Southern California Institute of Architecture (SCI-Arc)
Pratt Institute
University of Southern California (USC)
Tulane University
University of California, Los Angeles (UCLA)
Temple University
University of Oregon
Cranbrook Academy of Art
New York Institute of Technology (NYIT)
Kansas State University
How much debt is Grad School worth?
I've worked in the construction industry doing CAD/design for subcontractors and really want to be architect. Most of the people I work with went to school for architecture but now work in the construction side (due to higher pay/more job demand), and are still paying off their student loans. My question is: How much debt is too much? An architect's salary is pretty mediocre, and it seems like it would be VERY easy to rack up debt in grad school...easily exceeding 100k. I can't see myself being an architect with that kind of debt. What kind of cap is a good amount for someone wanting to go to architecture school?
Some people here have kicked 'your first years salary' around as reasonable. No idea what the logic is behind that, but I suppose it makes sense.
I'd probably be more interested in the long term growth possibilities.
'your first years salary'
which is $27k in NYC. less elsewhere.
That is a really difficult question to answer because it depends on many variables, some of which are specific to each individual.
I would argue that context is very important and especially at this juncture in time. In a context of growth and expanding economies, you could probably take on as much debt as you want and there is a decent chance that the rising tide of increasing salaries and general inflation will make your debt obligations feel minor after just a few years. By contrast, a deflationary economic malaise could leave you in a deep enough hole that you might never be able to pay your way out.
Right now continues to be a very precarious time for taking on new debt obligations because global growth is pretty stagnant. Education loans are especially scary because 1- the easy availability of education loans over the past several decades has fuelled skyrocketing education costs in the US and 2- education loans are extremely difficult to discharge even in the event of bankruptcy.
The education bubble hasn't quite burst yet and that leaves today's student in severe danger of being whipsawed by paying overinflated tuition costs today only to graduate into a deflated and oversaturated market of architects willing to work to work for less simply to keep themselves employed. That is catching a paradigm shift in the worst way. To offer a possible scenario, it's not too crazy to imagine somebody racking up $150k of education debt today and then find themselves struggling not just with a $30K salary this year but still struggling to crack even $40K ten years from now.
In other words, stay out of debt, yo!
What HandsumCash says. Stay out of debt.
Though I would feel comfortable with less than $25k in this economy. Even waiting tables you could pay that off over 10 years (as long as you didn't take on any credit card debt too).
This really isn't a matter of guessing. Crunch some numbers. Look at your repayment options. Evaluate what your interest rate is likely to be. Set a bar for your starting salary and go get it. Contrary to popular belief there is quite a nice return on higher education, but debt needs to be managed and well planned. Guessing and "rules of thumb" are not very smart ways of taking on debt.
This is a useful calculator. Plug some numbers and see what you feel comfortable with:
http://www.ibrinfo.org/calculator.php
Zero dollars ideally
I wanted to specifically avoid this so I went to a state school, established residency there and then finished with little debt - it still sucks but it's better than a lot of others I've seen around. There's one guy who went to a pristegious ivy who I used to work with and was somwhere around 200k in debt. That's out of this world and pretty much a life setback...
I guess I was one of the people pushing the "no more than your first years salary" because if you work the numbers that is the maximum amount that you want to pay off.
Loan Balance: $40,000.00
Loan Interest Rate: 4.00% (if you have good credit, through private loans)
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $0.00
Monthly Loan Payment: $404.98
Number of Payments: 120
Cumulative Payments: $48,597.68
Total Interest Paid: $8,597.68
Now not everyone is interested in paying their loans off over 10 years...personally my strategy is to shoot for under 5 years since I have a lower number than 40k and treat it like a car payment since I don't plan on buying a new car for another 5 years. Also, having the discipline to apply tax returns/bonus checks to make large "dents" in the overall debt can do wonders to reduce that loan balance.
Sorry I messed up the famous Babson quote. I should have written: Keep out of debt.
(image via khanstudiointernational.com)
It's carved into stone for a reason, yo!
I have about 100k in student debt and am pulling in around $75k/ yr. I look at my budget more or less this way:
50% of my monthly pay goes to rent
25% to student loans
25% to all other expenses
Anything extra goes into savings. Living in Boston, I'm about breaking even. It depends on your city, but this is a safe percentage for those just starting out. I live by myself in Back Bay and enjoy a pretty comfortable lifestyle- you could easily get roommates/ cut other expenses if you wanted to.
50% of my monthly pay goes to rent
o.O
I think you may be living beyond your means.
Yeah. Student debt may be difficult calculate because of all the variables (will I get a job? how much will it pay? how long will I keep it? etc.) but a good budget rule of thumb for housing expenses is not to pay more than 25% of your income on mortgage/rent.
Pay yourself first, yo!
If you have to go into debt to go to grad school, you probably shouldn't go to grad school.
