Going to college in a big city like New York can be exciting! Hear about how going to college in a city can enhance your learning by taking advantage of all the opportunities but also be aware that it can be a little overwhelming for some students.
Continue readingAlthough the January 1st application deadlines have passed, there are still many other colleges to which you can apply.
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Student loans can help you pay for college. But too many student loans can ruin your life.
An article today in the New York Times reports that student loans have now outstripped credit card debt in the US, and that the amount of loans will surpass $1 trillion next year.
That’s a lot of debt.
To those undergraduates thinking about taking out student loans, please hear me and hear me good: don’t take out any more than the Federal loan limit, which is $5500 your first year, $6500 your second year, and $7500 in each of your third and fourth years.
So your maximum for undergraduate loans: $27,000. And if you can do it for less than that, you should.
If your college of choice asks you to borrow more, tell them “no thanks” and walk away.
A loan of $27,000 paid out over 10 years at an interest rate of 6.8% (the current rate) without any loan fees (and there will be fees) will mean that you will pay $310.72 per month for 10 years. Your total amount paid will be $37,285.87.
So think about it. For a slightly higher monthly payment, you could lease at brand new, 2011 Mercedes C300 4Matic Sport coupe (okay, so you have to come up with a down payment of $5000). But hey, you can easily get a Hyundai for that sort of payment. And you can lease a new one every three years!
If you’d prefer to pay your loan over a longer period (say, 20 years) you can reduce your monthly payment to $206.10, which would mean that you would have to pay a total of $49,464 for the right to borrow your $27,000. This payment might not seem like a lot. But let’s put it in perspective. According to the article, the average salary of a college grad in America–of all ages–is about $55,000. This is higher than the average for people without a college diploma. Remember, however, that this is only an average. About half of Americans with college degrees make LESS than $55,000, and some (especially younger grads) make a lot less. So paying back nearly $50k to The Man At The Bank is like losing a whole year of salary (on average) over your lifetime.
And don’t forget, twenty years after you graduate, your own kids will likely be in high school…so then it will be time to take out loans to pay for college for THEM!
This may be manageable for many students. But when you think about borrowing more than the Federal Stafford loans, look out.
If you borrow $50,000, your monthly payment will be $575 if you pay in 10 years and $382 if you pay in 20 years (assume no loan fees and a 6.8% interest rate, which is lower than the market rate for non-Federal loans.
If you borrow $75,000, your monthly payment will be $863 if you pay in 10 years and $572 if you pay in 20 years, based on the same assumptions. (Note to students: you can rent a nice two bedroom apartment in Denver for $850/month).
Want to borrow $100,000? Why not. Your your monthly payment will be $1,150 if you pay in 10 years and $763 if you pay in 20 years. My colleague, Katherine Price, heard about a student today who decided to attend NYU to get a degree in dance, and who will take out over $100,000 in loans to pay for it. In order to pay off her debt, she will have to make $14,800 per year after taxes for 10 years just to pay off her debt. As a dancer. Sure, college is an “investment.” But does that investment make any sense to you?
Don’t do it, folks. No college is worth tying an anvil around your neck.
Borrow no more than the Federal limits.
Mark Montgomery
Educational Consultant
NYU and Columbia have announced plans to expand by taking on more debt in these tough economic times. Does this really make good financial or educational sense?
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High school seniors are now in the final stretch of cranking out their college admissions essays. Pity them.
In an effort to keep students entertained during the admissions process, some colleges ask students to respond to some pretty wacky prompts.
Why? Well, the cynic in me wants to say that these essays are a way to separate those who are really interested in a particular college, and those who are not. Those applicants who spend the time and energy to address these prompts are perceived by the admissions office to have at least “run the gauntlet,” and are therefore more worthy of admission.
Admissions offices that require these crazy essays swear that they glean something interesting about the writer that helps them to determine whether the student is really someone they want to grace their campus. Maybe so.
Either way you look at it, my job is to help students brainstorm ways in which to respond to these kooky prompts. Sometimes the process is fun–hysterical, even. Sometimes, it’s like pulling teeth.
1. How do you feel about Wednesday? (University of Chicago, 2002)
2. What outrages you? (Wake Forest, 2009)
3. Write a haiku, limerick, or short poem that best represents you. (New York University, 2009)
4. In the year 2050, a movie is being made of your life. Please tell us the name of your movie and briefly summarize the story line. (New York University, 2009)
5. What is college for? (Hampshire College, 2009)
6. Are we alone? (Tufts, 2009)
7. Make a bold prediction about something in the year 2020 that no one else has made a bold prediction about. (University of Virginia, 1999)
8. Write a short story using one of the following titles: a.) House of Cards, b.) The Poor Sport, c.) Drama at the Prom, d.) Election Night, 2044, e.) The Getaway. (Tufts, 2009)
9. How did you get caught? (Or not caught, as the case may be.) (Chicago, 2009)
10. You have just completed your 300-page autobiography. Please submit Page 217. (University of Pennsylvania, 2009)
Thanks to Allen Grove for bringing this list–originally published at CNN.com–to my attention. I’ve worked with students writing nearly all of these this year. Whee!
Mark Montgomery
Educational Consultant
