It's ok for my son to graduate with $X debt

AZCoyote - 

You have made some good posts early in your "career" here on HSBW.

I will not put a specific answer but will be following closely because I think this is going to be interesting.

I anticipate 2 main camps.  1 camp will say absolutely no debt.  1 will say the opposite.  

Financial experts way smarter then me seem to be in the camp of pay what you can afford as parents up to the point that you do not put your retirement in jeopardy.  Something about time value of money and interests rates, etc.  Easier said then done I'd imagine.

Keep 'em coming Coyote!

Rich

www.PlayInSchool.com/bus_tour

www.twitter.com/PlayInSchool

My son will have a 20,000.00 loan to pay back barring any future academic scholarships. He goes to a liberal arts division 3 university. I wish we could help him more then we are. When our son was figuring out where he was going to attend school he had to keep finances in mind. We suggested not to get more than 20,000 in student loans.That left him staying local and luckily one of the local  Universities recruited him to play baseball.He is now a sophomore and he seems to be happy with his choice. We think he has had many wonderful opportunities by attending this university.

Agreed with the above statements.

College costs are out of control, I always suggest going where it is affordable (each families situation will be different)  for desired course study and do not place yourself in debt over any of your children's education. 

This should be a discussion when recruiting begins, be open and honest with your children as to your financial situation and what you can and cannot afford.

Don't be afraid to consider schools that have prestigious reputations and if you have the grades there is plenty of academic money available, and a lot has to do with qualifying for it.  That's why it's important to make sure your kids do as well as they can in school.

Just for reference a $25K loan = about $200/mo. for the next 15 years that Johnny will have to pay back.

IN MY OPINION there are a lot of "right" answers.  If you believe your child will graduate in chemical engineering, where the starting salary is ~$90K, $30K-$40K in SL debt might be ok.  If you want to be a music/sociology/etc. major, I think the answer is closer to $0.  If I had to put a raw number on it for the majority of "useful" degrees, I come out around maybe $10K.  What you can afford is not always the right answer.  I have a family member who sent their son to a prestigious music school in Boston.  Many tens of thousands later, the son has a music degree and still requires mom and dad to pay his cell and car insurance.  I don't think the dad would ever consider that money well spent.  It didn't jeopardize retirement, but may have set it back 5 years.

The other thing that sparked this topic is the new Malcom Gladwell book "David and Goliaths".  There is a chapter that discusses education and the main premise is that it's just as good (better at times) to be top in the top 25% at a "crappy" institution as the bottom 25% at a Harvard/Stanford etc.

Carry on.

The schools that are still recruiting my 2014 all have a zero loan policy.He will not have any student loan debt to pay back when he graduates.

I would encourage folks to seek out schools that have a track record of putting together generous financial aid packages.

Here is a free financial aid calculator tool that is quite helpful :

https://collegeabacus.com/

I agree w post that relates it to major/salary

I ve seen people go to $40,000 plus a yr school for education degree. IMO that's crazy unless your getting scholarship money  that puts cost closer to state public schools. 

I've always had the number of $10K/yr max with student responsible for a good part of it.  As others have mentioned, that may certainly fluctuate based on major and likely return.  Also, of course, if parents are well off, the ceiling goes up accordingly.

We felt it was important for our son to participate in his education so he will have a moderate loan balance between $15-$20K. From the school and degree he is getting  he will have close to a six figure income when he graduates and should be able to pay it back comfortably within 5 years. If he decides to go to graduate school we may or may participate depending on the circumstances, but he will be able to make a financial decision on his own if it is worth it or not. 

What degree is yielding over $100k with an undergrad degree fresh out of college, no experience?

The answer to the question is it depends...

1-on his degree and expected income from it it, and

2-the cost of living in the city that will yield that expected income.

You can afford a lot more debt with an engineering degree working in Dallas than a social work job in NYC.

azcoyote,

This is one of those scenarios that is going to vary dramatically due to many, many variables, goals and circumstances even within the same family.  My wife and I decided to help our kids the best we can based upon their situation, and our financial situation.  We gave them some skin in the game too.  My oldest (senior RHP) will most likely graduate with between $13-15K in debt, and pay it off immediately.  He accumulated enough cash in summer jobs and internships that he'll pay it all off right after graduation.  He decided against playing summer college baseball.  It was not an easy decision.  He's an engineering major, and will start off with a job at graduation with no debt.    For his situation, an Ivy engineering degree was well worth the investment.  Everything was need based financial aid at his school.     

His younger brother is at an ACC state school (not playing baseball) studying engineering also, and working on campus to help pay his way.  He receives no FA.   He has a savings account that will cover the expected $10-12K of debt he will accumulate by this senior year.  He has a summer job lined up for the next couple summers.  His junior year he'll need to find a junior engineering internship.  We fully expect he will have a job at graduation will no debt either.   We're working on a plan for my youngest son (non-engineer), but that is in the works at this very moment.

One of the challenges that my oldest son faced was whether or not to play to summer college baseball.  His college coach made that entirely his choice as do most of the coaches in his conference.  It was a question that I posted on HSBBWeb many years ago, and it truly was a difficult decision for him.  On one hand you have rising college costs, on the other you have (most coaches) demanding their players play on a summer college team.  For a lot of underclassmen getting the reps and playing time is important to win starting Spring jobs in the Fall.  For a lot of programs your son will be expected to play summer ball thereby missing out on the opportunity to earn some much needed income.  There is no right answer overall only what is right for you.

Good luck!

The amount of acceptable debt depends on two factors. 1) Is paying X more for college going to lead to a higher paying job? How soon can the debt be paid off? 

I wouldn't look at the concept of monthly payments over a long period of time even if it's the safe way to start. Look at how fast the money can be earned to pay off the debt. I graduated in the late 70's with 14K in debt. I paid it off in two years after college.

My daughter wouldn't allow me to help pay for her law school since she's married. Given the (non binding) verbal offer she has heading into law school from where she interned for two years, she believes she can pay off the debt in two years.