Got Orthonomics in your Email Box?

Monday, February 22, 2010

Student Loans: A Tremendous Burden

Hat Tip: A long reader and commentor, feel free to self identify

The Wall Street Journal online edition has an article posted with the title "The $555,000 Student-Loan Burden." The case presented is most certainly extreme, but demonstrative of the tremendous burden that student loans can be, especially when you don't read the fine print. But even where you read the fine print, payments come due, income isn't always earned as planned, and life gets in the way. It was nice to see an article call these loans "one of the most toxic debts" because student loans are often labelled as "good debt" and many people don't consider other options in the face of student loans.

But the structure of the debt is anything but "good." It is near impossible to discharge the debt, or even renegotiate it, something that can be done regarding other debts that do not get discharged in bankruptcy, such as debts to the IRS. The article quotes a figure that absolutely floors me: only 40% of student loan debt is being actively repaid. The remaining debt is in default, deferment, or forbearance.

I think that many people would make different decisions regarding paying for college if they didn't view student loans as a first option. It is no secret that I don't like student loans. I see too many people being crushed by student debt. In the frum community, the burden of K-12 tuition is putting a tremendous strain upon parents, leaving little money to work with come college. This is quite problematic as young families often are dealing with a tremendous debt burden for college tuition (often compounded by other debt run up in addition to the student loans) and the burden of their own children's tuition and/or childcare.

I'd like to hear from my readers who student loan debt is affecting you? Was the debt you took out an active choice or a more passive one? What, if anything would you do differently? And what are your plans in terms of funding an education for your own children?


Dave said...

One thing to remember, for those who don't have children in college now, is that the tuition we remember isn't anything like the tution now.

When I was in college, the in-state tuition (including fees, but not including books) for a full course load at the flagship state University was $453/semester (I went back and looked it up).

You can't come close to that at a community college these days.

Mike S. said...

My wife came from a poor family and used student loans to supplement her scholarship to MIT. Didn't impact us much, but then tuition was 1/10th what it is now.

I suppose it depends on your choices. If the choice were to pay cash for a good state school or take out loans for a private college, I'd do the former unless there was a very good reason; like a kid who would get lost in a large school but will do well in a smaller one where the faculty can keep more of an eye on the students. On the other hand, if my choice were taking out loans or not going at all, I'd take the loans. Your prospects with no degree are a lot worse; sure, there are some who do real well without a degree, and some with a decent degree who don't do well, but the degree really shifts the odds. Of course, if I were going on borrowed money, I'd make sure to get a degree that the job market valued--engineering over art history, say.

One thing a Jewish child should consider is going to school in Israel. Even for foreign students, the tuition is much less than US prices. If you make aliyah, you can do your Army service and then go for free. If your Hebrew isn't good enough, IDC Herzliya and Technion are offering international schools in English. Tuition is higher, but still low by US standards. (about $11K per year; IDC is a 3 year program, I think Technion is 4 years.)

Anonymous said...

I'm with Mike - if the only way to go to college is with student loans, then the student loans are worth it. However, then you should also think about other decisions - i.e. wait to get married till after your degree and work part-time during college to help keep the loans down. If parents aren't going to be able to pay for college, then they might want to think about some trade-offs - i.e. instead of paying for camp every summer, would it be better to put that money in a college fund and keep the kids at home in the summers -- same for paying for fancy bar mitzvahs, simchas, year in Israel.

gavra@work said...

We refinanced/consolidated about 40K in student loans for under 3% over 30 years (about 2006ish) and now pay about 200$ a month.

It did put us in a much better position than we would have been otherwise, as we now both have good jobs that are a result of our education. It does work in some, if not many cases.

Anonymous said...

I have a close friend who was brought up by parents who were frugal and always preached against taking on debt (they were from the depression era). He was so afraid of debt he did not go to college because he would have had to finance it with student loans. Now, as an adult, he is stuck making under 40K/year working long hours in a job he hates and where he has little autonomy and little opportunity to use his mind.

David said...

Student loans often do make sense. One needs to a look at it realistically as a cost benfit analysis type problem. It is of utomost importance to consider the job propsect for your chosen field after graduation.

Miami Al said...

Mike S.,
The degree from MIT was probably worth it. What people NOT from elite schools don't realize is the difference between an elite school and a normal school. Note, Elite school in this case is Top-5/Top-10 schools, Not mediocre bottom first-tier schools like YU.
A YU degree will not earn you a positive ROI vs. a better "stop tier" school like Rutgers, but MIT, Harvard, Yale, Penn, Stanford, Caltech, those WILL.
In Computer Science, recession aside, Comp Sci graduates from MIT are making 20k/year more than someone with a state school degree.
Even if you can go instate for "free" and MIT was a full ride, that's an 8 year payback on your investment.
OTOH, my SIL went to an expensive liberal arts college. She and her parents each had a 40k note at the end of the 4 years, and the degree was NOT worth more than a Rutgers degree, it was from a lesser known, lower ranked school. Sure she enjoyed her 4 years on a small campus, but it is definitely cramping her and her family's future (newlywed, no kids yet).
A top University is a GREAT investment. A good state school is a GREAT investment. Otherwise, go to community college or trade school. Unless you are rich, there is no reason to go to a rich kid university and pay $40k-$50k/year for a lower First Tier or work degree.
That said, paying for expensive summer camps and then encouraging the child to go to a cheap college is a common thing I've noted in my community, and it's freaking asinine. You're setting the kids up to have to downshift their life as an adult because you didn't want to say no to summer camp.
No sleep away camp unless the college fund is fully funded... they can go to JCC Camp.

