who wants to live away.

We are comfortable with her taking the $5500 she is allowed in her name a year. So total would be $22,000. We would also have her start paying them back immediately...even $50 a month and most likely would also make extra payments towards them to knock the total down before graduation.

Anything more than that, we would not be comfortable with and would consider a lot. What are your thoughts on this topic.

I realize the major and career choice also comes into play. A future doctor taking out $100,000 in loans will probably be able to pay it back more readily than an elementary school teacher that took out the same amount.

But in general what do you consider a lot?
 
we would not have signed for a parent loan for more than what our kids could take out (5500 per year). I think that is getting near "a lot" as is and anything over about 25K total is a lot. As is, our goal was for them to have minimal debt, if any---but that also meant that price (including scholarships) needed to be a major factor when choosing a university.
I am always shocked by how little parents and highschool students look at price when narrrowing down the university choices---that (with schools offering a decent program in the major my kid wanetd) was our first criteria to then get the list narrowed to something reasonable to really look into.

Our oldest has about 17K which is how much can be written off if they teach for 5 years in a high needs area----if that type of work doesn't pan out for them for any reason, we will help pay those loans off---but it made sense to take them given that the plan is to teach.

Our youngest is in an apprenticeship program (not in the USA) and is paid to learn. He lives at home and saves most of his money. He will have no debt at all and I am grateful for that.
 
We are shooting for our kids to not have any debt for undergrad - if we hit our savings goals, we should have enough to pay for their college educations outright.

I don't have any issues with them taking out loans for a graduate program, though, if the program has high earning potential. Most of my students who go on to get MD degrees end up with $150-200K of debt, but many of them have it all paid off in 5 years or so.
 


I know it's not always realistic but I think taking any amount of student loan debt is too much, or a lot.

This is my thinking. I worked full time as an undergraduate and paid my way as I went. No need to take out loans and it wasn't all that long ago even as my peers were lying about there "being no way to pay your way through school". No debt at all and I didn't get a penny of help from anyone. My employer is paying for my graduate degree and I knew from the day I graduated undergrad that is the path I'd take. If you were successful in my career path you'd have no problem getting your MBA paid for.
 
Undergraduate = $0

Graduate = really varies by profession but unless for specialized like medical, my max would be $20,000


NOTE:
2 kids, 1 has undergrad and grad degree, 1 has undergrad and currently in grad school.
Both fully responsible for their own tuition. Both graduated undergrad with zero debt.
There are many options and ways to get an undergrad without going into debt.
At the point graduate degrees come in to play, you again look at all your options,
but student loans may be necessary for part or all depending on institution time requirements.
 


We are comfortable with her taking the $5500 she is allowed in her name a year. So total would be $22,000. We would also have her start paying them back immediately...even $50 a month and most likely would also make extra payments towards them to knock the total down before graduation.

if hers will accrue interest during school make sure to check into the auto-pay option. dd's fed loans offer a quarter of a percent interest discount if paid by auto pay (every little savings helps).
 
Undergraduate = $0

Graduate = really varies by profession but unless for specialized like medical, my max would be $20,000


NOTE:
2 kids, 1 has undergrad and grad degree, 1 has undergrad and currently in grad school.
Both fully responsible for their own tuition. Both graduated undergrad with zero debt.
There are many options and ways to get an undergrad without going into debt.
At the point graduate degrees come in to play, you again look at all your options,
but student loans may be necessary for part or all depending on institution time requirements.

I see it as the complete opposite. Undergrad - Stafford loans are the way to go, especially the subsidized ones. But for grad school - you shouldn't have any debt at all - oldest daughter is getting paid to get her doctorate. There are many programs out there where you work to get your advanced degree.
 
