College Debt Inquiry

SpicyTouch's picture
Rank: Monkey | 54

Hello Monkeys,

I am a high school senior who has recently been admitted into a decent semi target(UT McCombs). The only problem is that my parents cant afford $50k/year. All in all, I will approximately have ~$60-80k in loans when I graduate.

If you were in my shoes, what would you do? Also, if any of you have similar stories, please share. Did you have college debt? If so, how much? How long did it take to pay it off? Would you have done anything differently?

I really appreciate your help, guys.

Best Regards,
A Stranger who is Spicy

Comments (56)

Best Response
Mar 28, 2015

I easily cleared 6-figure debt from undergrad, but I also went to an Ivy. Accumulate whatever debt you need, for the best school that will make a difference or open doors.

In other words, don't get 100k in debt for some slightly shit state school instead of attending some shittier no-name school for a fraction of the cost.

Do take on 100k for a school with a strong brand or stellar, recognizable academic program. The return you will get from career earnings & doors opened far outweighs the investment.

    • 4
Mar 29, 2015

Thanks for your reply. Did you take a commercial loan to get 100k?

Mar 29, 2015

Why would you take a commercial loan?

"I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature."

Mar 29, 2015
Ambani:

Why would you take a commercial loan?

If the school only offers you 10k in loans, what else will you do if you need more money? Is there another option?

Mar 29, 2015

My situation was similar to yours. I got into Emory where I would have 80-100k debt when I graduate, and a bunch of non-targets where I would have 0 debt when I graduate. I didn't know what I wanted to do career-wise at the time, so I didn't want to take on debt for an uncertain future, and didn't go to Emory.

Two years later I "discovered" finance, and kicked myself for not going to Emory. As a previous poster said, ~80k debt is nothing compared to the years of increased income you can get from going to a target. Since you already know you want to do finance, it will probably be worth it.

I have a tender spot in my heart for cripples, bastards, and broken things

Mar 29, 2015

You still made broke into IB/CF, so it probably doesn't matter too much now. Thanks, I truly appreciate your input.

Apr 1, 2015

@SpicyTouch -

"You still made broke into IB/CF, so it probably doesn't matter too much now. Thanks, I truly appreciate your input."

That's not an accurate take on his comment. I LEFT a top 50 to go to a low ranked, much cheaper state school. Recruiting became incredibly difficult, I didn't have a shot at even talking to someone at a high ranked firm and it's taken me years to build a profile to get into a top B-School to turn that around. In finance you will always be swinging from behind if you go to a non-target. It can be done and you can catch up in the end if you're lucky, capable and opportunistic, but why risk having to start making $30k-$40k in fund accounting or some other back office role because you went to a shitty school (don't kid yourself, this is common from non-targets) when you can be assured of a chance at a well paying position?

Also, its tough networking from a low ranked undergrad. I know one other person who ended up in a true front office finance role from my undergrad and he was fired within a year.

I'm 30, work my ass off, have earned 2 financial certifications and am on Level III of the CFA and still feel like my undergrad holds me back. So now I have to take out $150k in loans for an M7 MBA. Which was more difficult to get into, because, you guessed it, B-School cares about your undergrad too.

Anything under $100k in loans is normal and reasonable. Don't handicap your future if you KNOW you want to get into finance. If you're getting into AM/Research, I've seen junior analyst roles with 1000 applicants at my firm. It's really easy to have your resume thrown out in today's ultra competitive world.

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Mar 29, 2015

Half of my debt is federal and the other half is private. As an aside, I was on the pre-medical track for 3 years and completed my neuroscience major by the time I realized I didn't want to go to medical school. Because I was at a great school and maintained a reasonable GPA, my options were still wide-open for any grad school or post-undergrad career path. The school allowed me to land banking / PE internships that would be otherwise unattainable for a neuroscience major at a "non-target".

Mar 29, 2015

What're your other college options? If you can go to another school that's almost as good for 50k less, I'd do that,

Mar 29, 2015

Other than McCombs, I got into a mid level non target and an extreme non-target. I applied a bunch of places, but got waitlisted by most targets/semi-targets. My options are limited.

Mar 29, 2015
SpicyTouch:

Other than McCombs, I got into a mid level non target and an extreme non-target. I applied a bunch of places, but got waitlisted by most targets/semi-targets. My options are limited.

What's a mid-level non target? Like a Michigan State or Minnesota? How much more expensive would UT be? And are you 100% set on IB?