Anonymous said...

Life is about choices and consequences. The more people are going to spend on tuition for elementary and high school, the less they will have to spend on college. This will shift a greater burden of student loans to their children. It seems that many people have already made their choice (whether consciously or not) that they are going to burden their children with onerous student loans. When you're spending $15,000+ for elementary school and $25,000+ for high school, I don't think you'll have much left for your own retirement, let alone your kids college education. I personally finished graduate school with about $70,000 in student loans, and its now down to about $25,000. I was fortunate in that I graduated at a time when interest rates were very low, but still, I've paid a lot in student loans.

Comment to SephardiLady: I wish you would write something about the concept of people's choices and the consequences such choices entail. I wonder whether those people sending their kids to expensive schools have really thought about it and really understand and appreciate the consequences of doing such. I doubt that many people really have any understanding that by spending such an obscene amount on tuition today, they are potentially robbing themselves of retirement and going to push an enormous student loan burden on their kids.

efrex said...

Like many other financial decisions, social pressure often dictates peoples' actions even if it doesn't make financial sense ("everyone's taking out big student loans/ big mortgages/ adjustable rate mortages, so it must be the right thing to do.")

There's no "one size fits all" here. Parents and students need to realistically assess what kind of potential earnings gains can be realized for the $ spent. For some highly specialized jobs (particularly medicine) it might make sense to go into debt. For almost any "standard" career choice, though, there's not going to be much long-term difference between a degree from an expensive second-tier college and one from a good community college.

I was blessed to go to Cooper Union (tuition-free school), so tuition was never a problem in my undergraduate days. Had I not gotten in there, though, I would have done what every member of my family in the previous generation did and gone to a CUNY school. Indeed, for my graduate schooling, that's exactly what I did. I can't say that CCNY's graduate chemistry program was as well funded as Columbia's, but I don't think that their program gave enough added value to be worth 5-10x the price.

Miami Al: I don't know that it's "asinine" to send children to a more expensive camp and then a cheap college: depending on one's value system, that can make a lot of sense (e.g., the more expensive camp has a hashkafa that I'd more like to see my children learn from), even at the possible expense of initial earning potential. I don't claim my experience to be universal, but at least in my field, once someone's been working for 3-5 years, the name on his/her college degree becomes much less meaningful, and advancements/ promotions/ raises are a function of the individual's on-the-job performance, not his/her schooling.

Anonymous said...

Anon: The people who are actually paying the 20-25K per student tuitions and not taking scholarships are probably the ones who will also be able to put their kids through college and are saving for retirement. It's the people struggling through to pay 8-12K tuitions that probably are the ones who will be in trouble. Since they are arelready in the lower priced schools, they may not have a lot of other options.

Anonymous said...

I'll relate my experience, for what it's worth.

My parents were completely tapped out from yeshiva tuition and were unable to save for my college education or pay much for my college tuition. At the time, I was interested in engineering and got into a top-10 engineering school and the local state school (top tier, but not top-10). I was advised to go to the best school I got into even though it was more money. I graduated with nearly 6 figures in debt. If I had gone in-state, my debt would have been about 1/3 of that.

I ended up switching out of engineering to a more lucrative career, which helped pay down my loans in just 3-4 years, so it all ended up OK. But, I'm not sure if it was the right decision or not.

On the "pro" side, I met my spouse and I have friends who are really movers and shakers in their respective fields. I'm not sure if I would have had the same at the in-state school. The education I got was also more rigorous, it's not true that science is science or math is math and is taught the same everywhere. We were really challenged and taught to think. I took summer classes at the in-state school and was really underwhelmed by the quality (for example a 3rd semester physics class was taught without calculus whereas the comparable class at the top-10 school made extensive use of differential equations and other advanced calculus). There's also, still after all these years, the "wow" factor to where I graduated and the network of alums we have, there is a bond when you meet someone in your field who went to the same school. I think the name of the school, even without any honors at graduation, is likely worth more than the in-state school name with graduation honors (cum laude, etc).

On the "con" side, the debt was really scary and crippling. I had to live at home after graduating since I couldn't afford to pay loans and an apartment. Also, if I hadn't switched careers I'd still be paying off those loans. Additionally, if I had done really well in-state (which was more likely than not), I probably would have had access to the same quality jobs as were available at my top-10 school.

In the end, everything worked out, but I think it is incredibly stupid to go to the big name and more expensive school without a guaranteed lucrative career upon graduation. My sister in law just graduated undergrad and went to a $40K+/year university (taking on significant debt) and is only qualified to work in jobs that pay $30K/year without much room for salary increases.

Dave said...

In Computer Science, recession aside, Comp Sci graduates from MIT are making 20k/year more than someone with a state school degree.

That's not my experience. On the other hand, if it helps get them into a better entry level position, that could help their overall career trajectory.

But really, past entry level, I've never seen anyone in high tech care about undergraduate degrees.

Anonymous said...

