Article on College Debt- so true it makes me cry

[babiesX2]

Dh and I looked at the money we spent on our university educations as investing in ourselves. We worked and raised DD13 and didn't take out student loans. We had already bought a house before we started to college. I took classes with plenty of people with more time on their hands than we had, but they were taking out student loans instead of getting part time jobs or even full time jobs (like Dh and I had). We put a few quarters of my tuition on zero interest CC's, but that was paid off within 4 months of me graduating. We rented our books and that saved bunches of money. I guess where there's a will, there's a way. I don't feel sorry for anyone who graduates with student loan debt. They have an education which is more than they had before. If you can't get a job then you should have picked a better major. Nursing wasn't necessarily my first choice, but I knew we'd get the best return on our investment. I love my job, and I'm glad I picked that as my major! Dh got his degree to gain extra job security. The navy trained him for his present job, and he couldn't make more money working in his degree field, but he did get a raise with his present job just for having a degree now.

 

[azgal81]

I have student loan debt about 15k I pay 140 consolidated at a low set interest rate. It's not hurting me at all I have a decent paying job and am still able to save over half of my income.

I don't think you should let your student loan debt control your life. College should help you get a decent job you shouldn't graduate from college with debt and be stuck in a dead end minimum wage job. I think thats what happens to too many college graduates and then they can't afford to pay off the debt.

My debt is not stressful at all. I could pay more if I really wanted to but I'm gaining more investing then I'm paying in interest each month so why bother.

 

[Spoodleink]

I think another reason the article is skewed is that theese people are just out of school I was lucky that my parents were able to pay for me to go to school so I graduated with no debt. DFI graduated with about 10K of debt. When we first started working I was totally bitter about the $165 coming out of our account for his SL But now 3 years later we are making about 40% more than we started at. We are now paying $300 a month and I dont bat an eye at it. We live in Metro DC too and can't buy a house b/c they are very very expensive not b/c of any SL debt.

I think people need to think about what they are going to do with a degree not just getting one. Our degrees are in BSNS and Computer Sci. we both knew we would be able to get well paying jobs with our majors. Also alot of people i went to school with went right to grad school paying for it themselve both DFI and I work for companies that are paying for grad school for me and continuing ed for him so we get it for free.

I also know people who complain about thier SL but that doesn't stop them from getting starbucks every morning and eating out for lunch everyday Our goal has always been to get the SL loans paid down as soon as possible.

 

[grlpwrd]

Robin, very true and very cute that you posted that. I acknowledge, you are exactly right, it is a touch surprising.
www.johnanddana.weddingwindow.com
You can read all about it.

Oh my, how wonderful!

I would never have thought you have an "inner princess" and I mean that in a most sincere way. Congratulations!

 

[mickeyfan2]

If a $200/month payment is keeping you from saving any money with a college degree than you either got a degree in a low paying field (and should have found a low cost way to get that degree), you are living in a too high cost of living area and need to move to one where your degree allows a decent standard of living or need to reevaluate your budget to see where you are overspending. I had a $87/month payment when I graduated in 1983. I paid it off a few years later. I made it a priority. Taking account inflation it would seem that $87/month 23 years ago adjusted for inflation is atleast $200/month.

 

[mickeyfan2]

What I don't get is why student debt would stop anyone from marrying. The only thing I can think of is that they want money for a more lavish wedding, which I think is a choice, not a pitiable condition.

I can understand putting off kids, but why marriage?

I agree. DH and I got married out of college. I needed an apartment, since I moved away from home, so how was having him live with me going to kill my budget? He still needed a place to live, food to eat and transportation.

 

[MrsPete]

It is a choice the student and usually the parent makes.

One of my hang-ups about student loans, however, is that the student doesn't really have the financial savvy to make this decision. How does an 18-year old just out of high school make an informed decision about payments on something for the next 30 years? He's barely old enough to legally take on debt, and he's allowed to borrow against essentially his entire working career? I hope parents are heavily involved in these decisions.