I would not be comfortable with anything over $15,000 for a young person with a standard 4 year degree. I might go a little higher in a STEM field that had really good starting salaries, but otherwise, I think it's too much for someone trying to start out. I think $15,000 could be paid off relatively easy with living at home for a year or two and being smart with your earnings.
 
we would not have signed for a parent loan for more than what our kids could take out (5500 per year). I think that is getting near "a lot" as is and anything over about 25K total is a lot. As is, our goal was for them to have minimal debt, if any---but that also meant that price (including scholarships) needed to be a major factor when choosing a university.
I am always shocked by how little parents and highschool students look at price when narrrowing down the university choices---that (with schools offering a decent program in the major my kid wanetd) was our first criteria to then get the list narrowed to something reasonable to really look into.

Our oldest has about 17K which is how much can be written off if they teach for 5 years in a high needs area----if that type of work doesn't pan out for them for any reason, we will help pay those loans off---but it made sense to take them given that the plan is to teach.

Our youngest is in an apprenticeship program (not in the USA) and is paid to learn. He lives at home and saves most of his money. He will have no debt at all and I am grateful for that.

$11,000 combined per year seems very very low to me. I guess it depends on the cost of tuition and room and board at the school your child is at, how much you managed to save in 18 years prior to them starting college, and your preferences on how much if any of your child's college you want to pay for. My son exhausted all our savings for college for both our kids with his selection of a $50,000 a year college, with room and board, and after a $10,000 grant each year from the College. To keep some breathing room, he took on $30,000 in student loans, and DW and I took on $30,000 in loans. His sister is 4 years younger, and she bounced from a State University away from home, to a Community College a mile from home, to a State University 6 miles from home, to a year at a University in England, back to a State University 6 miles from home. Her most expensive year, tuition, room and board came to $12,000. As we had paid off our mortgage, the $1,100 a month we had been paying there was more than enough to pay her tuition without going into further debt.
When my mom passed away and we sold her house, we were able to retire all the debt related to my son's college.
 
I see it as the complete opposite. Undergrad - Stafford loans are the way to go, especially the subsidized ones. But for grad school - you shouldn't have any debt at all - oldest daughter is getting paid to get her doctorate. There are many programs out there where you work to get your advanced degree.

Oh I agree there are lots of money options for graduate work. DD was a graduate assistant so had half her tuition covered (she was out of state), she also earned scholarship money from the department, she also taught and she interned for pay for the athletic department. She graduated with an expensive masters for her concentration with a very tiny loan she needed her last semester. Yes, I know folks paid to get their doctorate ... I think that is more common than for masters levels. It's a win/win for the doctoral programs.

I do not believe in loans for undergrad degrees. That money adds up fast and having a "22 year old" graduating with possibly tens of thousands of debt is possibly a hole they can't get out of once they start paying for adult life, needing an new car etc. That is assuming they even graduate. With online programs, commuting to school, combining community college with a transfer to a 4 year, scholarships (most private schools have huge endowments for scholarships not tied to rules of merit) etc ... there is no reason for someone to go in to debt. You study within your means.
 
The thing is that for many and maybe even most degrees, where you go to school is not important. For those degrees, why spend $50K a year on a fancy school if you can go to a state school for a fraction of that? Choosing the best school for the money for your major is the first important financial decision most people will make. It is also one that can have long lasting impact if the decision does take into consideration paying back any student loans that are needed. The who financial aid process needs to be more transparent. Students and their parents should be told up front what the payment of each loan will be, interest over the term of the loan and how long it will take to pay it off if the minimum payment is made. How many kids would go to that fancy school for a degree in "something" studies if they knew they would be paying more than a car payment for more than a decade? I see this as the same problem as with credit cards where people had no idea how long it would take to pay off something if they just made the minimum payment.

So to answer your question, IMHO too much student debt is debt that a student cannot reasonably pay off within 5 years based on the average salary they can expect for the degree that they are pursuing.
 
I also consider anything above the minimum federal loans too much. I figure car loan, not house loan! I actually disagree with above poster because I think paying on fed student loans for 10 years or even more is a good investment if needed for a degree with good employment. Imo, the real problems begin when people go with higher loans than the federal student loans offered for undergrad. Another issue is trying to immediately upgrade from living like a student before paying them down. My husband had loans and I am forever grateful he was still living like a student when I met him and had them paid off before our wedding! He is grateful I did the same with my post grad costs.