To further comment,

There is way too much focus on "hashkafa" in our communities to the point where you'd think we're all practicing different religions. I can understand that it is undesirable for a MO family to send their child to an ultra-RW yesiva/camp. I get that. But, when people talk about finding a camp or yeshiva with the right hashkafa, more often than not they're talking about the most ridiculous, asinine, silly differences that are only visible under an electron microscope. The parents act as if the child will go completely off the derech if the child spends more than a few minutes with those slightly different. In this school the sexes are separated at 6th grade, but I think they need to be separated at 4th grade. This school has a double period of gemara only once a week, but I think there needs to be double periods of gemara twice a week. It's just ridiculous and causes further fracturing of our already divided communities. If people stopped to think for 2 seconds they'd realize that all this desire for the "perfect" hashkafa is in large part responsible for the lack of competition between camps and yeshivas and therefore there are few economic forces acting to keep prices down.

I also don't think anyone realizes how crippling this multi-generational debt is. You have grandparents paying for tuition, parents paying for tuition, and children who will be forced to take massive student loan debt to even try to get the degrees necessary to pay for the tuition of their own future children.

If people realized this they'd be more open to alternative options (or heck, JFS in Staten Island!!!). But, due to blindness and hashkafic reasons and placing absolute comfort above all else, people are just walking off a cliff.

Miami Al said...

efrex wrote,

"Miami Al: I don't know that it's "asinine" to send children to a more expensive camp and then a cheap college: depending on one's value system, that can make a lot of sense (e.g., the more expensive camp has a hashkafa that I'd more like to see my children learn from), even at the possible expense of initial earning potential"

It is asinine. Summer camp is 8-10 weeks/year. For some children it is a wonderful experience, but expensive summer camp is a huge luxury.

If you can afford an expensive summer camp, you kids are growing up in an upper middle class environment. Decreasing the likelihood that they can maintain the lifestyle in adulthood that they grew up with because you want to someone to "impart a certain Hashkafa" is DEFINITELY a hashkafa... but WANTING your children to be less well off than you is not a Jewish value that I'm familiar with, but it is DEFINITELY a Yeshivish value.

Anonymous said...

I was fortunate in only have to take out loans for grad school, not undergrad. How did we avoid loans undergrad? For one, my grandparents never bought me a single gift -- no clothes, no toys no trips. Instead for every occassion - bar mitzvah, birthdays, etc. they made a deposit to a college fund. (BTW - I was as close with them as could be, grandparents can spoil grandchildren with love and time, they don't need gifts.) Second, my parents were frugal - only two years of summer camp, extremely modest family vacations (no flights or hotels involved), no new cars, etc. I worked and saved the summers starting at 14. In the end, I very fortunately was able to pay back the portion of my college tuition that my parents paid.

Miami Al said...


The companies that recruit for Computer Jobs at Stanford, MIT, and CMU often don't go elsewhere. The fact that recent graduates get experience that would be years 4-5 for others starts a completely different career trajectory.
If the first job pays $60k-$65k, vs. $35k-$40k, that can carry through for a LONG TIME.
If you are REALLY REALLY REALLY GOOD, nobody cares where you went to school. However, if you aren't in the top 1% of programmers, the name on the degree makes a BIG difference.
Those from elite schools don't realize the difference unless they have friends who went into the fields from other places, they think it doesn't matter, but they interview with higher level people for higher level positions throughout their career.
Those from lesser schools have no idea what they are missing.

Anon 10:44:
We are practicing different religions. Hassidism, Yeshivaism, and Modern Orthodoxy are ALL different religions. Sure we're all within the "Orthodox Jewish" spectrum in practice, but the beliefs are totally different.
Modern Orthodox Jews don't take everything NEARLY as literally. For example: how old is the universe? Did dinosaurs roam the earth? These are different "beliefs."
Is it holier to work and learn Torah, or learn Torah and be supported by others. I suspect you would get different answers from the right and left wing, and those are core beliefs that affect 1/3 of the time of the week.
I think that while we follow the same laws and Halacha, there are very few overlapping beliefs.
Judaism, definited as Halacha, is the same in all three Orthodox faiths.
Religion is the Western European concept of beliefs and worldview that originated from the Protestant reformation as the Protestants developed different beliefs than the Catholic Church... when applied to Orthodox Judaism, I think that the different branches turn into different religions.
Messianic Chabad and YU Modern Orthodoxy are BOTH flavors of Observant Judaism, but they are distinctly different in belief structure.

Anonymous said...

It would be very interesting to hear from some folks whose parents sent them to the best (most expensive) yeshivas, summer camps, year in Israel, big wedding etc. but couldn't help with college and see how that worked out for them, not only economically, but spiritually, etc.
The same for folks in the converse situation, less expensive schools, no sleep away camps, etc. but whose parents paid for most/all of their college.

Any parents out there who went one of these routes and are (a) happy with their choices or (b) would have done things differently if they knew what they know now?

Anonymous said...

It's Anonymous 10:33 and 10:44 here.

Miami Al,

I suppose what you're saying makes sense for yeshivish vs modern orthodox vs chareidi.

My point was more that you see Modern Orthodox (or so they call themselves) looking for the exact, perfect hashkafic fit for their children between different modern orthodox yeshivas and camps! As if there is a real and true difference between the hashkafa of two different modern orthodox institutions that will make a lasting impact on your child. See my examples above about when sexes should be separated (or even if they should be separated, I suppose) or how many gemara classes a kid has.

If you look on HonestlyFrum, for example, the inanities those Bergen County parents are arguing about is just laughable. They all pretend there are real hashkafic differences between YNJ or Yavneh or JFS which somehow justifies thousands of dollars a year in extra expenses.