"If you have to go into debt to go to grad school, you probably shouldn't go to grad school."
gwharton, keeping poor people from upward mobility since 1982. :)
Assuming no growth in wages and inflation, a person putting away 5% of their gross income into a generic savings account will have the follow amounts after 40 years of earnings— $81092.71 for a high school diploma, $91083.85 for an associates, $97127.87 for a bachelors, $133841.11 for a master's, $160533.07 for a professional degree, and $211629.11 for a doctorates degree.
However, only the person with the high school education could feasibly work 40 years because of the time and length of more education— $85605.68 for an associates [2 years], $85546.53 for a bachelors [4 years], $110217.53 for a master's [6 years], $127638.05 [7 years] for a professional degree, and $150583.80 for a doctoral degree [10 years].
The full lifetime advantage, from an investment point of view, is the final difference in savings between the two— $81092.71 versus $4512.97, $7306.08, $29124.81, $46545.33 and $69491.08 And this figure brings us back to what they started at the beginning of the topic, your indebtedness should be below these amounts.
Considering the average professional degree student debt is $98,711 [graduate and under graduate], there's no lifetime investment advantage to higher education. Simply put, you will not be better off when it comes to retirement.
In fact, you'll be -$52165.67 in the hole, compared to a wage worker, when you die.
This, however, ignores that your standard of living will be by leaps and bounds better than a wage worker.
@J. James R. - Why are you calculating this only looking at 5% of gross income? Bizarre.
The actual difference in lifetime earnings between a high school graduate and someone holding a professional degree is close to $2M across all demographic categories. Even at the higher end of educational costs, you will likely recoop much of your educational investment.
Education and Synthetic Work-Life Earnings Estimates [PDF download]
http://www.census.gov/prod/2011pubs/acs-14.pdf
There is a significant return on investment of higher education.
Because I based the 5% off of the U.S. Personal Savings Rate. And judging by the savings rate over the last 5 years, 5% is incredibly generous. You can find the data here— http://research.stlouisfed.org/fred2/data/PSAVERT.txt.
I did specify, though, that there's incredible differences between standard of living. A high school diploma might net you a working car and a 1000 square foot home compared to someone with a professional degree who might end up with 3 BMWs and a 3500 square foot home. But, the way people spend money, is largely proportional to their income if you believe the Consumer Expenditure Survey.
But at the end of the day, whether one is eating Slim Jims or Kobe steak, they'll still put away roughly the same amount into their bank accounts proportional to income.
The older generation of Americans have driven up prices for everything - especially higher education to a point where it is virtually impossible to successfully gain a college education without being massively in debt no matter where you go. I noticed that in high school it was the already rich people getting an overwhelming percentage of the scholarships even though their families already could afford their education and most of the middle to lower class (who excelled in school) were left out in the dust and were given nothing.
The sad thing is that generation has been highly successful in talking everyone into waging stupid and pointless wars with countries that the average American knows absolutely nothing about - first they wanted us all to kill communists and now every American is indoctrinated into wanting to kill Moslems. Example - we can now see the public is once again getting hoodwinked into thinking that we should wage war against Iran. Hopefully someone can drop the ball and say that such a move will bankrupt the country for generations,
Rusty, if upward mobility now requires going to grad school then we're truly screwed. The next generation is uber screwed since they will probably have to get a PHD to keep up with the times.
paradox, you kind of need a graduate degree to even stand a chance in our profession. You need PHD level these days for certian types of engineering endeveours. It's fucked up, but that's where we are now.
I agree with med: You should not spend more than 1/3 of your net income on rental housing.
med, it doesn't matter if the country is bankrupt for generations. That's what the global elite have been doing since WWII: bankrupting countries. The new twist is that they are now coming after the wealthy (and supposedly democratic) western nations of North America and western Europe whose citizens have been bludgeoned by neoliberal policy for so long that they are losing the will to resist.
Back to the college debt issue. One of the things that skews the data of high school education vs. college graduates is the fact that those who go to college tend to be more ambitious than those who don't. So many people in America attend colleges these days that any 18 year old with a brain (and frankly, many without much intelligence) are shuffled off to university without really giving it much thought. I'm speaking hypothetically now, but if a bright & ambitious 18 year old decided to become a baker or auto mechanic or tailor etc., skipped the 6 figure college debt in favor of a few years of low-wage apprenticing, it's not a stretch to think they could be an independent business owner by the age of 30 (rather than settling $15/hour drafting jobs to get their "foot in the door" of a more prestigious profession. Moreover, as a business owner they could potentially expand as much as they want.
College may produce professionals such as architects & lawyers, but it's not particularly good at producing entrepreneurs. Point is that there is a sort of herding mentality involved in America's higher education and the expense (or debt) of this is crippling both to many of the participants and quite possibly the community at large.
Yo!
Very challenging times we find ourselves in. I tend to agree with those who suggest eschewing debt. You would be on the hook for Federally insured student loans FOREVER, as this debt is apparently not dischargeable in bankruptcy. Anything you owe after completion of your "productive" working years can be garnished from your social security check!
