Feeling nervous about loans

[SocGal08]

Hi everyone, I've been accepted to a master's program that is pretty much exactly what I'm looking for, except that it's quite expensive. I would likely have to take out $30k in loans to cover everything. It's only a one year program, so that would be it, but it still seems like a lot of money. I'm trying to remind myself of all the arguments for going: that it's a good fit academically and personality wise; that it's at a top university; and that it will help me achieve my goals. It seems like other people are in this position as well. What did you guys decide, and how did you decide it?

[hopeful grad]

I am in your same position except I'm still waiting on funding- but i need to decide if I will still attend the program without scholarships. A few factors to consider would be salary after graduation (you can contact the career office). For example, if you are making 60k a year how long would it take you to pay down student loans, etc. Also, do you have any debt from undergrad? This could add to your payments. Check to see if there are any scholarships available to students for second semester or if you could possibly get a position working at the university with tuition remission. Calling the department never hurts, as they may have more ideas on how to decrease your student debt.

Realistically for me, as someone just 2 years out of undergrad, I feel if I don't get a scholarship I could benefit from more work experience and re-apply in a year or two- thus increasing my chance of aid.

It's a really difficult decision, especially if you are really excited about the program- good luck!

[hambergrrr]

I agree with hopeful grad. I'm in a (somewhat) similar situation--no fellowship offers from anywhere, but I wasn't expecting to get any given my relatively lower grades. So that means I am attending a program, regardless of any debt I might incur. Maybe the whole idea of carrying a whole lot of debt just hasn't hit home yet, but I know it will be worth it in the long run.

Another way to look at it is to see how much your lifetime earning potential would increase, and what that amount looks like relative to the debt and interest paid on the debt. A friend of mine who came out of J-school at Columbia w/$50k of debt recommended Suze Orman's book, Young, Fabulous, & Broke, which I think does a pretty good job of laying out a plan to attack any sort of debt while saving up for the future. It's a quick read, too.

I don't have it in front of me right now, but she shows that if you were to put $500/month toward say $30k of debt for 10 years, you'd be paying $10k in interest (don't quote me on the exact numbers cuz they're probably wrong...), but relative to the increase in income, she points out that it's well worth the investment.

[SocGal08]

Thanks for the advice. The university did offer me a scholarship, but with living expenses and the high tuition, I'm still looking at a lot of loans. I think that getting more information about the size of my monthly payments, the amount of time it will take to pay off the loan, etc. as you're both suggesting, is a good idea. I've heard good things about that Suze Orman book. I saw her on Oprah and found her quite grating, but maybe I'll pick up a copy.

I definitely agree that it is likely worth it in the long run because at the end of the day, I'll (hopefully) be doing what I want to do. After punching the clock for a couple of years, that means a lot. Thanks!