Dave said...

The companies that recruit for Computer Jobs at Stanford, MIT, and CMU often don't go elsewhere. The fact that recent graduates get experience that would be years 4-5 for others starts a completely different career trajectory.

All I can say is, what you are saying doesn't match my experience.

On the other hand, I've spent the bulk of my career either in sub-specialties where education is not the primary determiner (largely because formal education hadn't gotten to those fields yet), or where the recruiting target is the top 1% anyway. Or both.

So my experience may not be universally applicable.

((It's also worth noting that other factors can also apply -- having an automatically re-activatable clearance can add a signfificant amount to your income))

Miami Al said...

Anon 10:33/10:44,

I'm on that blog, they are whiners. The fact that such minute differences constitute a Hashkafic difference is pathetic. Schools compete and differentiate, but the razer+blade pricing model of building fund is so anti-competitive it isn't funny. The have built their own golden handcuffs. They want to pay 50% less for education without giving anything up, good luck with that.

There are areas of the business world where degrees don't matter. There are areas where that is ALL that matters.
Going to CUNY instead of MIT or Harvard, doesn't doom you to a life of poverty, but it takes certain options away.
A big name degree opens doors throughout your career, that is worth SOMETHING.
I think that the loans are worth it for a Top 10 school, I don't think that they are worth it for a private University not in the Ivy Plus grouping.
I do think that a college education of some kind is worth a substantial amount of loans.
But, it's a Cost Benefit Analysis and discounted future earnings analysis, not a value statement.

Dave said...

Oh, sure, there are options that a Harvard or MIT degree opens that a degree from Georgia Tech or USC doesn't.

But those doors are not necessarily tied to income, just to different possible career paths (some of which are less lucrative).

Anonymous said...

Maybe Harvard, Princeton, Yale, MIT & Caltech are worth the premium price, in terms of future income options.

Penn, Columbia, Dartmouth, Cornell, Brown, etc. definitely are not. Hiring managers don't care; a lot of hiring managers can't even distinguish btw Penn & Penn State. It's amazing that people would pay $40K for this. And a lot of the people who go there are just not that smart.

Dave said...

And, on the flip side, coming out of school with low to no student debt opens up options that someone coming out of an elite school with six figures of debt doesn't have.

Life is about tradeoffs.

Bethami said...

notes on the aliyah comment way far above:
if you are religious woman, or a man above a certain age (doing your MA?), you get your free tuition without doing the army.
but you must make aliyah, and then if you make yerida again within a certain amount of time, you need to pay it all back.
going to an israeli school without making aliyah is still cheap. i started at bar ilan almost 10 years ago, tuition was about $5000 a year. Thats a joke compared to US schools. but you don't get the US networking you might at other schools.

all that said - if you are planning on making aliyah, please do your university here in israel. make aliyah, get the tuition for free, learn hebrew at university instead of while hunting for jobs, and then network after graduation in a country you are already familiar with. i can't tell you how many oleh friends of mine are now saddled with student debt that is near impossible to pay back on israeli salaries, trying to find jobs while raising kids. it doesn't work well.

Miami Al said...

Anon 1:04, Dave,

All about trade-offs. No debt = lots of flexibility to take risks, whereas debt limits your options, whether it is "good debt" or "bad debt."

A friend wanted to go do Doctors without borders after med school, so she was looking into cheaper med schools to have options. Then she learned that Harvard had a program where if you volunteered for that program, they forgave your debt.

She figured, "no brainer," if she does the service, she has no debt AND the Harvard degree. If she decided to sell out instead, well, she still had the Harvard degree.

However, if the choice was: Summer Camp + State U and no debt, or JCC Camp + Harvard and no debt... well I think that JCC + Harvard is a better trade off IF you want to be modern Orthodox... since for all the Modern Orthodox hashkafic naval gazing, none of it matters if you can't make 150k-250k FAST, no matter how good your Torah is.

Or, to put it in Bergen County terms: elementary school @ JFS + JCC summer camp and Ivy Plus University Debt Free is WAY MORE LIKELY to be able to be Modern Orthodox in Bergen County than Premium Elementary School + the right summer camp + 100k in debt from YU.

Mike S. said...

I can't speak for statistics, but I hire from both top schools and mid tier state schools. The starting pay is a little different but the biggest difference is that it is easier to get me to interview you if you are coming out of a top tier school. (E.g. I'll think about lower GPA, thesis topics further removed from what you will be doing, etc.)

One stat I did read somewhere is that kids who get into Harvard but go elsewhere do just as well as those who go to Harvard.

Avi said...

I went to YU and graduated in four semesters* to keep costs down (parents paid all living expenses, I covered tuition with summer income, scholarships, and loans. I still ended up with about $7K in loans which we paid off as soon as we were married - my frugal wife came with hard earned savings and a fear of debt. Frugal wife went to crazy expensive lib arts college paid for by her grandfather that gave her a useless degree. She then retrained herself as a programmer; the lack of loans and healthy economy at the time gave us the breathing room for her to do that. Our careers have not been directly fueled by our education, though I do credit YU for improving my writing. (I was an English lit. major and initially worked in marketing.)

