Student loans yours or for your child

[seriously1]

Tell me about your student loan journey for you or your child.

My d has always dreamed of art school specifically digital art, character development and animation. She is incredibly driven and I truly believe this is her passion. We looked at in state programs and we found one school in our state that has an animation major.

We are now facing college decisions. She has been accepted at all her schools and been awarded some grants and merit scholarships however there is still a huge difference in cost. The top art colleges are between 50k and 65k a year. It’s insane! The in state options are closer to 30k a year. We have saved thru 529 but not nearly enough. How does the loan process work? Who can I reach out to to learn about monthly payments and length of loan? Do they even loan that much?. I am confident she will be able to get a job after graduation but I also know this isn’t law or med school but the price tag seems like it.

[Susie]

The #1 thing I would recommend is to find out what employment prospects and typical salaries look like in the chosen profession.  Not just "I'm sure s/he will be able to get a job," but understand about how many roles are available relative to the number of graduates (i.e. how likely/realistic it is to land the desired job reasonably soon after graduation), where those jobs are located (and then think about COL there), what is the pay range for those roles, is any further training after this degree required to obtain those roles, and other granular questions that get to how readily employment in the field can be found upon graduation, and what it will pay.  Then you can use online loan calculators to determine monthly payment on a loan using an example balance, interest rate, and term (say 10 or 20 years).  

If you look at a realistic pay range, divide it by 12 months, subtract an appropriate % for taxes based on the income bracket, you'll have a ballpark monthly net income.  You should be able to get a sense of whether the budget would work with a student loan payment the size that you're entertaining, together with housing, food, car, utilities, etc.  

I am a longtime veteran of student loans myself.  My husband and I borrowed a combined ~$260k to pay for our law degrees in the mid 2000s.  We've paid off about $200k, and have about $66k to go, which will be $56k if Biden's SL forgiveness survives litigation.  In general we've done ok, but it hasn't been easy, and I know MH didn't really think enough about the math before going into it.  He borrowed around $120k for his JD with a goal of becoming a prosecutor.  His first job as an assistant district attorney paid $49k.  Spoiler:  the monthly budget math on that does not work.  I was a year behind him, and spent around $140k on my JD from the same school.  The math worked a lot better for my specialty/private practice.  As we've both advanced in our careers, and aggressively paid down the loans with the highest rates, our loan payments have gotten dramatically more affordable.  At this point I'm not really in a rush to pay the rest off because the rates are pretty low, the balance is much lower, and there are other things I can do with the money for better return.  For a long time though it was the defining feature of our lives.  We delayed a lot of things, including having kids, because we just couldn't afford to do it sooner.

[bee20]

I chose the more expensive school and ended up with about $12k in loans as well as having to work like crazy during the school year and all breaks (even christmas and spring break) to keep the balance that low. It certainly impacted my GPA and my ability to participate in clubs and activities. It was easy to pay off that balance, because my starting salary was about 5x the loans (engineering). I've variously seen recommendations to take out no more than the starting annual salary, and to not have payments exceed 10% of the monthly salary.

I would tell 17 year old me to pick the cheaper option, which in my case was a highly regarded state school. However, I wouldn't go for the cheapest option, which would have been the local, non-flagship state school. I work with several people who graduated from the state flagship, I don't run into anyone who went to the local state school.

To make your decision, I would look for statistics on employment after graduation. My more expensive school was much bigger on writing resumes, running practice interviews, and had much better employer engagement than the state school had. For marginal students it would make a big difference.

ETA: For your questions on loans, often the student will be offered a combination of federal, parent PLUS, and private loans.  Each of these will be at different interest rates and payment terms, but all of mine came with a disclosure before I signed on.  I had no parent loans but had friends whose parents were taking out $10-20k/year on top of the student's amounts.  I had friends graduate with $200k in debt for an undergraduate degree.  This was a combination of public and private loans. The financial aid package should outline what types of funding they are offering you.

[wildrice]

Oof. I'm not sure from your post how much you are looking at spending out of pocket each year, but I'd start there. There is absolutely no way I would recommend taking out 200k for an art degree. Or any bachelor's degree, for that matter. But I am guessing she isn't actually looking at a price tag that high.

I would probably start with the financial aid office at a school she wants to go to. They should be able to tell you more about the total sticker price and point you in the right direction for loans. With financial aid it might cost a lot less than you'd think.