Mar 29, 2015

I think this answer really hinges on what your other options are exactly. 60-80k in loans is nothing to scoff at.

Mar 29, 2015

How much more expensive is UT than Miami? If it's 50k+ more expensive, I'd go Miami.
If it's

Mar 29, 2015
MMBanker14:

How much more expensive is UT than Miami? If it's 50k+ more expensive, I'd go Miami.

If it's

50k total debt or 50k difference per year to attend? Sorry for the confusion. To be more clear, at Umiami I will take 5-10k loan per year, and at UT I will take 20-25k per year.

Mar 30, 2015
SpicyTouch:
MMBanker14 wrote:

How much more expensive is UT than Miami? If it's 50k+ more expensive, I'd go Miami.

If it's

50k total debt or 50k difference per year to attend? Sorry for the confusion. To be more clear, at Umiami I will take 5-10k loan per year, and at UT I will take 20-25k per year.

It's a tough call if it's 60k more in total. Try to connect with some Miami grads who have gone into banking or other areas and see how tough it was. UT isn't that much better as an overall school I don't think, even though I'm sure they place better. I'd probably lean towards Miami and work really hard - IB or the other areas you're interested in are possible from Miami.

Mar 29, 2015

I go to UT op, pm me if you have any questions

Mar 30, 2015
Communist:

I go to UT op, pm me if you have any questions

I just messaged you with a couple questions. Thanks alot.

Mar 30, 2015

just going by the math with my student loans, 60k would be about $500 a month in payments. if you come out of UG making $70k+, you can handle this, assuming you don't have kids and manage other expenses (rent, car, etc.). you may not be able to ball out, but you won't be a pauper either. I'd do my student loans all over again to have the experience I had.

Mar 30, 2015

it blows my mind that Miami is cheaper than Texas, I'm guessing you're getting some sort of scholarship from them. If that's the case, and talk to your college advisor/counselor before doing this, but you may want to tell Texas what Miami is offering you to see if they counter.

Apr 1, 2015
thebrofessor:

it blows my mind that Miami is cheaper than Texas, I'm guessing you're getting some sort of scholarship from them. If that's the case, and talk to your college advisor/counselor before doing this, but you may want to tell Texas what Miami is offering you to see if they counter.

I plan on countering the financial aid offer soon. I've heard it is really difficult, though. Yes, UM is a hell of alot cheaper than UT due to scholarships and grants. UT just gave me a fuck ton of loans.

Apr 1, 2015

I was admitted BHP, valedictorian of my class with a 2300 SAT and all I got were loans. I feel your pain.

You've received some good advice here. I think the solution is to go to UT McCombs. See if you can get in-state fees by living in an apartment for a year or something. Additionally, work your ass off freshmen year and lateral into the BHP program. If you are highly informed (which you probably are if you're on this forum as a HS student), you should be able to find the easy classes, get your GPA up to a 3.8 or whatever and join some clubs to break into BHP. Once your in the BHP program, you should be able to access solid recruiting for consulting, accounting or banking. From there, paying back your debt should be pretty easy.

None of this is going to be as possible or easy at UMiami. As far as quality of life goes, I would think UT would be better, and if you can somehow go Greek or find clubs with people you enjoy, you'll have a great time in Austin.

I don't know much about UMiami, but UT seems like a solid choice.

Apr 1, 2015

IMO, student debt is the best consumer debt you can have. Aside from not being able to be discharged in bankruptcy, it's much cheaper than other financing sources in most cases and can be deferred for like two years if you ever get laid off. It's also tax deductible (unless you get a good job in NYC).

Apr 1, 2015

I'm not certain I would so easily brush aside the inability to discharge it in bankruptcy. That is a huge, huge difference. The moment you take that 60k you aren't getting out of it. Period. Yes, the return on it will be much better than most other forms of debt but don't forget that the vast majority of people don't end up in the super high paying job category when they graduate. It's something you make sure you consider long and hard before you take the money and handicap what you are going to actually do while you are in school and what your realistic salary prospects are when you graduate. Not the pie in the sky numbers, but what's the worst case scenario where I'm making significantly less than 70k upon graduating. If you can handle it then great, take the loans and don't look back. Just make sure you are going into it realistically and with both eyes open.

Apr 1, 2015

Yes, but if you over extend yourself and start at a bad job, you will probably just not be able to buy a house rather than being forced into bankruptcy. $100k of debt is manageable with a $40k job, it will just restrict where you can live and what you can afford to buy. If you are confident about the value of the college you go to, taking on student debt is one of the best investments you can make, particularly if you are going to a target school and are set on finance as a career.