Low debt was just one ingredient: HKB"H blessed us in many ways. Plus, we didn't get married until we had both graduated college (truth is, we didn't meet each other until after college). We didn't stop work for grad school (I tried getting an MBA at night because my employer at the time was footing the bill; it didn't take). We didn't have kids right away (not by choice). AND we didn't have loans. 10+ years later, our Dr./lawyer/MBA finance friends have finally caught up with us and passed us in terms of income, but we were better positioned for buying a house and putting away some savings in the meantime.

All debt should be weighed carefully. Student loans can be good debt, though I've seen too many dubious investments to make any blanket judgments. All in all, I agree that having Harvard on your resume is worth crushing loans, but only if you have a clear career path in mind afterwards because you won't have the financial flexibility to change your mind later.

(* it's worth noting that YU closed that loophole and now requires 3 years on campus; you can't do what I did any more, no matter how many AP's, Israel, and other college credits you have.)

Conservative SciFi said...

Miami Al,

I used to think the way that you did, but after a lot of real world experience, I find that even the "Harvard, Yale, Princeton" degrees don't differentiate much. I went to a state school and to a different state graduate school versus cousins who both went to Harvard/Yale/Princeton (as did many of my friends). From a strictly income perspective, I make more in my very secure job than they do. Beyond that, when hiring is at the executive level, nobody cares what college you attended. They look at how you grew the business and how you will add value. While many people who go to Harvard/Yale/Princeton are self starting go getters, the same people would probably have similar career tracks out of state schools. The people who are not self starting go getters, however academically successful, will likely have the lesser careers whether they attend Harvard or State U.

Anonymous said...

Mike S. said:

"One stat I did read somewhere is that kids who get into Harvard but go elsewhere do just as well as those who go to Harvard."

There's a good reason for that Mike. It's because the kid who got into Harvard is a good kid and can do well almost anywhere. There's no doubt that a Harvard degree will open more doors than a Rutgers or YU degree, but its the personal characteristics of the kid who got into Harvard that will allow such kid to succeed.

There are many different roads to success in life. That's why I don't get hung up on having to send my kids to an expensive school that brags that its students go to Ivy league schools. I'd rather not blow tons of money of an elementary an high school just so that my kids might have a chance at Harvard. I'd rather save for the long run...

Anonymous in Teaneck said...

Is the only measure of an education how much money you earn?

Dave said...

Is the only measure of an education how much money you earn?

Absolutely not.

But the cost/benefits of a formal degree require that you know the financial cost and benefit.

Almost the cannonical example (and in fact, it's been used as such in papers) is a Doctorate in Philosophy. This is an expensive degree, that only opens one door (and a narrow one at that). It potentially qualifies the holder to be a Professor of Philosophy.

Of course, the very nature of the academic model means that you end up with more PhDs in Philosophy than you have any hope of having professorial positions.

If you can afford it; learn whatever you like. My wife and I wanted to learn welding. We spent a couple of quarters taking the weekend no-credit welding class at the local technical college.

Not very expensive, fun, and not anything that would come close to qualifying you as a professional welder.

If one of us wanted to become a welder, we'd have been taking a far more rigorous (and more expensive) class schedule -- for credit.

Sarah said...

Unfortunately, in the frum community, education is a means to an end. So, yes, Anonymous in Teaneck, the answer is yes.

I think an Ivy League ed is good depending on your field and your future ambitions. For instance, if you are going to be a teacher, it doesn't matter where you graduate from, you are still going to be earning the same (that is, a Harvard grad will earn the same as a CUNY grad.). If you are a speech therapist, OT, PT, etc. it depends on where you want to work, but again this, and not necessarily your schooling will determine your pay.
It really is a matter of your major. By the way, all the above occupations are good second incomes, not primary ones for frum families.

Miami Al said...

Anonymous in Teaneck asked, "Is the only measure of an education how much money you earn?"

Of course not. However, the discussion is on student loans. Loans are a sum of money to be repaid, with interest, in this case for securing an education and hopefully a degree. If the increased earning power of the degree covers the loan payments, it's a good investment, if not, well, you better hope that the incidentals of the education are worth it.

However, my primary responsibility to my family is as breadwinner, not to feel personal satisfaction at my undergraduate education.

dvorak613 said...

Based on the above comments, it seems that I am the youngest one here, and thus qualified to offer a perspective from school as things are currently. True, I can't tell you how much money this is going to be making me (or my husband) down the road because we are still there. But I can tell you why my masters degree and his law degree are debt free; presumably, whatever happens after graduation, this convenient fact should leave us somewhat ahead of our peers.

My most important advice: if you know you will be entering a field that requires graduate study then do yourself a favor and go to a cheap college and save the money and the headache for grad school.

Both of us went to CUNY schools for about $2,100 per semester. I'm 21 and he's 23, so we're not old fogies reminiscing about the days when Harvard cost $100 a year or whatever. We both graduated last spring (I skipped 1st grade and finished college in 3 years, so even though he's older, I'm caught up school-wise). In any event, we didn't need to go into debt for college, so all that money that our families had painstakingly saved for our college educations will cover grad/law school.

We are now both at NYU- I am going for a PhD in adolescent psychology and hubby is pursuing his JD (NYU is one of the top 5 law schools; my program is "only" top 10). For my field, it doesn't matter as much unless you intend to go into private practice (as I do; and that requires certain internships that are more forthcoming if you're in a prestigious program), but my husband says that where you go to law school really, really matters in terms of job opportunities and salary (any lawyers out there, feel free to comment and possibly disabuse us of that notion). Neither of us feel in any way "behind" or "less prepared" for our respective programs; we are happy with the wonderful, solid educations we received from CUNY. There is no reason to take out crazy loans to fund 6-8 years of education; it makes more sense to avoid loans for undergrad and apply the savings to grad (even if you still need to take out loans, they will be substantially smaller).

