hi everyone!
i'm a current college freshman and i just recently found out that i don't qualify for the map grant anymore starting next year. which is crazy, because last year i was $300 over the limit to qualify for free tuition and my household income barely went up since then. regardless, i really want to stay. the program i'm in is great, i have an incredible social circle and i've already had so many great opportunities to network and learn about ways to enhance my career prospects that i don't think i would fully get anywhere else. i am working part time (about 15 hours a week) and i have a cheap apartment lined up for next year.
all that being said, it looks like i'm going to have to borrow about 28k, which i'm estimating will be around 35k with interest by the time i graduate (assuming the worst case scenario with my federal loans since they're variable- i actually did have to take out some private loans this year for room and board but they're only at 4% interest fixed, thank you college ave, so i'm shockingly not as concerned about those)
my mom has also already let me know that i am very welcome to move back home when i graduate. we have a great relationship so i'm not super concerned about that, i think it would be fine and probably even nice to have a couple years to focus on my career and paying down my debt before i'm off by myself in the world.
also, for context, i'm getting an advertising degree. average salary of graduates 1 year post-grad from my school is 53k, which isn't horrible for entry level. not sure if i'll actually be at that number obviously but i'm hopeful because i'm trying to be very proactive about internships and making connections and everything.
so… how bad is 35k, really. i know it's probably manageable, but how stressed do i need to be? i know the number isn't that high compared to most people here but it's a LOT more than what i thought i was going to owe before this whole map grant thing and it's seriously throwing me for a loop. especially considering the state of the world atm. it feels like a huge weight looming over my head because i already wasn't sure if i was ever going to be able to afford a house or retire or have even a somewhat comfortable life and the thought of taking on that much debt right now makes me feel actually sick to my stomach. i just need to be talked through this logically i think. dropping out doesn't seem to be the smart option because i genuinely believe i can be successful in the field i'm going into, but nothing is guaranteed which is TERRIFYING.
edit: clarifying because there was some confusion on a different sub- 35k total, not yearly. i'm not the most financially literate but i'm not insane haha
is my student debt as bad as it feels?
byu/shartarion inpersonalfinance
Posted by shartarion
13 Comments
Figure up how much you’d pay for rent, just as a guess. If you stay at home with your mom for 2 years after you graduate, you could spend the money you were going to spend on rent on those student loans. I’d be shocked if you couldn’t knock out a huge chunk of the 35k just by staying at home instead of immediately going out on your own. I stayed at home right after college and knocked out my college debt early that way, and I’m glad I did.
Personally I don’t think going 35k in debt is worth it for a job that pays on 53k a year.
53k is not a big number annually to bring home. That equates to about $25/hr. Not sure where you are located or cost of living, but you will be living with Mom for a long time trying to pay that debt off.
53k/yr assuming you can even get a job at all. It’s rough out there.
Depends on what you get paid when you have full time work and what your interest rate is. But for context, I graduated back in 2013 with $36k total debt. Paid it all off 3 years ago. And just a few months ago took over the parent plus loans my parents had out for my schooling which was ANOTHER $25k that I paid in one swoop. It’s doable.
35k is not bad. I finished with that much and paid it all off within 6-7 years.
Okay – in general, you “should” be fine. Doesn’t guarantee fineness.
Assuming $35k in loans at average of 5% interest you’ll be paying somewhere around $150 a month towards interest when you first start paying off loans – and rest goes to principal.
Assuming a $50k salary and you have your parents as a backstop you should be in an okay spot. Take home on $50k will maybe be around $35k to $40k depending on your specific tax situation (make sure your parents don’t claim you as a dependent even if you do live with them).
That is $2,900 a month of take home. Which should comfortably allow for a $370 a month payment to the loans (maybe more depending on situation). The $370 a month would be about right for a 10 year payoff period. Would recommend putting more towards the loans if you can early.
Living with parents for 2-3 years would likely help you put a healthy dent into the loans, if not wipe the completely.
Risks
Something happens and you can’t live with your parents
You are unable to get an entry level position for $50k
You end up needing to take out more loans than you thought.
Variable rate on your fed loans skyrockets (though you did say you already assumed worst case scenario here – but my payment plan only assumes 5% average rate).
That’s how much my student loan was, it’s a reasonable amount that you’ll be able to pay off. On the other hand my friend had a loan closer to 100k but she was able to pay it off by living with her mom and not having to pay rent
One thing I didn’t notice you mention is a summer job. You might be able to avoid a few grand in loans by banking money from a summer job (or taking summer classes). That could keep the loan amount <30K which feels more feasible, but honestly ~35K doesn’t seem horrible to me. Anything 40K and up though and I personally would strongly consider transferring.
35k isn’t too bad, but I’d be wary about going into advertising right now. That seems like a field AI will cut into significantly. I’m sure there will still be jobs, but possibly far fewer in a couple years. So if your program is flexible, make sure you’re taking a variety of courses and have a good foundation to be able to pivot. Something like business or marketing may be more marketable, but I’m just spitballing. It sounds like you’re on the right track with internships + willingness to hustle.
About 400$ a month for loans. It’s slightly bigger than average but manageable.
I only have federal loans. I’m on an income based payment plan and work at an employer that qualifies for PSLF, so (without getting into a bigger political or moral debate about any of that – I’m not here for debate) the loans are quite honestly not massively affecting my life. My college path was worth it to me in terms of personal development and educational quality but I struggled to find a decent paying job right out of college (even as a STEM major) so income based payments were a life saver while I got work experience. I also got a masters and started to move up a bit. So! I’m not encouraging you to take out loans, but as the payment plans for fed loans stand today (which could change), it’s not “as bad as it feels.” I will say the whole “average salary outlook” thing feels a LOT different once you’re living on it though vs. comparing numbers while still in school.
as long as you get a good degree that is in demand with good longevity and growth you should be fine. it’s good that you are giving this careful thought though, tons of others would not have done that.