Kyle
Should I worry about taking out a bank loan?
I'm worried about taking out a loan for college. I plan on majoring in computer engineering, but I'm worried about finding a job to pay off my loans.
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3 answers
Jon Lee
Jon’s Answer
You'll likely need to think about it from the cost/benefit perspective. And you should spend a fair amount of time calculating these costs and benefits now, because this decision could stick with you for 20+ years.
Ask yourself:
How much will the loan principal be for 4 years of school? 5 years? The interest rate? Use a loan calculator to figure out your monthly payment for 4 years of loans (expect your loans to be slightly higher than the first year, as expenses grow).
What is the expected starting salary of a hardware/software engineer (after taxes)? How much does the average (for your level. If you're going to Stanford, it's different from St. Olaf) engineer make after 5 years? 10 years?
What happens if you don't like engineering after 2 years of school and you switch to a different major, and that increases or decreases your expected salary? Now you may be in school for 5 years or more. How does that change the equation?
Will all of your loans be government loans, or will they be private loans? How does that affect the equation?
In short, getting loans is never simple, especially student loans. Once you have student loans, you will not be able to get rid of them by filing for bankruptcy, or any other method; they are yours until you pay them off.
That said, think about ways you can reduce your loans after graduation. Peace Corps service, working for non-profits, etc, can reduce your loan principal.
Vikas Arora, PMP,CSM, ITIL
Vikas’s Answer
That is a natural instinct to be worried about taking a loan. However based on your parent's financial situation if you qualify for a subsidized loan it is worth every bit because the interest on that does not start accumulating until 6 months after graduation. So it is almost interest free for 41/2 years. Also the demamd for computer engineering / software is high . If you have good grades students come out making good money which you can use to pay your loans off. So look at that as an investment for yourself and you will do Great
Jay Odedra
Jay’s Answer
From what I can gather there is huge demand for computer engineers right now, but I'd be looking to get some specific data for the course/school your applying to around what the expected income and time to find employment are after graduation. That should help to understand whether you'll be able to pay off the loan afterwards.
It's also important to think long-term as the benefit may not be immediate but over the course of your career there are normally substantial benefits.