NYU student with 100K loan

[Andy Nguyen]

When I read this article on NYT this morning, I can't help but relate to the amount of loan many MFE students are taking on to pursue their dream degree.
I don't know how much we can relate to the experience of this woman who takes 100K loan for an undergraduate degree at NYU, the biggest brand name school she can get into.

Your Money - Another Debt Crisis Is Brewing, This One in Student Loans - NYTimes.com

 

[atreides]

All for an undergrad interdisciplinary degree in religious and women’s studies, which she could have gotten cheaper or for free even at one of those state schools...

 

[kbharadwaj]

I agree with atreides. I checked out her profile and read that article and was astonished to see that she took out a 100k loan for those subjects. 100k is way too much for them. However, it is her own decision. We are no one to mock at her decision. Regardless of whatever it is, she has a 100k debt and that is bad, very bad.

 

[Joy Pathak]

Princeton 73220
Carnegie 74000

Anyone attending these two programs especially the Carnegie NYC campus program is guaranteed to be in $100,000 loan. The new MIT program also brings the people upto $100,000.

I wonder how long it takes them to pay off these loans. Those are humongous numbers for a 1.5 year program. The average salary from the employment stats seen online is usually around 75-90K at the top schools. I think Baruch was 96K this past year. I mean there are always the odd ones who start at 200K per year (e.g Baruch 08 class high ), but the average/median is still low.

It doesn't seem worth it to goto a super expensive program just to get the brand name and be in tremendous debt or goto an affordable program with almost similar brand name and respect that provides the exact same opportunities and pay off debt within the first year.

 

[bigbadwolf]

It doesn't seem worth it to goto a super expensive program just to get the brand name and be in tremendous debt or go to an affordable program with almost similar brand name and respect that provides the exact same opportunities and pay off debt within the first year.

Other than Baruch -- which is an anomaly in this respect -- what other affordable schools are there? All the leading programs are charging an arm and a leg. It's becoming increasingly difficult, with mounting competition, to get into Baruch. The other programs see what the market can bear -- hey, this is no-hostage-taken capitalism -- and charge accordingly. The second-tier and junk programs are also charging close to what the first-tier ones are. The same as in law and MBA programs.

That people are trying so hard to get into these programs, and are willing to mortgage their future for this, is indicative not so much of obtuseness as of the unpromising character of the job market. People with undergrad, grad, and even doctoral degrees in engineering and the exact sciences are applying to these programs not so much because of a get-rich-quick mentality but because the job market is so very dismal. It is desperation. And it's this desperation that leads them to take literally unrepayable loans in a winner-take-all game, one where many are called but few are chosen.

 

[Joy Pathak]

Other than Baruch -- which is an anomaly in this respect -- what other affordable schools are there? All the leading programs are charging an arm and a leg. It's getting increasingly difficult, with mounting competition, to get into Baruch. The other programs see what the market can bear -- hey, this is no-hostage-taken capitalism -- and charge accordingly. The second-tier and junk programs are also charging close to what the first-tier ones are. The same as in law and MBA programs.

Actually there is no other school that is in the same tuition range as Baruch that can provide all the job opportunities and career services that CMU,NYU,Columbia MFE, and Princeton are providing and some. The employment stats of Baruch are not only comparable but exceed in transparency to all these schools if compared.

University of connecticut 11767
Baruch 20700
University of dayton 21870

I don't think the first one and the last one can be taken seriously.

University of Toronto is $35K I think with basically 100% placement, but it basically isolates you to jobs in Canada/Toronto making it very hard to move to 'wall-street'.

 

[Andy Nguyen]

Using Quant Network Program Selector | Quant Network , i was able to sort by tuition of the US programs and there are a few programs that have very low in-state tuition (majority of the students don't qualify anyway).
It's also interesting how programs categorize their tuition. Some list per credit cost, some list per year fee so it's hard at first glance to compare the cost.

 

[joel_b]

I don't know, it's hard to blindly sympathize with her. While I understand the early death of her father must have made things tight, they both made choices that have them in this boat. She has been avoiding the debt since 2005, 5 YEARS, and is now pulling the 'if I knew then how this was going to turn out, I wouldn't have done it' card? How are you ever going to learn anything in life, if you believe that your choices and actions don't have consequences? 5 years of inaction!

My first degree was at a b-school, and I was $60K in debt by the time I was done. It was after the tech crash and job market was terrible. My first job didn't pay much maybe 55k WITH bonus! haha! But, I found a way, made payments and got on with it, because I signed up for it. 3 years later I was contract consulting for a wicked rate and it was all paid off.

Now looking at an MFE or MS path for me next year and living in NYC already, I have already budgeted 100-150K to cover everything. I'm not worried. I'm making an invetment in myself , and don't require immediate results. Plus, I know what I am capable of now, so it's not a big deal. That comes with the experience of success and failures in your life, and you're never going to get moving on it if you don't address the elephant in the room, for 5 years. Avoiding the debt is just paralyzing, even if she was making partial payments or had negotiated a longer term, having to live on little to no income to make payments might have inspired and driven her to find something better.