Apr 1, 2015

My question is how are you getting to $50K / Y for McCombs? That sounds high even for out of state.

Apr 1, 2015

Don't take out debt to go to a "better" school. I declined two Ivy acceptances to attend an in-state school.

My logic: attending a top school will make it easier to get where you wanna go, but will it make it $200k easier? No chance. The education gap is not that pronounced so it comes down to the doors it opens. Make networking, self-study, and working toward your dream career your full-time job and "pay" yourself $50k a year for it.

You are a UT McCombs caliber student. Going to a different school will not change that, you'll just have to go the extra mile to show you're on par.

Is that extra mile worth the amount you'll have to take out in student loans?

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Apr 1, 2015
skeam-c:

Don't take out debt to go to a "better" school. I declined two Ivy acceptances to attend an in-state school.

My logic: attending a top school will make it easier to get where you wanna go, but will it make it $200k easier? No chance. The education gap is not that pronounced so it comes down to the doors it opens. Make networking, self-study, and working toward your dream career your full-time job and "pay" yourself $50k a year for it.

You are a UT McCombs caliber student. Going to a different school will not change that, you'll just have to go the extra mile to show you're on par.

Is that extra mile worth the amount you'll have to take out in student loans?

skeam is on the money here. I went to state school and got out with zero, nada, nilsh debts. It was USD 5K a year to attend, I worked throughout Uni and got out happy.

If you are clever and really know what you want, the undergrad you went to won't matter much. If you were to say: I got into Harvard or U-Penn (b-school) than I would consider the debt burden as that would more or less guarantee you a spot in IB if this is what you really want to do. McComb I am sure is a good school, but not good enough to be spending loads of money for IMHO.

Although to be fair, you said the difference b/een McComb and Miami is only 15K - that's USD 60K of extra debt or USD 100K Gross of salary when you get out. If you get a good job you should be able to clear that out fast. IF you get a good job.

By the way: School loans are the shittiest - you can never bankrupt on them, and rates are pretty shit. Remortgaging is where it's at, just not sure how keen your parents are to do this...

Apr 1, 2015

Not knowing if you're a resident of the Great State of Texas or not, but consider making Texas your legal residence if you go to UT. After a year as a resident of Texas, you should be able to qualify for the In State tuition rate which will greatly reduce your loan burden and cut your academic expenses significantly. I would consider that if you are seriously looking at UT Austin because it will definitely help you out with the cost savings. Gotta love in-state tuition rates.

Apr 1, 2015

+1 SB

Apr 1, 2015

Also, really? How has no one mentioned that point yet throughout this thread. In-State Tuition at a public state school versus Out-of-State Tuition changes everything. For a bunch of Finance Types, I'm shocked that it skipped right over our heads.

Apr 1, 2015

Work during college, either it being a busy boy or a caddie. just work to keep up with living, on-top of applying for a bunch scholarships. If you prove yourself in the first year or so, you get opportunities to can get scholarship at junior/senior year

"Son, if you really want something in this life, you have to work for it. Now quiet! They're about to announce the lottery numbers." - Homer Simpson

Apr 1, 2015

I think it's easy to lose perspective on how much of a burden ~70k can be. Now, having said that, going to Miami would mean choosing a fairly mediocre school versus one that's top flight for recruiting in the South and still places well in other places.

Still, I wouldn't be able to get over that kind of debt. I suggest that you go to Miami and transfer to a target school in 1-2 years. From what I have heard, transferring from a non-target to a target after 1-2 years is a very viable and underused option. If you work your ass off and maintain a high GPA (3.8+) at Miami, you have a great chance of moving on to a higher tier school with more scholarships.

Apr 1, 2015

go to the better school (UT). This wouldn't be true if you were planning on majoring in English or something, but with a business major, you will almost certainly be better off, especially if you want to go into finance after.

Apr 1, 2015

If you go to UT, after 1 year you can petition for texas residency, which gets you in-state tuition. Saves you a lot of money for your last 3 years. My tuition was like 9k as a resident. Cost of living is high if you want to live in the most convenient locations, but there are $300-400/month apartments if youre on a budget

Apr 1, 2015

Thanks everyone for your help! I have decided to go to UT for the first year and follow the procedure to qualify for instate tuition from the second year onwards. This will leave me with

Apr 1, 2015

Thanks everyone for your help! I have decided to go to UT for the first year and follow the procedure to qualify for instate tuition from the second year onwards. This will leave me with less than 30k in debt and a much happier me. The only downside(if anything) is that I will have to work throughout college. This will take up a lot of my time and I might not be able to participate in club sports, but I think it's for the better.

