When Attending Your Dream College Means Massive Student Loan Debt

Does attending my dream school mean taking out substantial student loans?

This is a critical question for high school students to ask themselves ahead of “decision day,” the colloquial term for the May 1 decision deadline. This is the date that many colleges and universities require students to notify their admissions if they plan to attend in the fall. Student loan discussions are far from the most glamorous aspect of college decision-making, but it is one of the most important factors that could affect student life for years to come.

In a recent episode of Talking College with admissions and college planning expert John Dragonehost John Dragone explains what makes a reasonable amount of student loan debt, why price may be more important than prestige, some of the challenges students and parents face when taking on excessive student loan debt, and why it may make you think twice about attending the school of your dreams.

Reasonable or unreasonable debt

By now, most students and/or their parents will have received financial aid award letters from the schools to which they have been accepted. The letter details the amount of financial aid the institution is willing to offer to that student. It breaks down information on grants (non-repayable), loans (must be repaid), and self-help programs (like work and study).

You’re going to want to compare the reward, or gift money, to the annual tuition cost and multiply that by four – that’s the amount you’re obligated to pay out or through loans for a four-year college. Now that you have a concrete number in mind, you may be wondering: is this a reasonable amount of student debt to accumulate?

“Some experts in the field of college funding and financial aid define “reasonable” as follows: if you can come out of four years of college with a student loan amount equivalent to the starting salary of the the student’s first year out of college, that’s reasonable,” Dragone said. “For example, let’s say the student gets a degree in social work. Let’s say their college debt is $46,000 for the four Let’s say their starting salary for the first year after college is also around 46,000. That’s probably a reasonable amount of debt, because the general rule is that if you owe a full amount for all four whole years which equals your first year salary, the amount of debt the student has accumulated is quite reasonable.

On the other hand, what signals an unreasonable amount of debt? If your student loan debt is more than twice your annual/freshman salary, there’s a decent chance that you won’t repay your loan due to the disparity between what you earn and what you’re owed.

In many cases, there is definitely a positive side to taking out student loans. “They allow people who may not have cash to pay for [school] go to college,” Dragone said.

High cost does not mean high quality

According to Dragone, “There isn’t just one college you need to attend if you want to be successful in getting a job in your career field. It’s not necessarily where you go to college that will launch you into a good career or professional position. What matters more, rather than the name of the college you attend, is what the student accomplishes at that college in those four years. »

These achievements can be good grades, a successful internship, student activities, or any other aspect of career building. Either way, coming out of undergrad with a good education is what attracts employers the most.

People often assume that a high cost school equals the best quality education.

“Nothing could be further from the truth,” Dragone warned. Take public schools, for example: “The reason this price is lower has nothing to do with quality. This is simply because the state the student lives in gives a large sum of money to each state university to help them run their campuses on a day-to-day basis. These savings are then passed on to the student and their parents, so it has nothing to do with quality.

Consequences of excessive student debt

Dragone has worked with students and parents on college decision-making for three decades. He has worked as an independent college consultant for his company John Dragone College Guidance Services since 2012. Through this experience, he has become familiar with some of the ways excessive student loans can affect students and their families.

There is a relatively short grace period between graduation from college and the start of loan repayment. Students with excessive debt may not have the luxury of taking the time to find the job that’s right for them. They may have to take the first good-paying job because they desperately want to start paying off the loan.

If a student with excessive loans dreams of living in a big city – where the cost of living is exorbitant – he will most likely find it difficult to afford to live there as he had planned.

Dragone said: “I’ve seen cases where students have such excessive student loan debt that they end up having to move back in with their parents just to be able to get their feet back on the ground financially. Many students are not happy to do this.

Additionally, they may struggle to afford daily necessities, make major purchases, or qualify for home or auto loans. In some cases, excessive student debt can even delay marriage and starting a family.

Ways to Limit College Debt

There are many ways to save money. You can get the same degree at a school that costs half the price of the one you normally wanted to attend. You might consider, for example, getting a nursing degree from a public school instead of a private institution.

You can also consider the two-plus-two community college option, where you attend a two-year community college and then transfer to a four-year school to complete your degree.

Be sure to check each possible college’s policy on awarding AP class or dual enrollment credit.

For high school juniors and other younger students considering college, Dragone said to apply strategically to colleges.

“Let’s say you are applying to a college that is very difficult to get into in terms of admission, and has very high standards for admission. Let’s say you apply to another school that may be just as good academically and maybe even better. You are on top of this [second] pool of applicants, you are the creme de la creme that the university really wants from you. If you’re at the top of the applicant pool, these colleges will often offer you large sums of gift money—money that never has to be repaid,” Dragone explained.

Dragone leaves parents with one last important question to think about.

“Do you want your child to start their adult life with an unreasonable amount of student debt that could affect them in many areas of their life for decades to come? Or are you going to use this as a teachable moment where your son or daughter needs to learn that delayed gratification, as opposed to instant gratification, is sometimes the wisest course to take? »

The choice, he says, is yours.

You can listen to or watch the full podcast episode “Excessive Student Debt Can Ruin Lives” here.

New episodes of Talking College with admissions and college planning expert John Dragone airs every Thursday at 4 p.m. Check this page for the latest episode.

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