State schools are no bargain, as a poster mentioned above. Rutgers is very expensive. A student can get much more aid and fewer loans attending a private University. Private schools have the endowments to offer more grants to more students . . .

State schools in my area are a great bargain. An in-state student can attend an excellent school for 10-12K per year (that's tuition and fees, a dorm room, and a meal plan -- all the basics). Our 16 state universities are also much better quality than some of the mediocre private schools in the area (not knocking all private schools, but I'd be downright disappointed if my daughters chose some of them).

Private schools offer just enough "extra aid" to keep the "it's just as cheap myth" going, but every student at every school isn't going to find this a reality; furthermore, many private schools offer heavy financial incentives for the freshman year only, which leaves the student with a difficult decision when he reaches his sophomore year: stay at the school where he's already comfortable, or seek out a new school and possibly lose credits.

I really don't think student loan debt is the end of the world. A student who is a savvy consumer and a good shopper can get a decent education for a manageable price.

But that's the point: The average just-out-of-high-school kid doesn't have the financial skills to make these decisions. Actually, many adults don't have them either. If they did, the average American would have a large 401K and a small collection of credit cards -- we know that the opposite is true. I think our society has a very unhealthy attitude towards debt, and we're starting our best and brightest on a difficult road when we accept that student loans are "inevitable".

I don't know anyone my age who bought a house within 5 years of college graduation -it just wasn't an expectation . . . I think it's unrealistic to expect to be able to "live the american dream" complete with new homes and nice vacations as a young person straight out of school. Those are things to work toward, not have handed to you on a platter.

I bought a house two years out of college, and I was 100% debt-free at age 38.

I think there's a fine line here between reasonable and excessive expectations. I do think a person who's been out of college a few years should be able to -- with careful spending -- buy a small house. People who can't are usually over-burdened with student debt, or they are unwilling to accept the idea that they need to buy a starter-house first.

. . .I could see delaying marriage a year in order to raise the money for that one fantasy event, if that's what it came down to. Luckily for us it hasn't, but I stand ready to defend anyone who's delaying marriage in order to construct a certain kind of event.

It's a matter of priorities. You really want the big wedding, and you're saving for it. I'm sure you realize that it's probably at the expense of starting your retirement savings, and it may delay a first house for a bit. If that's your choice, fine. We all have limited resources, and we should spend those resources on the things that matter to us most, but college students should realize that by taking out student loans they're using up future resources before they're earned: those loans will take away from their ability to have the big wedding, to buy the first house, to go on vacations -- they're taking away future choices.

There are some majors (like CS) where the BS is good enough to get a nice job. Then there are other majors (like anthopolgy or history) that a graduate is kidding themselves if they think they will find work with just a BS.

This is a problem closely related to student debt. High school counselors and colleges, while they don't actually say these words, tend to present all majors as good options. They imply that just getting a degree -- in any field -- will lead to careers and big paychecks. Because we've become so "all choices are equal, follow your dreams" in America, college students are not really aware that a BA in anthropology or philosophy leads to a wait staff job. A college graduate with a 4-year history degree and a graduate with a 4-year accounting degree do not have equal financial potential (though our college system would've allowed them both to take on equal debt). It's a parent's job to help their children make good choices. If one of my children someday wants to earn a 4-year degree in theater, I'll encourage her to major in something that's more likely to provide stability and income and take a minor or second-major in theater. I started saving for my daughters' educations prior to their conceptions, and I want to see them earn degrees that will lead to profitable careers.

I took classes with plenty of people with more time on their hands than we had, but they were taking out student loans instead of getting part time jobs or even full time jobs (like Dh and I had). We put a few quarters of my tuition on zero interest CC's, but that was paid off within 4 months of me graduating. We rented our books and that saved bunches of money. I guess where there's a will, there's a way.

I agree: students have many choices other than student loans: part-time jobs, summer jobs, co-op positions, military service, jobs for the university that provide free tuition -- the list could go on and on, but there's something available to everyone. Wish I'd had the option of renting books!

