Is a Better School Worth the Extra Cost?

Is a Better School Worth the Extra Cost? – Money Mailbox

May 27th, 2010 | by Allison Thompson |

How do you know whether more student loans are the way to go?
Jennifer wants to know…

I’ve been enjoying reading your blog for quite some time now. I have an issue I was hoping you could provide input with, from a financial perspective.

I am trying to get a 2nd B.S. degree in engineering, and debating between a UC and a Cal State. Obviously UC’s cost more, so that’s where the financial issues come into play. Do you believe taking out an extra $20-25K in loans (on top of the already existing $10K from 1st B.S. degree) is a smart move? I am in my mid twenties, and am married with a husband going back to grad school at the same time, but his employer will pay for his tuition.

[Aside: UC and Cal State schools are in California, and UC colleges are thought of as more reputable and harder to get into as a result]

I have a Roth IRA and have been reading pros and cons about taking out the money for education uses. Do you have any perspective about that?

I guess I’m mostly worried about digging a financial hole for my husband and myself that I will end up regretting, but I hear it’s wise to invest in education so do not know which thought should prevail. My goals for education is to eventually pursue graduate school after the 2nd. B.S.

My education was one of the most wonderful experience of my life, even despite the fact that I run a business that has little to do with my actual degree. Couple with the fact that $25k is easily recoverable under the right circumstances, and my initial reaction is to encourage you to go to the better school. However, there’s a major caveat, which you need to completely understand… Is the more expensive school that has a better reputation actually better for your education and situation?

Know the Real Difference

There are several factors that benefit a career other than luck. Since you aren’t a teenager and instead going through this process the second time, it’s even more important for you to research thoroughly. Here are a few factors that you should consider.

Passion – Does going to the UC actually increases your passion for your eventual line of work? Or better yet, does it help you find your specific major more easily? The right professor can help you far more in this area so sometimes, the Cal State University may be an even better choice.
Reputation of Your School in the Subject Matter – In general, a UC looks better on a resume. Don’t get me wrong. There are many Cal state students who are much better job candidate than UC students, but I’ve seen too many cases where a job candidate was picked based on what’s on paper. Perception matters.
Networking Opportunities – Your life is shaped by the people you know and hang around with. A big portion is based on the luck of the draw, but the more reputable schools usually have students with better connections. Just like in the corporate world, networking is key to success. Can you meet more people and give yourself a better chance of finding your first job in your career? Or do you always stay in your room?

Location Specific Issues

You didn’t mention whether those two schools were in the same vicinity. Even if they were, I assume the commute would be different for you. Have you thought about that? How about cost of living? Have you checked out how much a bag of ramen costs at the two cities?

Obviously, being able to live with your husband will save you a bundle, and work wonders for your marriage too. Is there any reason why one school would be better for you other than economical reasons? You can be much more productive, both in terms of schooling and meeting new people, when you are happy. Never forget that balance is important, so a UC in the middle of nowhere may not be the right choice if that will make you miserable.

Teaching Assistant

One of the few ways to supplement your income is to work as a teaching assistant. Since you are an adult now, I would talk to the professors and see if there are any opportunities. As long as you are genuinely asking for help, good things can always happens.

Roth IRA or Student Loans

Student loans can be paid off at any time with money in your Roth IRA account. Since your contributions can be withdrawn at any time, it’s much better to try getting a student loan first. Even if your situation changes and you find that it’s better to pay it off, having a student loan gives you that much more flexibility. Therefore, I would take out a student loan just on this basis alone, just to keep your options open.

Other Factors, and Perhaps the Most Important

But going back to the choice of schools, you mentioned that this is your second bachelor degree, so what happened to your first one? You also plan to continue going into graduate studies after this. Will you be back to square one in four years when you think of your third degree?

I’m sure you had good reasons to want a totally different career path, but just remember that the grass is always greener on the other side. You already show (through contacting me) that you are at least a somewhat practical person, so I won’t beat on this too much. You know what I am trying to get at, so think this through.

$25k is easily recoverable, but there comes a point when even $1 more is too much. How much debt do you have other than the $10k in student loans you mentioned? You don’t want to be 40 with a few hundred thousand dollars worth of debt, a bunch of degrees with no job. That’s worst than starting over!

So what’s my bottom line advice? Go to the better school even with the higher cost because you are going to make it worth it. If you don’t put in the necessary hard work to make it work, even the degree itself may not be worth the effort, cost or time.

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