Apr 1, 2015

^Are you sure that you'll be able to get Texas residency for your 2nd year onwards? I'm surprised this hasn't been recommended yet, but maybe you should look into attending a cheaper school for a year or two and then transferring over to a target. There are a couple of targets/semi-targets that have pretty high acceptance rates for transfers (e.g. Vanderbilt, UVA, Emory, UNC, etc.). This way you can save cash for a year or two, and then take out loans for the remainder of your undergrad.

Apr 1, 2015

Yes. I talked to the Office of Residency and they said that if I meet certain criteria(working part time, having a permanent residence, etc.) my residency status will be changed.

Apr 1, 2015

Best of luck!

If you don't find a finance oriented PT job, I worked my way through undergrad as a hotel doorman. If you get into a higher end property you call make decent cash (not quite bartender pay but home before midnight - definitely more than working the college bookstore) and hopefully flexible hours. I also learned a lot of great people skills that carry with me to this day, and it certainly taught me how to 'hustle'.

Enjoy your college years and hope you land your dream career.

Apr 2, 2015

Did you get into any other schools that offered financial aid? out of state schools are overpriced; at that price you could be getting a private school education.

Apr 2, 2015

SpicyTouch, I am just graduating from Rice Univ. in Houston right now and have a decent amount of debt because of it. It was worth it. I got internships in IB and ER which I couldn't have gotten at other schools. McCombs probably has better job placement in finance than any other school in Texas, and the money that you will be making after graduation will probably be 85K+ base salary by the time your graduate in this industry (at least that was the standard BB offer this year). 1 to 2 years of work should pay off the student debt that you accumulate.

I certainly know guys who have made it in finance from a "lower tier" school than McCombs, but that was only after multiple years of low salaries starting in tougher positions. Good luck wherever you go though!

Apr 3, 2015

Assuming you are going to at least a semi-target, check out private lenders like CommonBond, who calculate the risk differently for top schools and are able to offer lower interest rates.

Apr 3, 2015
Dr. Shakalu:

Assuming you are going to at least a semi-target, check out private lenders like CommonBond, who calculate the risk differently for top schools and are able to offer lower interest rates.

Thank You! If anyone else has different ways for taking a loan besides going to a bank, please share!

Apr 3, 2015

In HS, I had a competitive profile with a 99%+ SAT, 4.0 GPA, and solid ECs. But I chose to attend a non-target school--part of the reason being that the non-target was going to be free (in fact, cash flow positive in some semesters with the abundance of scholarships and grants.) I figured that I did not want $100k in debt in UG. Three things that I noticed were true after a few years.

(1) Education quality is really about the same as any of the top schools. I came out feeling like I could compete intellectually/skills-wise with any graduates from any of the top schools. Good professors are at every school, seek them out, learn as much as you can from them, and they'll take care of you. I owe a LOT to maybe three of my best professors in UG.

(2) Peer group is different. At a lower-ranked school, in general, the classroom conversation is not going to be the same caliber as at a better school. You'll still find great people, but on the whole, you might not be as challenged by your peers.

(3) Career opportunities are undoubtedly limited. Out of my school, getting a job in IB was VERY difficult. I know one guy who did it, but he had to move to NYC without a job and knock on doors for a few months after graduation before getting his foot in. It may also have helped that his step dad was an MD at the bank. I applied to a few banks online, but without networking, peer guidance, OCR, or a decent school on my resume (some online forms didn't even list my college and I'd have to write in "other") it was a lot of auto-rejects.

That said, I still got a solid job at an F500 and was accepted into multiple M7 programs which will help reorient my career. So guess at the end of the day, I still end up with ~$100k of debt. If I could do it over, I'd have gone for the top schools in undergrad--debt and all. But at the same time, I do not regret my decision because $100k is a boatload of debt and I still had an incredible undergrad experience.

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Apr 3, 2015

A clever way to save some money is to look at majors within the school that may not be offered at your state but are close to the program you want. If you prove the major doesn't exist at a public university in your home state then you get reduced tuition or something close to the in-state rate. For example, a few of my classmates majored in Real Estate Finance which had all of the same courses as the regular finance major only that you had to take an extra RE course or two to satisfy the major. You may be able to do this until you obtain residency and then switch. Just something to look into.