Also, there are some points in the article that beg questions:

What about her mother's credit history caused Sallie Mae to reject the loan app? Does the daughter now just have the same bad habits regarding debt?

The article mentions the mother would love to help, but selling her bed and breakfast would mean she has no house. WHAT? If there is enough equity in the house to help her daughter she could mortgage it, or run a secured LOC and put her on a family (easier) payment plan. So either she doesn't have the equity, or she's not really doing everything she can to help. Regardless, re-mortgaging the house won't drive the daughter to get the job she wants to deal with the debt, it may just prolong her dalliance, in SF no less.

 

[bigbadwolf]

I don't know, it's hard to blindly sympathize with her.

The mother was not an educated and savvy woman. By this I mean able to do some sort of rudimentary cost-benefit analysis. I see quite a lot of this. I see youngsters taking on loans for private colleges when state schools are at least as good and considerably less expensive. I see people taking majors in utterly useless subjects. A friend of my wife, who works as a nurse, has three sons she's been helping get through college. They've all gone to private schools in the Twin Cities -- Macalester and Augsburg -- when a state school like Minnesota is in my opinion at least as good (and unchallengeable in tech and science) and considerably cheaper. They've taken degrees in crud like "American Indian studies." And they all have big chunks of student debt around their necks.

People come out with worthless bachelor's degrees. Find out they're not marketable. Then decide to go back to school to earn an MBA or JD, incur more debt, and find they're still not marketable. One fellow has $275,000 of student debt.

 

[Andy Nguyen]

I have $0 student debt, or any debt whatsoever my entire school life and I'm proud of it. I know friends who were studying with me at junior colleges 10 years ago who are still paying off student loans. And I can't see how one would get rid of a sizable loan anytime soon even if they make 100K year in NYC. Compounding interest is the strongest force on earth one has said.

If you read the second page of that article, there are very tale-telling paragraphs.

said Randall Deike, the vice president of enrollment management for N.Y.U., who oversees admissions and financial aid. “Some families will do whatever it takes for their son or daughter to be not just at N.Y.U., but any first-choice college. I’m not sure that’s always the best decision, but it’s one that they really have to make themselves.”

We see decision like this being repeated over and over on various forums where one prospective student advises another to join an expensive program: "Son, you will make boatload of money coming out of that famous program that you will have no problem paying off your loan in no time".

I'd would love to get in touch with those folks who come out of these program and see how that plan is working. Anyone knows someone in that boat can put me in touch?

 

[bigbadwolf]

If you read the second page of that article, there are very tale-telling paragraphs.

No university official or faculty member is going to advise a prospective student to stay away -- even if he might want to tell the truth. It would jeopardise his own job were he found out. The university has a vested interest in not discouraging prospective students. To suggest otherwise is like expecting cigarette companies to voluntarily divulge that their product kills or soft-drink companies to divulge that the high-fructose corn syrup in their product causes obesity and liver damage. It ain't gonna happen.

The problem in laissez-faire USA is all the responsibility for one's actions is put on an ill-informed (usually misinformed) individual. Where is the individual to go for impartial advice and accurate information when he's being bombarded with propaganda, deceitful advertising, and misleading claims?

 

[tylor]

this sort of goes along with my strong feeling that 17 is just too young to be making a large decision like this. or perhaps our education system is so bad that we are not prepared at 17 to make a decision like this.

i went to a private school so everyone in my class went to college. i was the only person that just simply wasn't ready to go yet. i was in the same sort of boat as the girl in this article -- i wanted to go to USC. thank god i didn't get in. i took 2 years off in order to take some time to learn more about myself and the world. USC is 50,000 just like NYU. i would've come out in just as much debt as this person. however, since i took more time off, i realized the greater demand (and my higher interest) in engineering -- plus i'm going to my local state school which my father is paying for. yeah, it's only top 50 for engineering but i'm coming out with $0 in debt. plus, if you do the work, state schools have just as many opportunities available to the students as private schools. the difference is that private schools are better organized i think.

sure i would've gotten much better internships at a better ranked school. i just simply couldn't play that hand with the cards i was delt. it sucks to learn that but that's all part of growing up i guess. it is absolutely absurd to demand that it's the schools responsibility to educate people what they can/can't afford. our country is in some trouble.

Princeton 73220
Carnegie 74000

is it at all worth mentioning that CMU also states that their average signing bonus is $30k? baruch doesn't mention anything about that. when considering CMU i always felt like you could put that directly toward the loan and it's down to ~40k and it's not so bad...

 

[joel_b]

Also at the 'expensive' schools, there are a lot of people there that don't get the great jobs after either, but they don't end up in a NYT article, or report stats back to the university, because they did not personally pay for it, and that is life in expensive education. Those same people can get you distracted from your studies, your career management and path. It is easy to get caught up in the mix, I can appreciate that, but 5 years later they are still doing fine, and you are not.

I think if you are going to go into such a large undertaking of debt, you have to hold yourself to a higher standard, because you are often surrounded by people that are not on the same risk/reward curve.

 

[Ergodic]

All for an undergrad interdisciplinary degree in religious and women’s studies, which she could have gotten cheaper or for free even at one of those state schools...