I will say that student loan interest rates have been out of control (IMO) in the last 15 years or so. I think my H's federal loans are at around 7% interest, though they were from graduate school so I am not sure if they are slightly lower for undergrads. That doesn't sound like much, until you consider that if you owe 100k in loans, that's 7k per year that is being charged purely in interest. Unless you can pay multiple thousands of dollars toward your loan balance each month, the balance goes down VERY slowly.

I went to public schools and often speculate what my life would have been like if I had gone to a private college with more guidance and connections. I think public schools are great but it's much easier to get lost in the shuffle or not get much in the way of advisement at larger schools. For that reason alone, it makes me want to say "go to the best school!" because she'll probably get the best opportunity... but if she's on the hook for 1k a month in loan payments and only makes a 40k per year salary after graduation, that's going to be a huge problem.

[plutosmoon]

I work in a fin aid office and my BIL attended what is now a top art school and his degree is in computer art/animation, he has a job in his field. He tells me the demo reels/portfolios are most important when they hire, but having attended a well known art school can help get your foot in the door since the alums help each other out. It's a tough industry, and bil almost left it to do something else in his early years, but he now makes very good money, there will be lean years,especially early on. I would ask where the each school grads are working and what they are doing, if there are enough industry contacts, state school's program will be fine.

Regarding loans, she'll want to start with the direct loans, but the most a student themselves can take in a direct loan caps out at $5500-$7500/year, depending on year in school. The FA offices will be ale to walk her through getting a direct loan. I tell the families I work with start with what you can reasonably cash flow, most schools have a payment plan option to help spread out your payments. Next have your student maximize the federal direct loan, rates are generally lower and repayment terms more favorable than private loans. Now, if you need more loans, it's time to start comparing private vs. direct parent (PLUS) loans. PLUS loans are the easiest to qualify for and have favorable repayment terms, but the rates are high. The PLUS loan would be in your name as the parent and your DD would have no obligation to repayment.

Private loans can be taken out by the student directly, but she will need a cosigner (likely you), rates will vary as will repayment terms. My state has a pseudo government org that offers loans, their rates and terms are pretty good so that's usually one resource I recommend checking. Most FA offices will no longer direct you to a specific private loan company as there was a scandal regarding kick backs a while ago. They may direct you to a long list of lenders (we use an aggregator called ELM) or tell you you are on your own for finding a private loan. I also recommend you have a chat with your DD regarding what repayment will look like, and if you are willing to help repay any loan, what that looks like. We have families that have their students take out loans, but help with repayment upon graduation, and on the flip side parents who turn all the debt over to their student. I try to steer families away from large loans.

Also, it doesn't hurt to appeal your current aid package at the art school. As students decline their admission offers, merit scholarships that were offered may open up, and the admission/fa offices will re-award them to students who enroll. I don't work at a school with merit aid anymore, but when I did we sort of had a waitlist for merit aid. Call the FA office, have a chat, I promise the advisors will be happy to chat, especially at the art school. State school, you might have a bit more trouble getting through to someone, but they should be able to connect you with an advisor.

Personally, I borrowed a total of 25k for ugrad and grad school. It was very reasonable to pay back and I did so within 8 years of graduating college and right after finishing grad school. EXh was alos paying back on about the same amount and when he had a job he made less than I did. My salary topped out at 40k during that time, it was tight and any more would have been tough.

[seriously1]

Thank you this is all helpful information.

If we were appeal for more money is that a conversation with FA along the lines of ‘she is very interested in attending the school but cannot afford the cost. Are there any other options for merit or scholarship aid?’

[plutosmoon]

Dec 30, 2022 14:00:16 GMT -5 seriously1 said:

Thank you this is all helpful information.

If we were appeal for more money is that a conversation with FA along the lines of ‘she is very interested in attending the school but cannot afford the cost. Are there any other options for merit or scholarship aid?’