Our first step with our kids was letting them know early on we were saving for college or technical training and expecting them to do the same when they started summer employment in high school.

We told our kids the amount we could afford to give them (thankfully enough to cover tuition, room, and board at a state school) and that we expected them to cover spending money, books, and travel. Once they had that amount they could use it out of state or private, but only if they had scholarships and or work to cover the rest. We also told them no loans beyond minimum federal or our offer would be withdrawn. They had to evaluate their choices accordingly and both ended up with private options they could consider.

Both chose instate and actually spent less than we had offered due to schoarships, employment, cheap living, and internships. We paid from college funds we had set up, money freed up when we paid off our mortgage, and me going from part time to full time teaching. They both got through undergrad debt free. We tried to make it a team effort and I think they felt that. They knew we were happy we could help them, but that they had a role.

We were open and honest abouts costs and they did the fafsa with us so they knew it was a stretch and the money wasnt just falling from an open pot. They also knew we wouldn't continue to pay if they were failing to progress toward a degree. (Though we made sure they knew not to freak over one bad test or class!) We sat down together once a term to discuss classes, grades, and finances before paying (this lined up with vacation breaks between terms and the few times it didn't we skyped.)

We were pretty brutal because we also gave them a four year limit of our financial support. Obviously we could have changed our minds if there had been extenuating circumstances, but I have friends who wish they had set that expectation. We did not offer support for grad school.

I write this all out because I'm a mom of two employeed fairly recent college grads with no school debt and this is how we managed it. Our stem grad had a job offer before graduation, and it took our liberal arts grad a year to be fully employed in his field, which we expected.
 
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The common wisdom around here is to take no more in loans than you are likely to earn in your first year of employment in your field. (teachers earn around 35k, so no more than that for an education degree, nurses earn 60K, so that's a good number for nursing school, etc...). DS 18 chose wisely and is at a state school that we can afford with Pell grants and our 529 savings. He will have no debt and a teaching license in 4 years. DS 16 may be another story!
 
Our plan with our kids was that they get merit scholarships for undergraduate degrees or start at community college and we pay as they went.

So far, oldest ds earned a presidential scholarship for his undergraduate degree and got $ in his pocket. He got a graduate assistant assignment that paid for his graduate degree. Graduated without debt.

Ds#2 and 3 got merit scholarships. Ds#2 will have 4 years this May with no debt. But he's in a doctor of pharmacy program. So next 3 years will be expensive. We paid off our house in Oct to bank as much as we can. He'll likely still have some loans, but hopefully a good income to pay them down.

Ds#3 is in his 2nd year of the same pharm d program with the itch to switch to medical school. ((Faint)) We will help as much as we can, but with 2 and then dd in school, he will have loans, too.

Dd is a junior in high school on track for merit aid due to ACT PSAT scores. So we expect her 1st 4 to be covered. She doesn't know where she wants to go or what she wants to study. She has her sights on Ivy Leagues! Ha!
 
My older son got into a very competitive state school and had free tuition. He worked really hard and got a graduate assistant position for graduate school that came with free tuition. He graduated debt free with a masters in taxation.

A friend he graduated with did not get into the state school and went out of state. She is getting the same degree as my son, and has already accrued $200,000 in student loans.

She could have gone to a lesser state school and not accrued all that debt, but was set on going to a big SEC school. Sometimes, student loan debt is a choice, not a necessity.
 
If my kids are taking out the loans the sky is the limit Anything they are comfortable with.
If I am paying it has to be within my budget and/or comfort level.
 
Depends on the major. A degree in something silly like art history or French no debt would be best. $300,000 for Vascular Surgery would be ok.
I was going to say this exactly. You gotta do what you gotta do but make it worth it.
 

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