Clayton Christensen Institute co-founder: This equation reveals how much you should borrow for college

“If you’re in that realm, you’re going to have problems in the long-run.” It’s a smart way to avoid taking on more debt than graduates will be able to handle paying back in the future. But Michael Horn, economist and co-founder of the Clayton Christensen Institute, tells CNBC Make It that there’s a simple way students can predict roughly how much they can afford to borrow for college. “If you’re taking out $80,000 in debt to go to law school for example, and you’re going to a top law school, tha


“If you’re in that realm, you’re going to have problems in the long-run.” It’s a smart way to avoid taking on more debt than graduates will be able to handle paying back in the future. But Michael Horn, economist and co-founder of the Clayton Christensen Institute, tells CNBC Make It that there’s a simple way students can predict roughly how much they can afford to borrow for college. “If you’re taking out $80,000 in debt to go to law school for example, and you’re going to a top law school, tha
Clayton Christensen Institute co-founder: This equation reveals how much you should borrow for college Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-07-10  Authors: abigail hess
Keywords: news, cnbc, companies, taking, institute, work, equation, students, clayton, school, student, christensen, college, borrow, youre, going, cofounder, schools, reveals, debt


Clayton Christensen Institute co-founder: This equation reveals how much you should borrow for college

“You really want to be mindful that you’re not crossing that threshold of payments that are just going to crush your income because they’re taking up, say, 20, 30% of your monthly paycheck,” he says. “If you’re in that realm, you’re going to have problems in the long-run.”

It’s a smart way to avoid taking on more debt than graduates will be able to handle paying back in the future.

“As students look at the equation for how much they should borrow when they go to college, they ought to be thinking of the total debt that they take on as not being more than 10 to 15% of what their earnings are going to be when they leave college,” says Horn.

But Michael Horn, economist and co-founder of the Clayton Christensen Institute, tells CNBC Make It that there’s a simple way students can predict roughly how much they can afford to borrow for college.

The cost of attending college today is a daunting prospect. According to the College Board’s 2018 Trends in College Pricing Report , from 1988 to 2018, sticker prices tripled at public four-year schools and doubled at public two-year and private non-profit four-year schools, and many students use some kind of student loan to finance their degrees.

Students should think about what they want to study, research how much graduates at a given school in that major make, and not take on more than 10 to 15% of that amount in debt.

For example, according to PayScale, the average salary for an individual with a Bachelor of Engineering degree from New York University is about $91,296 per year. That means a student could plan to take on up to $13,694 (roughly 15% of their projected future salary) in loans to finance this degree.

However, the average salary for a worker with a Bachelor of Social Work degree from New York University is about $50,008 per year, so based on Horn’s recommendation, students should only take on about $7,501 in loans. Additionally, many social work opportunities require students to earn additional accreditation such as a master’s degree, and students should consider these costs as well.

Of course, this math is dependent on a student having a clear understanding of what they plan to pursue after college, something that can be challenging for many young people. Other factors students need to consider include a school’s reputation for graduating successful alumni, as well as its rate of on-time graduations.

“If you’re taking out $80,000 in debt to go to law school for example, and you’re going to a top law school, that’s probably a reasonable investment,” says Horn. “If you’re going to a bottom-third law school, a question you ought to be asking yourself is, ‘Is this worth it?’

“The most crippling debt is when you don’t complete. If [students] don’t complete, it can be crippling because they’re not going to have the wage bump from getting that college credential and so you’re going to be earning roughly as much as someone with a high school diploma is, but you have taken out $10,000 in debt.”

Horn emphasizes that debt totals have a significant impact on the financial lives of borrowers.

“Paying not just the debt back but also the interest on top of it, that can be really punishing to make the books work as you’re trying to think through raising a family, owning a home maybe in the future and other life decisions.”

Like this story? Subscribe to CNBC Make It on YouTube!

