What is your opinion of a reasonable student loan?

Edit: I will be updating the quick summary with what I am learning. Thank you FWF members!

I am going to go back to school, but I have no idea of how much is too much. According to http://www.finaid.org/loans/ "The median cumulative debt among graduating Bachelor's degree recipients at 4-year undergraduate schools was $19,999 in 2007-08. One quarter borrowed $30,526 or more, and one tenth borrowed $44,668 or more."

So, that said, what is your opinion of how much debt is too much debt to take on? Adjust for major, and if you took loans, state your major and debt at graduation.

I plan on being in that 10% group, either borrowing a cumulative of $39k or $75k. This is not taking into account any scholarships of which I will be applying. Below I posted my situation.

I have finished approximately 51 hours worth at community college that is transferable to University of Missouri for their BA in accounting. I currently make ~$24k/yr as a full time department manager at Wal-Mart. I have a house with PITI of $602, all other expenses 550-650/month (includes electric, auto insurance, water/sewer/trash, internet, satellite TV, cell phone and gasoline). My g/f contributes $210 to the bill, plus the groceries. I kick in restaurant visits when I can, usually only with coupons or other incentives to bring cost down.

Per the non essential items (re: internet, tv, cell phone), satellite TV is paid by the g/f, my cell phone is SER0 $30. Cheaper than landline where I live. For the internet, gasoline for commute & time away from family make paying for internet cheaper. Also, I drive a quasi-clunker Festiva that depending on how I drive gets 36-45 mpg.

To maximize savings, I plan to put $5000 in Roth, 7800 in 401k, 1800 in HSA (1200 co-funded match). This puts my AGI at around $16-17, enough to take pretty good advantage of the saver's credit. I plan applying for income based repayment, so I should be maxing out my tax deferred/tax advantaged saving to 100% of its potential. This will tack on additional loans I need of course, but I don't see how I am worse than the stereotypical college student: either party hard on mommy and daddy's money or take out $270-350 loans sporting the newest iPhone but majoring in philosophy. If I keep my full-time job, but only go part-time, I plan to take on $11.6k to $13k per year for 3 years (69 hours to go, based on a schedule of 9-9-6 (maintain saver's credit eligibility for taxes) and without the full-time workload associated with school.

If I can't handle school and full time work, I'll go part time at work, and draw out $25k student loans each year, most of three years.

So, it is either full-time 7-4pm job, evening part time classes @ loans of $13k; or full-time student in morning & afternoon, afternoon & evening part-time work @ loans of @25.

This would total consolidated loans of either $39k or $75k. I'd apply for IBR to defer loan repayment until I find a job earning enough to start making a dent in it. Does anyone think this is too much debt to take on? It's scary to think about stepping away from a $25k/yr job to go to school without any security. But I understand that the payoff may yield at least 50% more than I make now, given an average starting salary of $37k. Hopefully in 2013-14 employment opportunities will be more plentiful.

Another benefit of taking $25k loans instead of the $13k is that I could volunteer my time at college working on tax returns. I could also volunteer for charities. All my resume has right now is that I was a member of FBLA in my freshman yr of high school and placed 3rd in an annual business competition, have supervisory experience, and can hold a job (first and only job, Wal-Mart).

Advise please. And thanks for reading.

Not very helpful, but I would say try to limit the amount of student debt you take on - this will be with you until you die/become a vegetable (can't be discharged in BK). That is definitely something you don't want hanging over your head for the next 20-30 years.

There's a lot of cheap schools in Missouri and the midwest... I graduated in 2006 with about $11,000 in debt... Is it really worth it to take on all that debt just to go to a party school? Not in my book...

I wouldn't take out anything over what you need to cover tuition books (which you almost certainly are at UoM w/ $39kpy). What is your motivation for doing this? Are you looking for advancement at your current job?, looking for a new job?

You could do what I did in college, just take on as much student loan debt as you can and put all that cash in a MMA 'in case you need it'. With the current MMA/HYS accounts it would still cost you on interest, but you would have the cushion, and you can pay it all off once you secure a job after graduation.