Anonymous said...

MIami Al: The isue is not feeling personal satisfaction with your undergrad education, its having a career that is meaningful and satisfying to you. I agree that your primary family is to your family, but if someone is miserable in their job that is going to affect his/her family. Being responsible as the primary breadwinner does not mean making the best income. It means feeding, clothing, housing and educating your family and providing health insurance. When it comes to educating, housing and clothing there are a range of acceptable options.

Anonymous said...

dvorak613 - your husband is correct about which law school you go to, unless you plan to go into solo/very small firm practice or certain government jobs at the state and local level. However, getting into a top law school does often mean very good grades at a very good (although not necessarily ivy) college. Going to podunk U with other than very top of the class grades (i.e. summa) usually won't get you into the "right" law schools. I work in Boston and even though I'm over 20 years out, some people still want to know if you went to "THE law school," but of course Boston is a bit unique with its obsession with schools and that little university across the river.

ProfK said...

The debate really should not be centered on the Ivies versus other colleges and which is more worthwhile if you are going to take on student loans. It's not about getting into a school that is going to make a difference later on--it's what you do once you are in that school.

The Ivies certainly have name cachet but getting a gentleman's B or B- out of Harvard does not guaruntee you employment at the top firms nor success as you go up the ladder. Attend a non-Ivy and graduate in the top 10 of your class and yes, you are going to be going places. Make Phi Beta Kappa and yes, you are also going to be going places.

One of my children was asked to interview at what was then ranked the #1 law firm in the country. Sitting and waiting with her was someone out of Yale. He asked her where she went to Law school. She went to Brooklyn Law. He expressed amazement that she was interviewing for this firm, and yes more than a little snobbism. Who got the job? My daughter did. Why? Because graduating #2 in her class, being an editor of Law Review and getting top marks is still rewarded. (And by the way a Stern undergrad.)

Re that Rutgers remark, a different daughter went to Douglass College at Rutgers. For graduate school she applied to the top Journalism graduate schools and was accepted to all she applied to, including the Columbia School of Journalism, the top ranked school, where she did attend. She didn't need an Ivy background to get her acceptances. She was 4.0 at Douglass and Phi Beta Kappa.

My point here is that if you put in the work and get the high marks and honors you'll do fine regardless of where you went to school.

From our experience if you are going to take on school debt it's better to do so for graduate school than for undergrad. Spend less money on undergrad but put in more time to be in the top ranks.

Lion of Zion said...

i went to city college and split it with my parents. then i went to YU grad school for free (they actually pay people to go). when i later went back for another degree, it was at a very expensive (yet lower tier) private school and i didn't get any type of financial assistance. i incurred heavy student loan debt (thank god our only debt), but i considered it an investment as it's a field that is 100% employable (at least in the meantime). this was important to me. it wasn't about more money now vs. more money later, but humble job stability.

Lion of Zion said...

i never went to a "better" school, so i can't personally compare it, but the people i know who did go definately had more opportunities than we did at brooklyn college. for example, the computer majors i knew in brooklyn college were more likely to get summer jobs working for some shlamazel in boro park. my friends in columbia were getting summer internships at big companies and getting stipends that easily exceeded what my brooklyn college friends made out of school. and often those internships led to jobs. many of the brooklyn college grads i knew struggled to get half decent jobs.

have the brooklyn college grads caught up to their columbia peers at this point as some above suggest? that's an intersting question.


it's great if you can go to rutgers or brookly law and be in the top 2%, but only 2% can be in the top 2%

Mike S. said...

If you are going to graduate school anyway, save money on undergraduate school (if you are looking from a return on investment perspective.) No one much care where a PhD did his or her undergraduate work.

Offwinger said...


I'm glad your children have done well.

The point is that the same law firm that only interviews the top 5students at Brooklyn would easily also interview the top third of the class at Yale (depending on how many slots they would like to fill).

Furthermore, there are some more prestigious jobs that your daughter would have essentially no chance of landing out of Brooklyn or that would require another degree. The #2 student at Yale has a good chance of getting a Supreme Court Clerkship, which is a golden ticket for elite government work or the academy. The #2 student at Brooklyn doesn't get an interview for that and has to compete a lot harder to land the same kind of clerkship that even the #20 student at Yale can get.

We've had this discussion before on this blog. There is no one right or wrong answer about choosing an elite school. It matters a lot in some contexts, not so much in others.

Anonymous said...

ProfK: Your children were extremely fortunate. Plenty of people work their tails off in college and grad school but still can't be number 1 or even the top 10%. Also going to a name school makes a big difference if you are going to need to look for a job in another geographic area. Being a top grad at Brooklyn law or Fordham might mean something in the NY job market, but if that grad needs to job hunt in another region (i.e. if a spouse has to move because of work, to be near family, etc.) then those schools will not open any doors in say, Chicago or Boston or Atlanta.

ProfK said...

