You’ve received college acceptance letters and been admitted to a few schools. Congrats! Now, you have to make a choice.
In an ideal world, your decision would be based solely on which school you like. In reality, there’s often a financial component to consider. If one school costs far less, is it ever worth taking on more student loan debt to attend the other?
“Paying additional tuition for a more expensive school is worth it if the value is there,” said Crystal Olivarria, the founder and CEO of Career Conversationalist, a company focused on helping young people make better choices about education and careers.
But, how can you tell? Experts recommend asking these four questions to help you decide.
1. How much more will the expensive school cost?
When comparing two schools, don’t look only at their tuition charges. Factor in the cost of living, fees, textbooks, and other expenditures. The important figure is the total debt you’d end up with.
“If you’re really set on an expensive school, look into ways to lower the cost,” advised Adrian Ridner, the CEO and co-founder of educational platform Study.com. “Research low-cost alternative credit options, such as online courses that can speed up your path to graduation and ultimately save you thousands of dollars in tuition.”
If you’ve explored all your options and there’s a significant cost discrepancy between the two schools, consider how you’ll feel after graduation if you’re left with tons of debt.
“It can take decades to pay back student loans, and they can be a burden when trying to buy a home or save for retirement,” Ridner warned. “Think about if going into crippling debt is really worth it.”
Talk to people who’ve graduated with large student loan balances or read their stories to understand what it takes to pay back a massive debt. You can use our student loan payment calculator to get a sense of how much you’ll owe each month in loan payments.
“It’s so important for a student to understand what it means to have a $1,000-a-month payment before signing up for it and how it affects their expected take-home pay,” said Greg Kaplan, a college admissions strategist who’s the author of “Earning Admission: Real Strategies for Getting into Highly Selective Colleges.”
You might decide that taking on huge debt is worth it, but be informed before making that choice.
2. Will you have a better chance of landing a good job?
Going into debt for a costly college impacts your life in negative ways, but there can be some advantages. First and foremost: You might have more career opportunities.
If a cheaper college isn’t widely respected, you might have a harder time finding work after graduation. And if you can’t get a job in your field, paying back a smaller debt might be harder than paying back a larger balance on a bigger income.
However, don’t assume a costlier college always leads to a better job. “Employers usually care more about the degree you earned and not the name of the school you went to,” Ridner said. “It’s important to decide if you’re paying for a brand name, or if it’s a school that will help you develop marketable career skills.”
How can you decide that? “Find out what companies regularly pull interns from the school through the career center,” advised Nikki Bruno, executive director of Student Coaching Services. “Are they big names?”
Also, ask the college about its job-placement rates. The measurements that schools use usually aren’t scientific and might not take into account whether the student is employed in his or her field, so don’t be afraid to ask follow-up questions.
Review U.S. News & World Report, which provides information on how students from different colleges fare after graduation. Or consult the Global University Employability Ranking 2017 to see which schools are preferred by recruiters.
3. Will you earn a higher salary?
Your after-graduation salary makes a big impact on how difficult it is to repay student loans. If graduates from a costlier school often earn higher salaries, attending that college might be worth it in the long run. You’ll have more debt, but your potentially higher income would help you pay it off faster, and then you’d enjoy a lifetime of higher earnings.
To get an idea of whether you’ll earn more, compare starting salaries for graduates at schools you wish to attend. You can get this information from the U.S. News & World Report page mentioned above or from individual colleges.
Be sure to factor in your particular field of interest. “For some paths, there’s no benefit from studying at a private or out-of-state school that is more ‘prestigious,'” advised Kaplan.
Use Bureau of Labor Statistics data to check the wage gap between the highest-paid workers in your field and those who earn the average salary. If workers earning the most in your profession don’t make much more than the median salary in your field, then graduating from a more prestigious school isn’t likely to result in a higher income that would justify paying the extra tuition.
Looking at salary data also helps you consider how the total debt from studying at each school would compare with your earning potential. If the salary you’d earn in your chosen career isn’t enough to make debt payments affordable, you shouldn’t plan to borrow, Bruno said.
If going to a costlier school won’t allow you to earn a much larger salary, it might not be worth the extra debt. However, your total debt might not be a big consideration if you plan to embark on a career, such as medicine or education, that qualifies for many loan forgiveness options.
4. Will you be better prepared for your career?
Most accredited colleges can do a good job of providing a broad education on the basics. But, some colleges are much better at preparing you for particular jobs.
“When deciding whether to pay more for a costlier college, decide how much better prepared you’ll be to enter the workforce after earning a degree [from that school],” Olivarria said.
If the school you’re considering allows you to specialize in the field you’re interested in, it might be worth paying extra for in-depth career training. For example, if you want to become a teacher, you could pick a school with a renowned education program. If your goal is to become a doctor, a school such as the University of Rochester, which offers the Rochester Early Medical Scholars Program, could save you money, time, and stress by allowing you early admission to medical school.
By choosing a college that sets you up for career success, you could advance in your field more quickly, and possibly make enough money to pay back any additional funds you had to borrow.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.82% – 12.82%3||Undergraduate and Graduate||Visit Ascent|
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.99% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|3.88% – 12.88%6||Undergraduate and Graduate||Visit SunTrust|
|4.68% – 9.77%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.04% – 12.01%9||Undergraduate, Graduate, and Parents||Visit Citizens|