Friendly advice: DO NOT ROLL YOUR INTEREST INTO YOUR PRINCIPAL. This option is weighted so far in the lender's advantage it makes me cry, and 99.99% of borrowers can afford the interest each month.

Have you considered going to school full time and working full time? I would see if you can swing classes during the day and working at night. I know it's not a popular option around here, but I worked full time while going to state school for an accounting degree and it was just fine - graduated in 8 semesters (realisitically, full time school I felt was easy with just 2-3 classes a day). I used the income from my job to pay tuition as I went. I only got into a tight spot in the last semester and had to borrow $4,000, which I paid off in a year. I wouldn't worry about building up your resume through volunteer work. When prospective employers saw I worked full time through school they were very impressed.

I ended up going into public service and I'm kicking myself for not having any debt to write off in 10 years, but such is life. A lot of my coworkers cant take advantage of that program becasue their repayment terms were only 10 years to begin with, so there will be nothing left to write off. Whichever way you do it, I don't think you can go wrong with an accounting degree from a state university.

My view of Kollege is to get in, learn what you need, and get out as quickly as you can. The purpose of college is to prepare you for working and making money later. So the sooner you can get to the working and making money part, the better. Pulling complex manuvres with part/full time jobs/school and that public work for 10 years thing, may all be alright if you are into that sort of thing. But it's pointless to do that to save $30-$40k in student loans. Your best bet is to finish your learning and start earning money.

I ran up a $38k student loan while I got my MBA in 3 years of weekends. Why not, they wanted only 2% interest and gave me 20 years to pay it back. I got a 25k/yr increase in salary after I got my degree and switched jobs.

A good rule of thumb is only taking on 1x your expected annual starting salary in debt. For most degrees this would give you a window of $30 - $40k.

This will avoid ridiculous situations like the notorious music major with almost 200k in student loans.

I wanted to see how I could swing making retirement contributions and rolling that into student loans. I don't understand federal loan limits, which would probably limit me to how much 'living expenses' I could take out.

If I took a demotion and switched to a closer store, I could save commute time to work (heck, I could walk there even) & I would drop to only ~$9.60 or $8.80. AVG to $9/hr for 1080 hrs, it would put me into $9720. Work matches HSA with a $600 gift and matches dollar for dollar to $600. Take $600 off. Take $729 for FICA, leaving me w/$8400. Tuition and free estimate for full time is $8800. Living expenses is $12k/yr, not including food.

Even if I get a full ride, I still need a way to pay living expenses. I realze potential scholarship PRIZES can apply to anything (taxable), I know qualified tuition and fee scholarships are tax free.

I think I'd miss out on most networking opportunities with staying full time job. I wouldn't be able to make acct club meetings to network etc.

I assume that my starting pay with an accounting background would be $36k, which would limit loans to $36k. My living expenses don't include any gift or entertainment. If I could swing my degree in two years, I squeeze by. If I can't, the benefit of IBR and loan forgiveness through working in the public sector might be a viable option.

Given this economic climate, I wouldn't be very confident I'd get that high pay job. At best, I find something in 6-12 months at an increase of $12k my current gross income.

Income based repayment works on (AGI - 150% of poverty)/12 months, provided a standard 10 yr plan isn't cheaper already. An AGI of $16k would net a repayment of $10/month. I'm aware of recapitalization but if I get loan forgiveness I can swing this to my advantage. If I don't have substantial work while in college, I pay nothing until I find gainful employment in my field.

I get a job making $36k gross, deduct $15k for 401k, $3000 HSA, that brings my AGI to $18k, payments are $250/month.

MoonlitHollow said: I think I'd miss out on most networking opportunities with staying full time job. I wouldn't be able to make acct club meetings to network etc.

IMHO networking in undergrad is not that useful (unless this is code word for partying). The people you are networking with are just out of high schoool, don't have any connections to companies, etc. It's a lot different when you are in grad school and the students have experience and connections. Just my 2 cents, but I honestly don't network with anyone I met in undergrad and I'm only 7 years out of school.

