I'm paying HOW MUCH!?

School is expensive, dude. I wanted to stay on top of my graduate school loans, so I figured out how much I'll actually be paying in interest each year and I got sticker shock. I still have $27,300 in principal outstanding from Brandeis, down from about $40,000. The loans are much more expensive this time around. The lowest interest rate that the government offers on graduate loans is 6.8%. Some of the loans that I have are subsidized Stafford loans, which means they won't accumulate interest while I'm in school. Some are unsubsidized, which do accumulate interest, but the rate is the same on both. I'll take the money that I get from work and pay off my unsubsidized loans first. All of my undergraduate loans have been automatically deferred, so I freed up $320 a month in cash flow. I sent an email to BC asking if it's possible to pay down the principal on my graduate loans now. I'm still waiting for a response. Even with the extra debt, according to my math, this degree has a positive NPV. Using US census data, I found that the average American in my age bracket (28-34) with a graduate degree, makes $10,000 more a year than someone with just a Bachelor's. So, I took the $20,000 cost (plus interest on the loan) and then discounted $10,000 a year back to the present (up until 2047, when I turn 65) using the 30-year Treasury yield. The present value of the degree would be $150,000 and this number includes my tax benefits (the federal government gives you 20% of your money back up to $2,000 under the lifetime learning credit). Anything with a positive NPV is a good investment, so I made the right decision.

The damage:

Phew?

I heard back from MIT on Monday and the news wasn't good. Well, actually, the news was good, but I didn't get in. D and I have been debating what we would do if I got in, and I think we're just relieved that all decisions have been made for us. I started a part-time MSF program at Boston College on January 18th. I've already bought my books, I'm four weeks into the program, I've met the professors, and I didn't want to leave and start over at MIT. Going to BC also allows me to keep working, which I prefer. Plus, the cost is a significant consideration. If I keep going to BC, my employer pays $10,000 a year toward the cost. At the end of two years, I'll have an extra $20,000 in debt, all of it in federal Stafford loans at 6.8%. I also keep making my salary and plod along on my vesting schedule (I've worked for two years, so I'm only at 40% -- 5 years gets you to 100%). If I went to MIT, the cost would be $100,000 for a year (all living expenses included) and I would have to quit working. I'm not sure that the difference in salary out of MIT over BC would compensate me for the extra cost of the program. At least, not if I don't want to work 100 hour weeks. Which I don't. I think for what I want to do with my career, the BC degree will be fine. But, naturally, going to MIT would have had its own perks. Primarily, that it's MIT. I would been able to get lunch every day with D, which would have been nice. There was definitely a lot of back on forth on our end, which is why we were both relieved when I didn't get in.