Re your comments about getting Supreme Court clerkships, the school you went to has some bearing on being offered such a clerkship but is not the only factor. It's not all about being from an Ivy--no Princeton Law grads have had such clerkships. Nor are the Ivies the only schools from which such clerks are chosen. See

Given that Cardozo Law School is ranked in the third tier of law schools, strange how they have had a Supreme Court clerk. Ditto some other schools we've never heard of.

Again, it's not always about where you went but can be about who you are and what you have accomplished.

Miami Al said...


Of course there are exceptions. A friend (not Frum) went to Cordozo Law School and is currently fast tracked at a decent sized law firm here, despite recently having a child, she's not being Mommy-tracked... it might help that her Maiden name is the first name of the firm, but everyone has unique circumstances, right?

Some people will go to a know name school and be extremely successful. Some will wash out of an extremely prestigious school... one classmate flunked out and last I heard was working at a grocery store as a produce buyer... that's not an extremely lucrative career path.

What university you attend is NOT the determining fact of long term career success. Depending on the career path, it MAY have a huge impact on the short term career, or it may not.

Mike S. points out that once you have a PhD, nobody cares about your undergrad. I have an MBA from a Top-10 school, but people still care about the Top-5 undergrad.

There are no rules. The study about Harvard students showed that for the TOP students, by aptitude, it doesn't matter much, but what about the top 32% of the country that is top third but not top 1%?

The not so impressive kids from my prep school are doing MUCH better in life than the slightly more impressive kids from the public school I went to prior (Facebook is great for determining this stuff), and I went to a TOP notch public school. Now, the top couple of students at the Public school went Ivy Plus, but the rest, not as impressive.

Success tends to breed success. The right prep school -> right college -> right Fraternity/Eating Club -> right job -> right MBA is one path, but you can get derailed at any step...

The right social network might make ALL the difference in the world to one person, and might have ZERO impact on another.

However, while I don't have a study to confirm, I'm PRETTY confidence that going to a Elite University is more of a predictor for future success than going the "right summer camp," but again, I have no stats to back that one up.

Anonymous said...

As someone who has significant debt (40% of the article) from medical school, I speak from that perspective.

The debt made a difference in what field to practice. You cant practice family med with $250k debt. However, I am paying back the loans slowly (good interest rate).

The key though is job security. There are always jobs available. You may need to move but they are there. And as long as you pick the right field, the salary is fine. Most other fields dont offer that security.

Undergrad debt is not worth it. Med school is. But read the fine print. And the key advice (which I got on the first day of med school) "dont live like a doctor until you are a doctor"

Offwinger said...

Prof K,

I'm familiar with Brian Leiter's reports, and I stand by my original comment. I didn't say you can NEVER get a Supreme Court clerkship from a non top 10 school. Nor did I use the term "Ivy" - the University of Chicago and NYU are two elite law schools, for example.

Cardozo has also rapidly shot up in the rankings and is regarded as far better than a third tier school right now.

Your reference to "Princeton Law" - was that a joke? Anyone discussing elites among law schools knows that Princeton does not have a law school, right? I'm sorry. Your response baffled me and made me wonder what you really do know about elite law school education.

ProfK said...

The Princeton Law should have been in quotes to indicate that it wasn't being used in a regular fashion. (And yes, you would be surprised how many people out there assume Princeton to have a law school.) My point was that all "top" schools don't have representation among the clerkships or very minor representation.

as to "made me wonder what you really do know about elite law school education," it seems that my family, immediate and extended, seems to have "majored" in law, 9 lawyers so far and two graduating this year and next. They cover the gamut of schools--Harvard,Yale, Columbia, NYU, Stanford, Brooklyn, Fordham. I saw up close and personal what their school years were like and see now where they are in the pantheon of jobs. At this point in time for many of them it has ceased to be about where they went to school re their success and is a lot more about how good they are at "lawyering," how ambitious.

But that's the point: a top school can get you only so far in the working world--it may get you a foot in the door. How far you get after you get through that door is going to be up to your skills and abilities, your work ethic, your drive.

Rochel said...

Thanks, Offwinger, you said it in your last paragraph! A lot of people on this blog have absolutely no knowledge and are talking off the top of their heads. Once I heard the words "Princeton Law School" from Prof K - very funny! I am often amused and amazed by the bluffing and bloviating of the commenters on this blog. Here's another insight: Anyone who has the time to write comments on a blog during office hours doesn't have enough real work to do. Sounding off on a blog is an indicator of probable financial failure, or at least an indicator that you may be laid off in the near future. Am I spoiling the party? Gotta get back to work!

PayingParent said...

If you are not going to graduate school, there are many fields where it ABSOLUTELY matters where you go to school.
My husband graduated top 5 in his class from YU's Sy Syms program. Only very few guys got interviews at any of the top banks and NONE of them got front office jobs. And don't think that it's lack of connections- the few who were interviewed were due to jewish connections.
At one such interview at a major bank my husband was asked, "You have a very high GPA. I notice that ALOT of your peers seem to have very high GPAs. Is that due to grade inflation, cheating, what do you think?"
How embarrassing for YU.
Anyway, my husband managed to be 1 of 3 guys his year to get a back office job at a mjor bank and plans on getting an MBA from a good grad school to rectify the error of going to YU and majoring in Finance.

tesyaa said...

PP: wherever you go to school, YU or elsewhere, you have to choose a major very carefully if you don't want to go to graduate school. There are some undergraduate majors that qualify you for a job (think accounting, nursing); some careers require only a bachelor's degree and the qualification is on the job (actuary); but many if not most careers require graduate school.