See if you can get some more credit hours at the community college. Even if you can shave off a semester, that's $12k saved according to your numbers.

College is an investment in yourself, you need to look at yourself before and after.
What are you currently worth in the job market?
What will you be worth after graduation (be realistic)?

How much do you have saved?
How much will school cost?
How much income will be lost by going to school instead of working during that time?
What are the costs of borrowing money to go to school (interest)?

What is your current standard of living? what will your in school standard be? after graduation?

After factoring all those things, you have to decide if it is worth it for you, and remember lying to yourself on any of the factors, is just doing yourself a disservice to justify a bad decision.

The only undergrad networking that matters is spending your study time with the top of the class and making sure you go to the prof's office hours to get face time.

MoonlitHollow said: As for networking not all students are fresh into college. Taking an evening class or two will help me gain exposure to the working pros who are required to take a class or two to keep current.

So, I treat the student loans like an AOR, provided I can get subsidzed Stafford. Only truly use $20k and make a lump sum payment of remainder on first P&I payment.

Pell grants, work & school scholarships, what I can save in the next year, & stafford loans; I think I can swing it.

Again, you're thinking about this in the wrong order. Game the financial aid calculations FIRST then worry about the job income after that.

dawndelion said: Have you considered going to school full time and working full time? I would see if you can swing classes during the day and working at night. I know it's not a popular option around here, but I worked full time while going to state school for an accounting degree and it was just fine - graduated in 8 semesters (realisitically, full time school I felt was easy with just 2-3 classes a day).

I'm a relatively recent college grad (~3 years ago) and I strongly recommend against this. I'm of the opinion that I did not learn that much in class during college, but learned a TON outside of class (clubs, random projects, even student work).

IMHO, 1/2 of the point of college is to network and by working full time, you miss out on this.

zzyzzx said: I would not go into debt to get a college degree of any type.
There is good debt and bad debt. For me, my parents paid about 80% of my tuition/room costs (~$100k) and I got another $15k or so in grants, took about $20k in loans and paid about $5k out of pocket while in college (toward tuition) plus I paid all my day to day expenses out of pocket in college. I got lucky in the regard that my parents paid a substantial sum, but even if they had not, I would have taken the loans.

I've been out of college now for 2.5 year. In that 2.5 years, the amount of money my degree has earned me is approximately twice the TOTAL costs of school.
If you're good at what you do, and are going to put forth at least a reasonable amount of effort, college debt will pay off, quick. Without that degree my salary would be 1/2 of what it is now.

narshe14 said: See if you can get some more credit hours at the community college. Even if you can shave off a semester, that's $12k saved according to your numbers.

I *think* I am eligible for only 9 more hours of community college hours. I haven't audited my courses yet at UMSL, and they require 60 out of the 120 hours for a degree. I think I have 51 that will transfer, so that would cost approximately $900 at community college, as apposed to $2808 in tuition at UMSL. See http://www.umsl.edu/services/cashiers/fs09_ws10ugr.htm for a table of expenses. Business courses are an additional ~$40/hr, so I'll be saving more like $2300, still not chump change, but not $12k. My numbers include cost of living.

I could reasonably game my credit cards with the Dollar Coin deal, by utilizing half of my credit with one set of cards the day after they reset their billing cycle and pay off those cards with cards that end their billing cycles half way into my next end cycle. I won't be paying for $9000 of college expenses for awhile. My combined credit is ~$20k, so I could defer $10k monthly.

going to school is definitely a good idea, without degrees you are basically shut out of the job market. your fear of going to school is misplaced - you should be afraid of being stuck in a 25k/yr job for the next 40 years. accounting is also a great idea if you are competent at it - accountants will never be out of work.

OP I wonder what your age is, because that is a factor. ie. taking advantage of intern opportunities, etc.

also, it's good to be realistic but you may be aiming too low at 36k/yr, since you're going into this with the idea of profiting. (instead of "discovering yourself" etc) when the job market was functioning it wasn't too difficult to make 45-50k/yr out of undergrad.

also, education is a much better investment than a house.