Exactly, start with FA and tell them this. Sometimes the admission office handles merit awarding, but FA will direct you there if that's the case. My school has a form we have people fill out for an appeal, if there are any extenuating circumstances like your own student debt, medical expenses, elder care expenses anything not included in the original application we'd have you tell us about it through the appeal process, we have a committee that works through every single appeal submission. Every school I've worked in has a process to appeal, and it often results in a little bump, probably not a ton, but every little bit will help. The worst they can do is say no, so it doesn't hurt to ask. Also, make sure to confirm the grants and scholarships are renewable, most schools have improved in this regard, but there are still too many that front load aid to first years to get you to enroll and pull back in subsequent years.

[bee20]

seriously1 , You could also mention if one school is providing significantly more aid. When I attended the more expensive school I mentioned I was trading it off a full ride at a less prestigious school and they gave me an extra $2k/year. Not much but way easier to write a letter than to earn $8k.  The correspondence was a fax (I'm kind of old) to the financial aid department.  They mailed me the decision a few weeks later.

[aprilsails]

Definitely talk to the financial aid offices at each school. You will want to do your best to minimize the total loan amount, while also securing a quality education.

DH went through a “new media” program 17 years ago which was a partnership between a local college and the university. It covered programming, video game design, graphic art and animation, and marketing tools (webpage design, photo editing, etc). It was a very broad and intensive four year program that they were actually building as he went through since it was brand new. He got to do everything. He took math and engineering physics courses so he could develop 3D game engines. He took fine arts course like life drawings in paint and charcoal so he could develop the artistic side. He did all the computer programming and did business courses for marketing and concept development. He got both a four year college diploma and a bachelors degree at the end.

He has many friends from that program who went on to work for animation studios. The pay at the entry level is really bad. Like, actually horrific. They may be given a set of frames to work on (like say 3) and a week or so to do it. At the end of the week, they only get paid for the accepted frames, and the studio might not accept any of them. These are rough entry contracts.

That being said, my husband did all that and got a job initially at a video game design company (his goal). The pay was trash and after 7 years he got out. He’s never written a single line of code or drawn a thing in his career. He became a product manager and owner in the end for software development, but our area is a large tech hub so he has lots of opportunities.

[SusanBAnthony]

Unless you are willing and able to find most of the coat above and beyond the scholarships, I would try to put aside her passion and think about the reality of the job market and what her budget would look like.

If she is a top grad and gets the best entry level job, it still may be 40-60k a year in a city where rent is 2k a month for a shared apartment. If she has 3k a month take home she already can't afford any loan payment. Play with the potential math and see what shakes out. It might be a hard decision but a big student loan burden sucks and it will suck even more if she gets halfway through, have 100k in loans, and drops out due to either money or changing interests.

If this was my kid I would consider encouraging them to go to the state school for two years and considering transferring if she is still that passionate about it.

Now if you can afford to shoulder the cost it's entirely different. But most families can't.

[seriously1]

Jan 2, 2023 8:51:28 GMT -5 SusanBAnthony said:

Unless you are willing and able to find most of the coat above and beyond the scholarships, I would try to put aside her passion and think about the reality of the job market and what her budget would look like.

If she is a top grad and gets the best entry level job, it still may be 40-60k a year in a city where rent is 2k a month for a shared apartment. If she has 3k a month take home she already can't afford any loan payment. Play with the potential math and see what shakes out. It might be a hard decision but a big student loan burden sucks and it will suck even more if she gets halfway through, have 100k in loans, and drops out due to either money or changing interests.

If this was my kid I would consider encouraging them to go to the state school for two years and considering transferring if she is still that passionate about it.

Now if you can afford to shoulder the cost it's entirely different. But most families can't.

I hear you and I always told my dh that I did not want to pay for art school. I also said at the very least she should double major but her major is really best offered at an art specific school for the best opportunity to grow her skills. Why does it have to be so expensive! But she has been non stop drawing since she was three and it is who she is. I don’t see another way for her. She is an avid reader, good in school but it always comes back to drawing. She has taught herself photoshop and it’s all she wants to do. I’m willing to put off my retirement to support this. I’ve talked about getting a part time job in addition to my full time job. It’s hard to wrap my head around these amounts. We have a lot of equity in our house and I know a heloc is scary but I am very secure in my job. I guess I need to figure out the best loan options and put as much in her name as possible. I will reach out to the fa offices and hope for more support.

[formerlyak]

seriously1, I don't know what state you are in or how good your state school art program is, but if the art colleges she is looking at aren't offering her financial aid that would make it affordable, look into other art programs at schools with interstate tuition discounts or the like (I know in CA, it would be WUE). I would talk about limits to how much she should consider taking in loans. And I would not do a HELOC.