Definitely, the majors that prepare you for a career without further studies are vocational by definition.

Miami Al said...

Everyone has different experiences. In some people's career, they haven't seen degrees make a different, in others, people have. Perhaps for those that have, if it wasn't the degree, something else would have helped them, who knows.

However, choices are made, and it isn't so clear the student loan debt is "crushing" for people that take advantage of the education. However, for those that do not, the debt may be "crushing."

However, actions have consequences. Saving for college may make a difference in your child's life, or it may not. Perhaps the summer camp experience is what sets their life path.

There is no right or wrong, just a series of trade-offs.

My experience has shown that those that claim there is ZERO impact on a top notch elite undergraduate education are incorrect, but perhaps it meets with their background.

Being from YU, Harvard, or Queens college does NOT determine your life's destiny, but to claim that there is NO impact seems like it is likely overstating the situation.

Those that turned down Harvard turned out just fine, but Harvard is the nation's TOP liberal arts school, I don't know that you can extrapolate from that that there is no difference between going to Penn or going to Touro, but who knows.

Do what you think is right for you and your family.

Anonymous said...

I think that if you are planning on attending a professional school after college where you aren't going to get a stipend (think medicine, law, business), you really should think ten times, not just twice, before attending an expensive undergraduate school and borrowing significant money.

If you borrow let's say $100,000 for undergraduate (let's assume your parents help out somewhat) and then need to borrow $200,000 for grad school, you're starting out very deep in the hole.

If you're inclined not to go any further than undergraduate, it might be a worthwhile investment to spend the big bucks on an Ivy league degree.

I just hope people aren't borrowing to pay their kids elementary and high school tuition.

Just a Reader said...

I don't know you or Profk but her attitude sure beats yours. Talk about talking off the top of your head! So you can say "I am often amused and amazed by the bluffing and bloviating of the commenters on this blog. Here's another insight: Anyone who has the time to write comments on a blog during office hours doesn't have enough real work to do." So at 12:57 you weren't writing your comment from work? Plenty of bloviating on your part. Not enough work for you to do? Applies also to your
" Sounding off on a blog is an indicator of probable financial failure, or at least an indicator that you may be laid off in the near future. Am I spoiling the party? Gotta get back to work!" Make any money at your job? Feeling the axe about to fall on you where you'll find yourself unemployed?

We don't all have to agree here but some simple rules should still apply. Poking fun, making negative personal comments, holding someone up for ridicule is not how conversations get held. And that includes you.

Just A Reader said...

That was Rochel I was addressing.

Anonymous said...

"I just hope people aren't borrowing to pay their kids elementary and high school tuition."

Is that a joke? Most people I know are borrowing heavily to pay for yeshiva education whether it's home equity loans or credit cards. Maybe maybe maybe that's excusable. What's inexcusable is people doing the same for expensive sleepaway summer camps and bar/bat mitzvahs (and yes, I know lots of these as well).

aaron from L.A. said...

I am a Y.U. graduate. From what I see,the major difference between Y.U. and Harvard is that Harvard has the better theological department.

Mike S. said...

I should add that my experience is hiring engineers and scientists for nonacademic positions. My comments reflect that experience. Others are correct that different fields have different patterns. And academic jobs are different, too.

A PhD in Physics from MIT is the same, no matter where you did your undergraduate work. (Of course, it might be easier to get into MIT's grad school from a better known school, but my experience is that it matters less than you might think.)

And, as always with these financial posts, my strongest opinion is that general rules and advice are no substitute for clear thinking and planning about your specific situation. Whether loans make sense for you or your children depends on a whole host of factors.

Anonymous said...

Miami Al, Harvard is not "the nation's TOP liberal arts school." If you're relying on USNews rankings, Harvard and Princeton are tied for the number one "best national university." Williams College is ranked by USNews as the number one "best liberal arts college." Great schools, but great in different ways.

Miami Al said...

Anon 11:03, meant liberal arts in the general education sense, as opposed to a specialized school (i.e. MIT is the nation's top engineering school, Military Academy @ West Point being the nation's top school for military training, etc.).

However, you are correct at how liberal arts is used in describing academic institutions, my apologies for and confusion I caused.

Miami Al said...

Anon 11:03, meant liberal arts in the general education sense, as opposed to a specialized school (i.e. MIT is the nation's top engineering school, Military Academy @ West Point being the nation's top school for military training, etc.).

However, you are correct at how liberal arts is used in describing academic institutions, my apologies for and confusion I caused.

SquarePeg613 said...

I was in a co-op program, so I hardly had any debt. I had work experience, so I was able to get a job after college and quickly pay off the student loan. Then I made Aliyah.

tdr said...

Hope people are still reading this thread...

Problems I see with student loans are
1 People don't realize that these loans are riskier than all other loans out there, ie even in dire circumstances you cannot get out of them and they can dog you for the rest of your life. Yes, the gain can be great, but the risk is also very great.

2 As with other credit, people tend to just take the "easy way out" rather than defering school so they can pay cash, or perhaps creatively thinking of ways they can avoid these loans (ie with internships or scholarships or working in under-served areas, etc.)

The bottom line is student loans are taken way too lightly by most people who have them.

The doctor is the article is a more extreme case, but she is by no means unique unfortunately.

p.s. I sent this article to SL.