Agreed. If you borrow six digits' worth to finance a top-level education in the liberal arts, you are implicitly accepting a lifetime of poverty in exchange. (Unless you plan on "selling out" and getting a JD or MBA afterwards.)

 

[Andy Nguyen]

The US makes it so easy for their students to obtain loan but it's forever a burden if you can repay (you can't declare bankruptcy to avoid it). There is no bailout like home mortgage so you are pretty much doomed.

People from different cultural background has a view on loan differently. For example, mentality in the US is "charge it" where they live on borrow money whereas people from other countries would less likely to take on 100K loan without huge collateral.

That said, I'm curious to see how the MFE students from oversea finance their study. Do they have rich daddy who got several hundred thousands to spend or do they put their entire family's house as collateral for a local loan?

 

[Joy Pathak]

is it at all worth mentioning that CMU also states that their average signing bonus is $30k? baruch doesn't mention anything about that. when considering CMU i always felt like you could put that directly toward the loan and it's down to ~40k and it's not so bad...

This is what Baruch's website says... Employment Statistics | Master of Financial Engineering Program at Baruch College

The first year compensation reported here is the compensation guaranteed at the time of hire. It is comprised of the starting base salary plus the signing bonus plus any first year bonus guaranteed in the offer letter, if any.

The annual performance-based bonus is not included here. The annual bonus is typically an additional 15-25% of the base salary, and may by prorated. We do not track these numbers. In other words, the first year total compensation of our graduates is higher than the guaranteed compensation reported

Average Salary for Dec’09-May’10 is 96K and 88K for students with 0 work experience.

I am assuming the signing bonus for Baruch graduates is also similar to what CMU is, although I don't know personally. But Baruch's tuition for in-state is only 11K and international students is 20K.

 

[bigbadwolf]

the difference is that private schools are better organized i think.

The private schools mention their greater cachet and superior pedigree. They also tend to emphasise more individual attention, smaller class sizes, and more accessible faculty. For the lower division science and math courses at a state school, the class size can easily be over a hundred, even two hundred for the intro cal and physics courses. Plus students can feel lost in the labyrinthine and bureaucratic mazes of the large state schools. But if a student has someone to advise him at home, plus he gets the lower-division courses out of the way (calculus and physics APs, for example), then I think state schools are excellent.

I think more than one study has concluded that the price differential between state and private schools is not worth paying if one considers differentials in income trajectories.

Nevertheless, student debt is becoming a problem for everyone as the tuition fees rise inexorably for both state and private schools. There was a time when the NYC colleges -- CCNY, Baruch, Hunter, etc. were free. As was the University of California. At other state schools across the country, tuition fees for a semester were only in the hundreds (if they weren't free). But now in this brave new age of neoliberalism ....

 

[Joy Pathak]

That said, I'm curious to see how the MFE students from oversea finance their study. Do they have rich daddy who got several hundred thousands to spend or do they put their entire family's house as collateral for a local loan?

Few students I have talked to usually take out a second mortgage on the house. Well the parents do, and finance their children that way. There are restrictions on how much loan you can get in India, so a part of the tuition has to be financed out of their own pockets, which is why many international students look for part-time jobs extensively to fund their day to day expenses.

Many American/Canadian take low interest credit lines usually. If you goto school in Ontario there is OSAP (government subsidized loans). Canadian citizens residing in Ontario have access to almost $100K in 0 interest student loan until graduation loans as long as they goto school in Canada. The interest after graduation is very low too I think.

If a citizen decides to go out of the country he/she is entitled to I think 252$ per week only for the duration of the program.

 

[joel_b]

If you goto school in Ontario there is OSAP (government subsidized loans). Canadian citizens residing in Ontario have access to almost $100K in 0 interest student loan until graduation loans as long as they goto school in Canada. The interest after graduation is very low too I think.

If a citizen decides to go out of the country he/she is entitled to I think 252$ per week only for the duration of the program.

That's kind of misleading. The max OSAP you can get per year is now $12,000 (2 terms). So you would have to go to school a very long time to accumulate this 100K you're referring to, and I would imagine they have some sort of overall maximum, but I have not seen it. Plus even to get 12K you have to not work, and have no assets really, it's a need-based formula, you can't just get the amount you want.

The repayment interest on a Canada student loan is not cheap either, the options are fixed at prime+5% or floating at prime+2.5%. At least it's not retroactive from the interest free period.

Banks offer student LOC up to $5K-10K per year to supplement, but they are not subsidized, and require co-signers and appropriate credit. You pay interest the whole time.

Banks offer Professional LOC for MBA, MD, Law, Dentistry etc that can go up to $120K, and have less restictions but that's not gov't supported, or interest free. MFE currently doesn't qualify for the professional lines so far it seems.


Outside of the country yes you can get the federal portion of the weekly osap rate, close to the figure you quoted, as long as the school qualifies.

 

[Joy Pathak]

Yeah. Your numbers and comments are right on the mark. I was just making a general statement. There is a need base formula indeed.

MFE doesn't fall into the bracket yet but it all depends on the bank. I am with Scotiabank and they have been very accommodating with my students loans.