But I wouldn't say "I do not want to pay for art school." I was a theatre major. I attended the top undergrad theater program in my state at the state flagship university. My dh was also a theatre major, but at a very well-regarded private art school. Both of us, and our friends we graduated with are some of the most successful and financially stable people we know (we are in our late 40s). As my dad used to tell me, he wasn't thrilled in my choice of major, but he learned over the years watching my friends and me that unless you are doing like engineering or pre-med or something like that, it is more about the drive of the person than about the major.

[wanderingback]

Jan 2, 2023 18:43:24 GMT -5 formerlyak said:

seriously1, I don't know what state you are in or how good your state school art program is, but if the art colleges she is looking at aren't offering her financial aid that would make it affordable, look into other art programs at schools with interstate tuition discounts or the like (I know in CA, it would be WUE). I would talk about limits to how much she should consider taking in loans. And I would not do a HELOC.

But I wouldn't say "I do not want to pay for art school." I was a theatre major. I attended the top undergrad theater program in my state at the state flagship university. My dh was also a theatre major, but at a very well-regarded private art school. Both of us, and our friends we graduated with are some of the most successful and financially stable people we know (we are in our late 40s). As my dad used to tell me, he wasn't thrilled in my choice of major, but he learned over the years watching my friends and me that unless you are doing like engineering or pre-med or something like that, it is more about the drive of the person than about the major.

Yeah I was gonna say this. I think the cost of undergrad is insane regardless of the major, so I wouldn’t say I’m only paying for an education for X degree. My partner is a musician and often makes more money than me (doctor) and I have 2 other close family members that went to school for the arts and are doing well. Plus their careers have other advantages than being a boring doctor lol.

I agree with not doing a HELOC.
I would encourage the less expensive art school but I’d encourage that for any major!

It does suck being burdened by student loans, I’ve definitely had to make certain choices because of them, but at the same time I overall love my career and I had no other option to pay for school for my career, so I overall have no regrets.

[k3am]

Would she consider getting an AA at a junior college and then transfering to one of the other schools down the road? That's a huge cost savings.

[ellipses84]

The first thing you’ll want to do is fill out the FASFA application (now for fall). Then consider / apply for school specific aid (scholarships/ grants/ loan types) at your top few schools. If your household income is decent, you may not get much help and may need to take out a lot of parent loans.

I have a STEM / Arts related career and degree. I was the first person in my family to go directly to University from high school and we were pretty clueless. Luckily I ended up at a state school with an accredited program for my major. My state and the neighboring state only had one university each with an accredited program. I ended up going to the out of state option because they gave me a $4k/yr scholarship that made up the difference in tuition and I submitted my portfolio Sr year of high school to be accepted into the program I wanted to be in freshman year of college. My in state option required attending 1st year before applying to their program without a guarantee of getting in which would have cost me $$/ extra years. I already had some undergrad general Ed credits from a high school / community college program and I was able to graduate a year early at the out of state school by taking a couple of summer quarters.

I still ended up with $80k of loans, about $60k in my mom’s name and $20k in mine. I had low interest rates and always made the payments myself for all loans but my career doesn’t pay great so it was hard to pay more than minimums. After about 20 years, I’d paid the original loan amount and still owed the original loan amount, so I would have paid twice what I borrowed for like 30+ years… except my mom worked in public service for 10 years and for the $60k forgiven last year through PSLF. She had no college savings for her kids because she was a struggling single mom for many years, but I didn’t get much financial aid because she’d married my stepdad (dual incomes) and got her bachelors/ master degrees late in life while working before I (the youngest dependent) went to college. Even though they could have helped me, they said they would not because they could not do the same for my older siblings. I had work study jobs, summer and winter break jobs.

Particularly with anything arts related, I’d make sure the program is accredited and you know viable career options. A broader education program may be better than specific unless it’s a top program (not necessarily Ivy League, there are specific schools known for their arts related programs that will lead to good jobs. Some schools are pipelines for companies like Disney or Pixar and you can look at the companies linked in to see where employees went to school). It can be a tough, workaholic career [animation / film industry] so I always tell people only do it if they are really passionate about it and can’t fathom doing anything else. My sister eventually got a 2 year community college graphics design degree and she’s struggled in her career but I think she would have done better if she’d been able or willing to move to a big city or continue on to a 4 year degree. Personal art portfolios are important and they can be a variety of types of art but pare it down to the best work. I used to review a lot of intern resumes and portfolios, so let me know if you need help. There are portfolio websites they can post to.

