• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Gen Y Planning

Financial Planning for Millennials

  • Home
  • Meet the Team
  • Work With Us
  • Speaking & TV
  • Current Clients
  • Press
  • Blog
  • FAQs

Ask Gen Y Planning: Is Student Loan Debt Worth It?

This question was submitted by a reader! Do you have a money question you’d like Gen Y Planning to answer in a future blog post? Submit it to genyplanning.com/askgyp.

I am a high schooler getting ready to apply to colleges soon and would like to ask for your expert financial opinion. Do you think it is a smart decision to go out of state to university? If I do, I would have undergrad debt around $250,000 for a business administration degree, and my salary coming out of undergrad would probably be $55,000-$70,000. Is this a smart decision, or should I stay in state and have a debt of around $120,000?

Also, How should I be looking at financial aid for college? I do not qualify for need-based scholarships, but will private and public schools give me money to reduce my costs of attending school?

Ethan M. 

You are really thinking about this at a good time. I am a big fan of in-state public colleges and universities because they tend to be much more affordable than out-of-state schools or private colleges. I was convinced I was going to go to theatre school to get my BFA in Musical Theatre from a private school out in the East Coast and I ended up going to Minnesota State University, Mankato. I was a double major and graduated in four years, and it was very affordable for me and my family. I was also able to get a theatre scholarship.

From what I’ve seen, the ROI (return on investment) is rarely worth it to spend more than you need to on your undergrad. I have a lot of clients who I work with that are in their 30s and are still paying off debt from their undergraduate degrees, and they often regret spending six figures on college. Many people are going back to school to get their MBAs, law degrees, and other higher education and would rather have saved money on their undergrad to use for grad school instead.

Speaking of money: I think that $250,000 is a TON of money to spend on your undergrad. (It’s debt the size of a house!) To pay this debt off over 25 years, you’re looking at a monthly payment of $1,700!

Even $120,000 is a lot to spend on your undergrad. I would see what scholarships might be available. You could also live at home to cut your cost of room and board.

Since you’re still in high school, I would consider taking college classes during your senior year through a community college, or taking as many AP classes as possible. If you can go into college with a semester of college credits under your belt, you’ll save a significant amount of money.

In addition, if you can live at home for a year or so and get your associate’s degree from a community college or nearby state university, you’ll be in a great position to transfer to the school of your dreams. If you’re able to keep a high GPA, you may qualify for more scholarships later on.

Here’s what I would do if I were you:

  • Start taking college classes now, whether online or in person
  • Apply for a ton of scholarships
  • Live at home while you’re getting your associate’s degree and do it in half the time of other students
  • Transfer to an in-state or out-of-state college for the last two years to finish your undergrad
  • Work your way through school and take out as few of loans as possible.

I love getting questions from high school students like you! It’s wonderful to see you weigh your choices so thoughtfully.

Here are some posts from the Gen Y Planning blog that might be helpful to anyone who has their bachelors and are either paying off loans or considering grad school (or both):

  • Is Student Loan Debt Worth It?
  • Student Loans: Pay As You Earn, IBR, ICR, PSLF, and OMG This Is Confusing!
  • How to Pay for Grad School, Law School, or Your MBA

You might also enjoy reading:

How to Prioritize Student Loan Debt While Working Towards Other Financial Goals
Ask Gen Y Planning: Should I Be a Socially Responsible Investor?
The Gen Y Planning Guide to Insurance: Short- and Long-Term Disability Insurance
When Nothing Goes According To Plan, Having A Plan Matters Most
Share
Share
Tweet
Share

Don’t Miss out

Join our newsletter to get all the latest!

Previous Post: « Ask Gen Y Planning: Where Should I Keep My Savings?
Next Post: Ask Gen Y Planning: Do I Need an Estate Plan? »

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

CommentLuv badgeShow more posts

Primary Sidebar

I'm Sophia! And I'm not your father's financial planner. I work virtually with clients across the country to help them navigate through big life changes and reach their goals. I'm also a foodie, a true crime junkie, and a lover of karaoke. Let's chat! Click here >>

Stay up to date

Subscribe to get all the latest news!

Let’s Connect

  • Facebook
  • LinkedIn
  • Twitter

Latest on Twitter

Sophia Bera, CFP® Follow

Foodie financial planner who loves books, podcasts, and karaoke. Living in Austin, TX and loving it!

sophiabera
sophiabera Sophia Bera, CFP® @sophiabera ·
14h

Will this season be just as intense and dramatic as the last? How can potential buyers stand out among the crowd? #housingmarket #personalfinance #realestate https://buff.ly/3yWNLMO

Reply on Twitter 1540424592661123073 Retweet on Twitter 1540424592661123073 Like on Twitter 1540424592661123073 Twitter 1540424592661123073
sophiabera Sophia Bera, CFP® @sophiabera ·
24 Jun

How to recession-proof your personal finances; these strategies work in any economy. A great article from @NextAdvisor that I was happy to be a part of. #recession #personalfinance https://buff.ly/3HohArP

Reply on Twitter 1540122549312491525 Retweet on Twitter 1540122549312491525 Like on Twitter 1540122549312491525 1 Twitter 1540122549312491525
sophiabera Sophia Bera, CFP® @sophiabera ·
23 Jun

Achieving financial success isn’t always about following certain rules. Sometimes it’s about doing things differently. Interesting article from @CleverGirlCGF #personalfinance https://buff.ly/396Xg10

Reply on Twitter 1539963995003682816 Retweet on Twitter 1539963995003682816 Like on Twitter 1539963995003682816 Twitter 1539963995003682816
Load More
  • LinkedIn
  • Twitter
  • Disclaimer
  • Privacy Policy
  • ADV Part 2
  • Photo Credit: Matthew Johnson

Copyright © 2022 · Cultivate Theme On Genesis Framework · WordPress · Log in