Apr 4, 2015

As an Asian, I never understand why some people here recommend going to non-top school to save money. If your career goal is finance or engineering or some other well paid professional career, you should always take better school regardless the cost. In fact, that couple of years after college is the best time in your life to have high loan burden. You don't have kids, family, high medical bills and if you work your ass off, you will save a lot of money to pay off loan (because you don't have time to spend it).

IMO, undergrad brand/alumni network is the most important thing in your early career. It makes everything much easier. Yes, you can go to a non-target, networking like crazy and still end up in some sorts of FO role but if you do the same amount of networking in a target, you may get offer from GS TMT.

You know what's more difficult than competing with someone working harder than you? compete with someone has better family connection, better school brand name and still works harder than you. In high finance, you are going to compete with those ivy graduated, MD dad and 100 hr per week kids. Don't assume you can always make the exception by hardworking.

From another perspective, even if you party too much, become a drughead and work as some hippie freelancer after school, you have a better chance to remake yourself if you have a top school name on your resume. I know a Stanford kid did some random band/music things after school for couple of years and suddenly realized he needs to be serious to his life. He decided to apply to bschool. With a great story and hard stats (low GPA but high GMAT, Stanford hard science), he got into a lower target MBA. Now he works in MBB and everyone likes him because his music talent. Don't tell me a non-name state school kid could rebrand himself this easily.

Apr 5, 2015
youayou:

As an Asian, I never understand why some people here recommend going to non-top school to save money. If your career goal is finance or engineering or some other well paid professional career, you should always take better school regardless the cost. In fact, that couple of years after college is the best time in your life to have high loan burden. You don't have kids, family, high medical bills and if you work your ass off, you will save a lot of money to pay off loan (because you don't have time to spend it).

IMO, undergrad brand/alumni network is the most important thing in your early career. It makes everything much easier. Yes, you can go to a non-target, networking like crazy and still end up in some sorts of FO role but if you do the same amount of networking in a target, you may get offer from GS TMT.

You know what's more difficult than competing with someone working harder than you? compete with someone has better family connection, better school brand name and still works harder than you. In high finance, you are going to compete with those ivy graduated, MD dad and 100 hr per week kids. Don't assume you can always make the exception by hardworking.

From another perspective, even if you party too much, become a drughead and work as some hippie freelancer after school, you have a better chance to remake yourself if you have a top school name on your resume. I know a Stanford kid did some random band/music things after school for couple of years and suddenly realized he needs to be serious to his life. He decided to apply to bschool. With a great story and hard stats (low GPA but high GMAT, Stanford hard science), he got into a lower target MBA. Now he works in MBB and everyone likes him because his music talent. Don't tell me a non-name state school kid could rebrand himself this easily.

This guy has it extremely right.

To add to his point... If you are too risk averse to take on large debt at a great target school, maybe you should reconsider your career goals. If you are $150k+ in debt and get a good position in finance by working your tail off, you should be easily able to save intelligently to pay that down within 2 years. Any other excuse for blowing you money like an idiot or rationalizing dumb expenditures is your problem.

Keep this in mind though: I've worked on Wall Street for 8 years and I've realized one HUGE thing kids never understand or consider is the enormous lack of job security in finance. Just imagine the kids who started working at Bear, Lehman, etc in 2006-7. Everyone thinks they can predict the future and they won't be the ones down on their luck because they're "too smart". You can be out of a job in a quick minute. And once you hit VP level you are often the most dispensable person in the group. Just keep in mind that if you think you'll spend 2 years in banking and then safely get out to the buyside, the demand for performance is 2x as bad and is about making money, not "working hard".

My point is that you are entering a very risky, shrinking industry. The big reward doesn't come without big risk. So go big or go home and create the best opportunities and resume for yourself to help you go as far as possible. The honest truth is most kids on here that convince themselves to go to a cheap non target probably will never make it because they simply don't have the confidence to take the risks needed to get that far in life (monetarily/prestige wise). Without rich parents footing the bill there's nothing wrong in not taking that big of risk. That partly why the rich continue to get richer. Just remember that you either start on this path of high risk from the beginning, or don't get it at all. The sooner you make up your mind, the better because it reduces the "I wish I has given it a shot" type of talk. If it's not for you it's not for you.

Apr 5, 2015
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