% how to choose my major
% what to consider,
% expected earnings.

% buying a house, get married
% average age which you buy the house
% cost of living.

% make a tool that shows what majors to consider/not consider...


%Title:	How to choose your major.
%Author:	Beracah Yankama
%AuthorTitle: Director, StudentsReview


I was recently in the Student Union at Boston University chatting with a couple of students about their majors and the school.  Most BU students seem to be nice, but these two were a bit snobby.  Bad seeds, I guess.  During the conversation, they mentioned that they were majoring "Nutrition".  I raised my eyebrow at the time, but didn't think too much about it.


It wasn't until later that I realized what had struck me:  Boston University is one of the most expensive schools in the 
country. If you factor in room and board, it rings to the tune of $42,000 per year (2005/2006), or $170,000 
total!  Boston is also an expensive city to live in, and many students take out substantially more in loans just to 
cover normal, nonacademic expenses.  Therefore, we can assume the total bill for four years to be in excess of 
$200,000.  Even if one pays cash, keep in mind that the cash growth rate is similar to the loan money if placed 
in an appropriate security.  A person taking out a loan owes a similar amount of money to the cash growth that's 
been lost over time.


Now college students tend to be optimistic, which is a good thing, but occassionally there needs to be a dose of reality (aka 'life').


REALITY: Nutrionists earn somewhere between $35 and $53K per year.  Superficially, a student might think, "well, it will only take me 4 years to pay back that $200K loan as a nutritionist/dietitian".  Unfortunately, there's a few things he or she might be forgetting:  Number 1 is {\em taxes }, which will walk away with about 25% of our nutritionists' salaries almost right off the top.  The other things generally unaccounted for are:

2. Living Costs (Food, housing, insurance, automotive).
3. Interest on the loan, in addition to the loan itself.
4. Job market and availability of employment.


Let's continue to use our Nutritionists by assuming that our two friends have no problem finding a job, and immediately 
land an average salary of $39,000.  Let's also suppose that they suddenly learn how to be frugal and keep costs down.  In 
Boston, their favorite city, they choose modest housing and utility expenses, which account for $1000 per month, or 
$12,000 per year (Boston housing can range anywhere from $1000-$3000/mo).  After Federal taxes for their tax bracket, our 
two nutritionists are left with only about $20K per year of profit.  "Yay!" they exclaim to each other, "We can pay off 
our $200,000 student loans in only 10 years!"  Then they go out for dinner and subtract an extra $3K from their salary 
for food and other expenses. Suppose they devote all 17K each year to paying off the loan -- with interest (about 6.8%) 
it will take almost *25 YEARS* to pay off the loan.  The amount that the two nutritionists owe grows every year that 
it is not paid off, so that in 25 years, they pay almost $200,000 EXTRA just in interest.  

Lets be practical.  Nobody devotes 100% of their income and lives like a pauper to pay off a loan unless they owe it 
to the mafia or a loan shark.  When in possession of an extra $20K, most people find ways to spend it 
on marriage, a house, or other luxuries.


%  [! All told, the US Dept of Labor estimates that nutritionists and dietitians only earn between 31-46,000 per year! ]

% Counting interest rates, mutual funds, the actual cash paid for the BU education will total around 340,000.  After cost of living and taxes, it will take nearly 18 years of very conservative living for a nutritionist to break even with his or her BU education.
% link to explanation of the costs and breakdown.

% After college, people generally want to get married, support their parents, have kids, buy a house, etc.  Those are all enormous costs that interfere with loan repayment, and eventually the loan debt is passed on to your children.


If you plan to major in Nutrition or some other mostly low-salary field, it may be reasonable to attend a small college or state school with a total cost of $40,000 (or if you have substantial scholarships), but certainly not one that costs $200,000.  You do not want the growth on the interest to exceed your salary.


It cannot possibly be stressed enough how important it is to choose a major with an aggregate earning power higher than the cost of tuition.  If you pay more for school than you can possibly earn, you are wasting money on some "play time" and you are saddling yourself and your family with a debt that will last for the rest of your lives.


% And even if you pay cash, consider that in the same 25 years, your $200,000 would grow to almost $700,000 in an index (assuming an average 5% annual return). 

% So loving the major aside, 


% It is better that you take a normal job with no college and walk away with $700K in cash than 


% It may seem that the Nutrionists in the example above will earn an amount close to tuition, so lets continue the example.


% After graduation, as many as X% of people have trouble finding jobs, but lets assume that our two friends have no problem, and immediately land a salary of [! $39,000].  As soon as people graduate, they are saddled with the business of living, and its associated costs.  Lets also suppose that our two nutritionists suddenly learn how to be frugal and keep costs down.  In Boston, their favorite city, they choose modest housing and utility expenses, which account for $1000 per month, or $12,000 per year (boston housing can range anywhere from $1000-$3000/mo).  After federal taxes, which will be about 25% for their tax bracket, our two nutritionists are left with only $20,000 per year of profit.


% So you think in only 9 years our nutrionists will have paid off school?  Think again.  They are going to need a car.  Eventually they will want to buy a house.  We haven't even touched on interest on the loan.  With a 6% interest rate, our two friends will end up paying a total of 


% Suppose they didn't have to take a loan -- daddy paid cash.  They don't have anything to repay.  That's fine, but given mutual fund interest rate of 5%, the value of our BU tuition isn't $170,000, but $340,000 -- which is what the tuition would have grown to during the time of college.

% make an application to show the costs, deferrment, earnings, and estimate how long it takes to pay back.


% !  How can one possibly spend that much on a major that can never earn it back!??


% investment device (different topic)
% Education is an investment.