Dear Liz: I have been accepted to my dream school. However, the school isn’t giving me much aid and I am expected to pay $50,000 a year, or a total of $200,000, if I get through college in four years. Although that is a huge amount of debt to carry, I think a cosmopolitan city would provide useful networks for me as a business major. What is your opinion on this?
Answer: As a business major, you’ll be doing plenty of cost-benefit analyses. Do one now, before you chain yourself to a lifetime of debt.
The general rule of thumb is not to borrow more for an education than you expect to make your first year out of school. A basic business degree is highly unlikely to land you a $200,000-a-year job.
What’s more likely is that you’ll need an MBA to vault into the high-paying leagues — a degree that will require further borrowing.
Understand that massive student-loan debt will have repercussions for the rest of your life. Since this debt can’t be erased in bankruptcy, you’ll be saddled with huge payments that could prevent you from buying a home and saving adequately for retirement.
What makes more sense is tweaking your dream a bit to get an education you can afford. And here’s the good news: Students accepted to Ivy League schools tend to do well in life regardless of the institution they actually wind up attending, according to research by economists Alan Krueger of Princeton University and Stacy Dale of the Mellon Foundation.
So choosing a less-expensive education doesn’t mean diminishing your prospects. Saying goodbye to your dream school will be sad, but far sadder is throwing away the rest of your financial life with too much debt.
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