How much of an advantage is it if you don't have to pay for your college education?

[PaulConventionWV]

Ok, so two scenarios: If one either does not go to college and therefore, does not have to pay for it and gets a decent job, or if they do go to college and still don't have to pay for it but get the same decent job regardless of their major, how much of an advantage is that to someone who goes through college and accrues a large debt from it?

Second scenario: If one goes to college and does not have to pay for it, but gets a good job fitting for their degree, how much more advantaged are they than someone who accrued a large debt from school and has the same good job?

I am going to school now and I am not paying a dime for it due to financial aid, the school, scholarships, and some grants. My yearly costs would add up to 48k. I realize this is higher than normal, however, and I go to a pretty prestigious school. How much more of an advantage do I have, and how much easier will it be to get my life started if I don't have over 150k worth of debt? Approximately how soon would I be able to buy my own house under the two above scenarios vs. someone with debt and how much better will I be able to support myself right off the bat?

[Sean]

1. The person who has the job is working 4 years and making money, while the one that went to college free is not.
2. The person with debt it would depend on how much the job paid to offset that debt. Obviously if you make 500k a year 150k in debt is not much, but if you're making 40k a year it is a huge burden.

[noxagol]

Also, you must consider the upward movement one could make in a company in four years time. They could very well end up in the position college grads end up in, but without debt and with 4 years of experience behind them as well as 4 years of pay.

[PaulConventionWV]

Ok, so say I work at my current job, Burger King when I get out of college. Since I don't have debt, how much better off am I than someone in my situation who has debt from school? How long will it take, with my current job, to get my own house and to actually feel like I am making a comfortable living? I'm just trying to get an idea of what the real world is like after college, and I'm pretty pumped that my education is paid for so I don't have to worry about thousands of dollars worth of debt. I feel like that is what keeps many people poor, is the fact that they are stuck with that debt and keep accruing more with a credit card or something like that. Am I correct in thinking that is why most people are hurting? Is it relatively easy to make a living if you live by yourself and have a minimum wage job with no debt to pay off? Can you get off the ground after a few years with relatively low-paying jobs?

[PaulConventionWV]

Also, you must consider the upward movement one could make in a company in four years time. They could very well end up in the position college grads end up in, but without debt and with 4 years of experience behind them as well as 4 years of pay.

Well, where I work, 4 years isn't that much time. One girl I know has been trying to move up the corporate ladder at Burger King and has worked there for 10 years. She is now one step ahead of me, having only been there a few months, and is paid $0.40 more than me per hour.

[Zippyjuan]

Is Burger King what you want to do with your life? In some companies, they require a certain level of education to reach a particular level within the company. If they have two candidates for a promotion and one has a college degree and the other doesn't, which is more likely to get the job? Having a college education offers no guarante as to employment but the opportunities for people with a college degree are greater than those without one. Finding a job is particularly hard for people in your age bracket these days- with or without a degree as far as trying to find a better job is concerned. Things could be better by the time you graduate. Or not.

$48k a year is a lot to spend if you wish to stay with Burger King though. How many years with the company would it take you to earn back the money in the form of a higher salary?

If you want to buy a house plan on having at least 20% of the price saved up for a down payment (you will have other costs as well). That means live below your means to save. On say a $100k home (prices will depend on what you are looking at and where) you will probably need to have something like $30k saved up ($20k for the down payment plus closing costs). A $200k home? Perhaps $50k or $60k needed at closing.

Make sure to include costs of property insurance and costs of maintaining the property when you try to figure out what you can afford. Not sure how things stand now but it used to be that you used a figure of roughly three times your annual income to determine how much you can afford to spend on a house. The interest rate will also effect what you can afford- if interest rates are higher your payments will be higher and you will thus be able to afford a less expensive home. If you have other debts like student loans or a car loan, that will also reduce what you can afford.

How soon you can do that will depend on your situation. How much can you put aside each month saving towards the down payment?

