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How much dept for school is to much?

J

jsbush

Diamond Member
Well I applied for college and got accepted and everything, gonna be going there end of august. But I have some serious thoughts as if I should still go as I will have to move out of home, and the college isn't cheap, so I need a little over $10k a year to live on (this is a two year course). That is if I have a part time job while I'm studying.


So I would need to borrow over $20 000 for my two years of studies. Should i go into that big of debt (i'm only 17) to get a college degree right now, or should I work a couple years, save up 4-5k and go back to school and not take out as big of debt?
 
From your thread title, i expect you need all the school you can get.

Seriously: You should plan for worst case scenario. Like it takes you 5 years, not 4. And you get a crappy job, not a 75k/year one. My guess is that you should try to keep your total debt under $20,000. Find alternative sources of funding/scholarships.
 
Think about your 10 year finances. I don't know what jobs you are considering but do the math like this:

Case A) Work first then go to school.
Years 1-5: Earn $20,000 per year,
Years 6-7: Lose $10,000 per year,
Years 8-10: Earn $40,000 per year,
Net: 5*20000 - 2*10000 + 3*40000 = $200,000.

Case B) Go to school right away.
Years 1-2: Lose $10,000 per year,
Years 3-10: Earn $40,000 per year,
Years 3-10: pay $1000 in interest total for going into debt,
Net: - 2*10000 + 8*40000 - 1000 = $299,000.

Yes that is rough math (you could go into a lot more details). But it should be clear which is the better deal. After 10 years either path would be the same, so don't bother with differences.

Case C) Never go to school.
Years 1-10: Earn $20,000 per year
Net: 10*20000 = $200,000.

See how case A and C look the same. That is why many people never take the time and effort to go to school. BUT they forget about their life further than 10 years down the line. In case A you will make a whole lot more in your lifetime than case C. It is just so hard for people your age to think more than 10 years down the line financially since most of you live paycheck to paycheck as it is, and thus do not look more than 2 weeks down the line.
 
Think of it this way, the debt you'll be in is "good" since your education will allow you to further yourself. Its not like you feel like buying a few plasma tvs and a new car...
 
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