Consider these stories:
http://finance.yahoo.com/blogs/daily-ticker/student-loans-could-next-housing-bubble-robert-reich-144742652.html?l=1
http://www.washingtonpost.com/business/economy/senior-citizens-continue-to-bear-burden-of-student-loans/2012/04/01/gIQAs47lpS_story.html?wprss=
Couldn't resist...
@HandsumCa$hMoneyYo, I think you are overestimating the entreneurial spirit of high school graduates. The vast majority of entrepreneurs I know hold college degrees. There is something about higher education that I would argue equips one with the tools, knowledge, and experience to be entrepreneurial in a way that a high school dimploma alone does not. Not to say that everyone is cut out for college; there needs to be job skills training at all levels of ability and education, but call me a "snob," I think the data clearly bears out the financial advantages of education. ;)
LITS4FormZ: "Couldn't resist..."
You couldn't resist to tell us how bad at math you are? Or that you got another copy of "Atlas Shrugged"?
Either way, keep fucking that chicken.
If only you could put your energy towards something positive.
Yeah, because posting 4 images that say "it's your own fault for everything" is a definition of positive energy expansion, farty.
Wow, really...you mean people that actually worked while studying and avoided debt by living within their means isn't positive for society.
Keep trollin
Significant debt is something you should not take on. You'll look back and think "what was I thinking" because your not stepping into a six figure salary anytime soon to pay off the debt and the way the economy is you won't see ample opportunities to have a solid income stream in the near future to cover off the loans. Not being negative just a reality check.
Now taking on some debt to upgrade skills and education is great and worthwhile but six figure debt is crazy. You and your future children will suffer because of the debt.
A couple rules in business is to "keep your overhead down and pay yourself" learning to live within your means at school and early in your career is a good first lesson for success.
Wow, really...you mean people that actually worked while studying and avoided debt by living within their means isn't positive for society.
Except that much of the world, first-world or third-world or advanced and developing, depends on mass consumption and hyperconsumerism to stay functioning.
When one person saves money, another person theoretically loses money. So, theoretically, all of this hoopla over "responsible saving and spending" is a moot point. That's where both Chicago School and Keynesian economics both fail— saving too much versus spending too much.
The only way for everyone to have a job is for everyone to not save.
Even if you were to do the more prudent and conservative thing which is save you money in a diversified retirement account, the only way retirement accounts produce any money is by allowing other people to spend money that they don't have yet.
You know, considering retirement accounts and mutual funds exist to provide leverage for corporations, investors and governments to make massive capital and infrastructural purchases.
Spending requires saving.
And saving requires spending.
Shush James. You're skipping ahead to grade 9 economics. We are still struggling with nap-time concept here.
Yes, formZ if we all work part time jobs, than we can all afford $40k/year education. And if we save and work hard, then concept of global economic recession magically goes away. and then it's potty time!! yaaay!
@Token AE: What kind of a job and experience do you have?
As a "snob" then you've probably never set foot on a public campus with 30,000 students only to realize that about 25,000 of them really don't belong there because all they care about is partying. And there's no doubt that whatever data you provide would point to the advantages of financing education because that data is inevitably based on the past 50 or 100 years or whatever when it was very much true.
My biggest point is that times are uncertain & changing. Your data may be true but it's not going to hold. Sometime in the near to immediate future a nasty shift will occur. There's already evidence of the education bubble bursting. Although a "crash" might be expected more likely is will be a slow motion crash as the many stakeholders in the current system will fight to keep it alive. Still, I wouldn't be the least bit surprised if in ten years, for example, there are fewer students studying at universities and maybe even some shuttered universities in America.
Does investment in college makes sense? Ten years ago in 2002, yes. Ten years from now in 2022, probably. Right now (in America 2012), proceed with caution.
And what's the deal with all of those photos of handwritten notes? Don't kids know how to type these days, yo?
They're paying their own way and can't afford a computer ... or a printer.
Welcome to the 21st-century.
I'm pretty sure the photos of those kids are exactly the type of situation I am trying to avoid. Not the hard work, but the years of debt and the amount of jobs and hours they will have to work. I know architects work ridiculous hours for little pay, and I'm okay with that. Just not when 3/4 of my income would go to room, board and debt for the next twenty years.
Plus, I don't think I can work enough to make 60,000 a year (more than most architects make) and simultaneously go to grad school (especially architecture school) full time for three years to avoid taking out student loans.
As heartbreaking as it was, I had to decline my offer to the school I admire most (SCI-Arc) to avoid a lifetime of miserable debt. It was hard, but unfortunately it was the right thing to do. The only school I am considering now is Cal Poly Pomona. I know it's a completely different philosophy, but it's also a completely different tuition/cost of living.
Thanks to everyone, it really helped and put things into perspective for me.
congrats bobby! You picked well.
everyone else, good job, ticket closed.
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