[Lymeade-Lady]

I don't think college debt is the only reason people have trouble, but it does complicate things. We don't have debt other than the house (I went through college free too), but we are really tight--course I only work a bit b/c I'm home with my kids most the time--so that leaves us on basically one income. Things are getting more expensive and jobs are hard to find. I would encourage you to look for a career path NOW and try to get an internship (paid or not) in that field--sometimes it can even count for college credit, such as in the business school. Experience is the key, but in most career paths, Burger King experience will not be extremely helpful. Or get a degree that is easy to get a job with--such as engineering. Also look at things you can do on your own to earn a little extra money on the side and work on those skills--it's nice to be able to earn the extra income when you need it and it could keep you afloat if you are unemployed for a period of time.

[PaulConventionWV]

I don't want to keep up with the Burger King gig. That's just an example of something I might be doing a little while after I graduate. It's already been settled that my degree will be in political science. I'm wondering how much easier it will be to get off my feet since I am starting without any debt from college.

Zippyjuan, thanks. You post was helpful.

[The Midnight Ride]

If you want to buy a house plan on having at least 20% of the price saved up for a down payment (you will have other costs as well). That means live below your means to save. On say a $100k home (prices will depend on what you are looking at and where) you will probably need to have something like $30k saved up ($20k for the down payment plus closing costs). A $200k home? Perhaps $50k or $60k needed at closing.

Make sure to include costs of property insurance and costs of maintaining the property when you try to figure out what you can afford. Not sure how things stand now but it used to be that you used a figure of roughly three times your annual income to determine how much you can afford to spend on a house. The interest rate will also effect what you can afford- if interest rates are higher your payments will be higher and you will thus be able to afford a less expensive home. If you have other debts like student loans or a car loan, that will also reduce what you can afford.

How soon you can do that will depend on your situation. How much can you put aside each month saving towards the down payment?

Thanks for the info. I know that with my grad and undergrad debt eclipsing six figures, buying a house in the near future will be incredibly difficult (not that the market will recover anytime soon). Thankfully, I am quite frugal with my expenditures so I may not be in as bad of shape as a "regular" person would be.

As a suggestion to the OP, if you have skills with remodeling, use them. One of the best courses I took was building trades and I have utilized it numerous time from roofing, siding, plumbing, electrical, flooring, drywall, etc and all are up to local code. It is a major savings being able to do things yourself. Focus on a location that you are comfortable in and make sure the things that you cannot change (for example: the foundation) are in good shape. After that you can make upgrades as your savings accumulates.

I for one will be following that method. I am too cheap to hire someone to do things that I am able to do myself.

[AFPVet]

I got my education for free (as well as some additional income) due to the GIBILL—and in a case like mine, you should go to school and take advantage of it. Having a bachelor's degree (regardless of major) is a pretty good credential for competitiveness (as Zippy stated)—especially when you have veteran's preference on top of it. Furthermore, while you do lose some potential income for those years, it may eventually pay off.

Conversely, if you must go into debt for school, you should really consider the amount of debt in addition to lost wages and weigh that with the possibility of promotions within the organization.

[pacelli]

Obviously if you make 500k a year 150k in debt is not much, but if you're making 40k a year it is a huge burden.

It depends. 500k a year translates to around 250k after taxes. Also depends on the standard of living choices for the person making 500k a year. If they chose to buy a 500k house, expect mortgage payments to be much higher than a 250k house.

Debt is debt.

[brandon]

Impossible to compare. Depends on both of your career choices, skills, and motivation.

And what kinf of advantage are you talking about? Just income?

[WilliamC]

It all depends on what you want out of life.

I never really knew so I ended up getting a Ph.D. in Genetics and being a research scientist for a while.

It's fun, but most of the money for research comes from you taxpayers out there and I find that very difficult to reconcile with my belief that taxpayer dollars shouldn't be used to fund non-military scientific research 'cause it's not authorized by the Constitution.

I can work with someone who is getting Federal grants but I really can't justify applying for those same grants.

Now due to some unforeseen circumstances I'm not working and have had a chance to reflect on my life and I know what I want to be.

A mathematician, so I can either do better science or heck I'd be happy teaching math so long as it's not in a public school.

If I want to do this I have to go back for at least a Masters in Math, so that means more schooling for me.

But I wont' go into debt to do it, if I can't find a graduate program that will pay my way then I don't know what I'll end up doing.