Don’t miss:


Company: cnbc, Activity: cnbc, Date: 2019-07-10  Authors: abigail hess
Keywords: news, cnbc, companies, taking, institute, work, equation, students, clayton, school, student, christensen, college, borrow, youre, going, cofounder, schools, reveals, debt


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Broadcom-Qualcomm deal in limbo after CFIUS letter

Broadcom is still optimistic a theoretical deal can get CFIUS approval in the next 28 days, in time for a Qualcomm shareholder vote, the people said. (The CFIUS told Qualcomm Sunday to delay its shareholder vote by 30 days; it had been scheduled for Tuesday.) That would make Broadcom a U.S. company before Qualcomm shareholders could vote on the deal. But the CFIUS letter and interim order probably make Broadcom’s redomiciling efforts moot, said Christensen. Then it would need to make a new offer


Broadcom is still optimistic a theoretical deal can get CFIUS approval in the next 28 days, in time for a Qualcomm shareholder vote, the people said. (The CFIUS told Qualcomm Sunday to delay its shareholder vote by 30 days; it had been scheduled for Tuesday.) That would make Broadcom a U.S. company before Qualcomm shareholders could vote on the deal. But the CFIUS letter and interim order probably make Broadcom’s redomiciling efforts moot, said Christensen. Then it would need to make a new offer
Broadcom-Qualcomm deal in limbo after CFIUS letter Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-03-06  Authors: alex sherman, mike blake
Keywords: news, cnbc, companies, regulators, christensen, cfius, broadcomqualcomm, company, qualcomm, deal, limbo, broadcom, shareholders, vote, letter, shareholder


Broadcom-Qualcomm deal in limbo after CFIUS letter

Broadcom is not expected to walk away from the deal this month, according to people familiar with the matter. Instead, it will attempt to answer any questions the government has about the deal in hopes it can assuage regulators about their concerns.

Broadcom is still optimistic a theoretical deal can get CFIUS approval in the next 28 days, in time for a Qualcomm shareholder vote, the people said. (The CFIUS told Qualcomm Sunday to delay its shareholder vote by 30 days; it had been scheduled for Tuesday.)

“We are fully cooperating with CFIUS, and are absolutely committed to making the combined company a global leader in critical 5G and other technologies,” Broadcom said in an e-mailed statement. “There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development to that end. Entrusting this effort to a failing Qualcomm management who lacks the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America’s long-term interests.”

Qualcomm declined to comment.

Broadcom’s lawyers have also been looking into speeding up efforts to “redomicile,” or move its legal business location, to Delaware before the Qualcomm investor vote, said two of the people. That would make Broadcom a U.S. company before Qualcomm shareholders could vote on the deal.

CFIUS reviews don’t apply to domestic transactions — when one U.S.-based company acquires another. Broadcom, currently based in Singapore, filed on Nov. 2 to redomicile.

But the CFIUS letter and interim order probably make Broadcom’s redomiciling efforts moot, said Christensen. The U.S. Treasury’s reason for involving CFIUS prior to redomiciling is specifically to get ahead of it, he said. The government would have to approve Broadcom’s change of headquarters.

Instead, Broadcom may have to shelve this deal and become a U.S. company. Then it would need to make a new offer to shareholders to potentially avoid CFIUS review, Christensen said.

“They could come in with a brand new offer, say ‘we’re not a foreign buyer,’ and go to war with CFIUS on it,” Christensen said.

There is a potential silver lining for Broadcom if it walks away from a deal. CFIUS’s pre-emptive move to rule on the deal would allow Broadcom to avoid paying an $8 billion break fee it promised to Qualcomm as a sweetener in case regulators blocked an accepted deal. Knowing CFIUS’s objections before agreeing to a deal may allow Broadcom to move on if it can’t reach an agreement with the government.


Company: cnbc, Activity: cnbc, Date: 2018-03-06  Authors: alex sherman, mike blake
Keywords: news, cnbc, companies, regulators, christensen, cfius, broadcomqualcomm, company, qualcomm, deal, limbo, broadcom, shareholders, vote, letter, shareholder


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post