[ellipses84]

I did a quick search for accredited animation schools and a long Google list of the best ones came up. SCAD, RISD and Pratt came to my mind prior to searching, but there are tons of great programs. I figure if you are looking at spending $$$ you may as well try for the best near the location you want. I’m pretty meh about private colleges unless they are highly rated for a specific program and/ or offer a ton of scholarship opportunities to make up the tuition difference from a state school.

Always ask what alternate paths for college > career are. I know a lot of people who did undergrad in something related or totally unrelated, then a masters in my major, which can look more prestigious on a job application, even though I had more years of focused undergrad. If this has been her dream for a long time, see what programs she can apply to and be guaranteed a spot in right away. A lot happens in on the job training. My program was very design focused which was a great basis, but my career has been much more management, leadership, process and paperwork (not much like school aside from collaborative teamwork). Not sure if there’s a major/ tech minor mix that may make her more marketable for a wider range of jobs.

[SusanBAnthony]

Anecdote time. My cousin was 100% set on film making. He got a full ride to the in state school, a big university with good solid programs in the liberal arts but nothing top of the line. His parents (my aunt and uncle) had literally no money to contribute to his education.

He didn't want to go to the state university, he wanted to go to the best film school. He started but couldn't get enough loans approved. He still has no degree 15 years later. Don't let perfect be the enemy of good.

Don't take out a HEL. If she is amazing and passionate about art, an art degree from a "normal" less expensive school will still teach her a ton and there will be future opportunities to transfer to another school or do a master's or whatever. And I will say that about any major, it isn't about art.

[dr.girlfriend]

seriously1 , I know nothing about art school or student loans, so here's the little bit that I can contribute: In my limited knowledge good artists can make quite a bit of money doing commissions, especially if they've developed a little bit of a following, and no one cares about their actual credentials, just their product and ability to work with a commission.

I've commissioned a bunch of stuff from artists on Tumblr -- an ink portrait and digital painting of my son, a ink pet portrait, etc. I even paid someone to draw little cartoon versions of me and my DH for our wedding Save the Date 20 years ago when it was a lot harder to find those things. I usually pay a few hundred for something like that, delivery is entirely digital, and it only costs the artist their time, which seems to be a pretty good rate per hour depending on the work, but it's a great deal for both of us because I am not artistic so it's like magic to me. :-) Anyway, something to think about that might supplement her income in a way she enjoys and might potentially pay more and be more flexible time-wise than the typical retail job, etc.

Here's my favorite so far -- a comic book artist who painted this portrait of my son:

[krystee]

Does she have a dream job, like Pixar or something? It might be kind of cool for her to write to a couple of animators she admires (via LinkedIn, maybe) and ask how they got their roles, how much they think their school made a difference, etc. I bet some would be willing to mentor someone with initiative and she’d have contacts for the future!

I am hopeful to divide college expenses in thirds: a third cash flowed or paid by the 529 by us, a third or as close to it as possible cash flowed by my kid (working PT during the year and FT in summers), and a third in loans if we need to (that we would probably split 50-50 with each kid).

For the next few months, have her do a TON of research on community and industry scholarships. I work for a professional association and our foundation and our chapters give out scholarships, and we often have more scholarships than applicants because it’s not always super widely known. If there are associations for her desired industry, take a look at those! My town and the local Jaycees offer scholarships too.

[hbomdiggity]

As others mentioned, reach out to the financial aid offices. You will need to fill out the FAFSA, which calculates the anticipated family contribution. This amount is probably going to be more than you may personally be comfortable contributing, but it is used to assess need, subsidized vs non subsidized, etc.

The big thing with the gov loans is the fixed rate, which has been high compared to market. That may be different given interest increases but this is the one thing I was hoping would get fixed with reform. My loan from first year law school (before the fix) is a quarter of my other loans.

My repayment periods varying from 10, 15, 20. Will depend on type of loan.

The smaller and/or private schools do tend to have better packages.