[phill4paul]

Go ahead and get the loan. THEN join a bunch of liberals in asking to have the loans "forgiven.' Win/Win. :D

[brandon]

A mathematician, so I can either do better science or heck I'd be happy teaching math so long as it's not in a public school.


I'm a working engineer right now, but I'm in the same boat. This is what I really want to do, but I have no clue how to get there. I know I'd probably need to take a year of undergrad classes before I could even get into a masters program. Not sure how I could ever afford it or justify returning to school for 3-4 years though. If you figure it out let me know!

[PaulConventionWV]

Thanks for the info. I know that with my grad and undergrad debt eclipsing six figures, buying a house in the near future will be incredibly difficult (not that the market will recover anytime soon). Thankfully, I am quite frugal with my expenditures so I may not be in as bad of shape as a "regular" person would be.

As a suggestion to the OP, if you have skills with remodeling, use them. One of the best courses I took was building trades and I have utilized it numerous time from roofing, siding, plumbing, electrical, flooring, drywall, etc and all are up to local code. It is a major savings being able to do things yourself. Focus on a location that you are comfortable in and make sure the things that you cannot change (for example: the foundation) are in good shape. After that you can make upgrades as your savings accumulates.

I for one will be following that method. I am too cheap to hire someone to do things that I am able to do myself.

I am not an expert by any means, but I have worked with my dad who is a licensed contractor and has been working in carpentry for like 25 years. I'm sure he would be willing to help me out for free if I were to get a decent house that needed some work. He's been working on ours since we got it 8 years ago, and the property value has gone up quite a bit, and the house looks a lot different now. I'll definitely keep that in mind.

[PaulConventionWV]

Impossible to compare. Depends on both of your career choices, skills, and motivation.

And what kinf of advantage are you talking about? Just income?

Yeah, you could put it in those terms. I would be interested in knowing what the advantage is like from an income standpoint.

[Zippyjuan]

There is no guarantee of any level of income if you attain a certain level of education but a chart of average income levels (and unemployment rates) based on level of education achieved:
http://www.bls.gov/emp/ep_chart_001.JPG
http://www.bls.gov/emp/ep_chart_001.htm

[PaulConventionWV]

Good stuff. I'm looking into an opportunity to work for a consulting firm to government agencies right now. It must pay well. The more I think about it, the more it seems I have a lot of opportunities after school, especially since I don't have to worry about being in almost $200,000 of debt.

[affa]

A relative of mine graduated college about two years ago. She reports that the vast majority of people she knows are out of work, some have menial jobs, and almost all live at home. This is east coast.

I was fortunate to get a scholarship to school. I wouldn't have gone otherwise.

It's a huge advantage not to have massive debt over your head just out of school. Massive.

[Zippyjuan]

A relative of mine graduated college about two years ago. She reports that the vast majority of people she knows are out of work, some have menial jobs, and almost all live at home. This is east coast.

I was fortunate to get a scholarship to school. I wouldn't have gone otherwise.

It's a huge advantage not to have massive debt over your head just out of school. Massive.

And that is people WITH an education. Not having a degree makes finding work even harder (note the unemployment rate by education in the chart I posted).

[Blueskies]

College is, like all of life, what you make of it.

If you go to a prestigious school, and get a reputable degree, and make great connections that you can leverage for the rest of your life--that's literally priceless in the long run.

I think people who feel cheated by college went in with a sense of entitlement. As if they were guaranteed a 50k+ starting job just for showing up to class.

Sorry, it don't work that way. Personal responsibility people.

College can be worth the debt, or it can be a huge mistake. College does not guarantee anything. It is simply a tool, that if utilized properly, can be incredibly powerful.

[Sean]

If your dad is a carpenter have him teach you his skills. I have known a lot of people who work for themselves as handy men and make more money than most college grads. Look at Gary Johnson. I believe he started as a handyman and built his own company. Skills like plumbing and carpentry are very valuable. You could also go into buying houses, fixing them up and renting them out. My ex father inlaw was a plumber and did that and now owns about 30 homes. You just need to be in a state like Texas, which doesn't allow renters to stay in homes if they default on payment.