I am 24, will that put me out of intern opportunities, I'd be 26 upon graduating, but I heard that some may intern as early as their junior year. I have only taking a keyboarding and intro to business course, but have a keen interest in money issues.

As far as starting salary, what is a good website to gauge salaries? I understand that the minimum starting pay may also be based on how well you did in high school/college GPA wise, etc. I graduated HS with a 4.0 (Honors courses were weighted higher), top 5% in my class. I have held a 3.59 GPA at Community College, well above the 2.2 GPA degree requirements thus far.

As far as the house, I have a girlfriend and have inherited two children. I am paying below market rent comparatively to the housing I would need to rent. If/When I relocate to that first accounting job, I will rent out the house, insure it to the max for liability and purchase a smaller 3BR, probably a mobile this time in the secondary market. I'd rather have a house to live in, not speculate as an investment. Lesson learned. I never knew how bad the utilities/etc would be. Hard knocks.

OP, if you had a 4.0 in HS you are obviously smart enough. I'd suggest you try harder on the GPA when you go to MU and now if you're taking CC classes ... GPAs matter A LOT in today's job market, even before the crash. 3.8 vs 3.6 is a big difference. also later on when you realize you need a grad degree...

as far as gauging salaries, i'm not sure, glassdoor.com? my point is more that you should be semi-obsessed w/ what different companies pay, how to get in with them through internships or whatever, and try to target those jobs. a lot of ppl never think about this during school, end up graduating and then taking a random 30k-ish job. since you're thinking about these things now you should be able to figure out how to target the better jobs.

motuwallet said: OP, if you had a 4.0 in HS you are obviously smart enough. I'd suggest you try harder on the GPA when you go to MU and now if you're taking CC classes ... GPAs matter A LOT in today's job market, even before the crash. 3.8 vs 3.6 is a big difference. also later on when you realize you need a grad degree...Really? is that the general concensus out there? I've never asked for GPA when interviewing even entry level positions. And people who put their GPA on their resumes stereotypically had horribly written resumes - I think they were counting on that one number to be the substance of their skillset. This may also be a horrible skew on my part because I never had a good GPA from 1st grade through post grad.

My only recommendation for job-hunting for any recent grad is to find the biggest companies in your industry and apply for a job with them. If your industry is very much local in nature, then at least find a big and established company in terms of the local market. The goal is to learn as much about the formal processes and best practices in your industry as possible. After a few years of that, change jobs, start your own company, go back to school, do whatever you want.

Edit: just read that the OP is working on a degree in accounting and a CPA license. My advice to the OP is to be very very careful with his job hunting. What I said above about finding a big company to start with is especially important for anyone who wants to do well in the accounting/finance/investment field. One wrong turn in this industry and you'll find yourself working in the AP department for the next 30 years making $35k. The CPA license opens a LOT of doors and is almost like an automatic acceptance at large audit/tax firms. The upside potential is limitless and if you are willing to work hard, you can move up the pay grade very very quickly. I would also recommend moving to a big city if you aren't already in one, as the difference in pay, benefits, and the professional network you can develop are significantly better in major metropolitan areas.

Considering that he's working, I doubt that he will qualify for the maximum subsidized Stafford loan. With undergraduate degrees, if a student makes any real money at all, the less he will be qualified for need-based grants/loans. The link is here for all federal loans and the limits.

For independent students (can OP be independent if still under 25?), the yearly maximum is:

•$10,500 (for loans first disbursed on or after July 1, 2008) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans.
•$12,500 (for loans first disbursed on or after July 1, 2008) if you've completed two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans.

For reference, I did the normal full-time college after high school graduation. My parents didn't make much money and I was sorta smart. I went to a private college, but had lots of grants/scholarships. I graduated with $12K in subsidized Stafford loans. I'm paying more than the minimum currently, but I do make much more than $12K every year.