 

[DVCLiz]

I do wish this aspect of college admission could be addressed by high school counselors. It would be so practical to have a workshop on student debt vs. future earnings, impact of student loans on other parts of your financial life, real-life examples of how graduates at different colleges managed that debt, etc. We had loads of information from our college-advising department, but it would have been helpful to see this issue addressed as well.

 

[mking624]

Just to add a little something, yes there are options out there for extra money...part time jobs, etc. However, just because someone takes out a student loan doesn't all of a sudden mean that the student isn't doing anything on the side. My husband worked his butt off while he was in college (and still now that he's in seminary), but he still needed to take out his loan. I think we need to be very careful and not assume that a student doesn't have his or her priorities straight or doesn't know what he or she is doing just because they took out a student loan. Let's not judge anyone here on the basis of a loan when we don't know all the circumstances. Not taking out a loan doesn't make someone a better person. It means they didn't take out a loan.

 

[NMW]

First of all State schools are NOT, NOT a good deal in all areas of the country, especially the north-east (NJ, NY, CT, PA). Private colleges give out much more money in many cases, and state schools give little IF anything. I have friends who got 3/4 of the money at private colleges and they were not even "exceptional" students (top of their class, super high SAT's).

I don't know where you live MRSPETE but, you are lucky. I graduated in 1994 and my state schools cost more than $10-$12 K BACK then! I'm the opposite of you. If my kids get money from private colleges and want me to pay cash for them to go to state schools, I'd be bummed. We live near excellent private colleges though.

Also, having student loan debt is not the most terrible thing in the world. My brother graduated from a private college and private law school owing over $500,000. My sister-in-law had college and medical school loans that were very high also. But they make quite a bit in their fields. I know that they payed off their loans in about 6 years. Now they live in a gigantic house, have expensive cars and vacation in the Figi islands. Would you think that borrowing that money for college and grad school was a mistake on their part? I bet they wouldn't!

By the way robinb, my brother's major WAS anthropology. You can major in a lot of things and still go to law school!

I only had a bout 15,000 in student loan debt when I got married. DH had none-his parents paid cash for his education (because they comfortably could). If DH didin't want to marry me becasue of my debt, guess what? I wouldn't of wanted to marry him! I took the 5 year payment plan and we payed it off before that, but he certainly didn't resent me for it.

I don't feel sorry for people with student loans. They have something they didn't have before, an education. I don't think you can get very far in this world with out one.

 

[MyGoofy26]

I may be speaking too early, but I don't see my loans as a burden like so many in these types of articles do. Sure a part of them were a waste (I was burnt out, trying to figure out what I wanted to do but mom wouldn't let me leave school so I wasted a couple years and had to basically start over once I figured out the path I wanted to take - ok THAT I'm a little bitter about, LOL) but I'd have never made it through without them. I tried a number of semesters paying cash, but when my accounts dried up it was a HUGE relief to be able to get money so I didn't have to stop for another year and save.

I locked in my loans pretty low - can't remember exact, under 3.5%. 3.3 maybe? My payments will be $187 a month for 15 years. Certainly manageable. My biggest "worry" right now is do I take extra money from the pay and save it? Or pay off early? I'd love to knock those loans out quicker, but with even just a savings account like my ING I can get more in interest than I'm paying in interest. So I'm trying to figure out which is better - peace of mind of not having loans that long. . . or the extra couple percent in interest I could pocket.

I've also taken cost of living into consideration. If all goes well, I'll be starting a job in about a month (I think it's mine but waiting on official word) in Pittsburgh. MUCH better cost of living than DC, NYC, etc. I'd even have the option of commuting from home for awhile . . . although sadly with gas prices, it probably won't cost much more to get an apartment, LOL!!

 

[mickeyluv'r]

The national figures don't lie - those who are not in the top tier are getting squeezed. That new figure on the national debt, was not so much due to the miniscule tax break that ordinary people got ( the politicians are LYING!!!!), but rather that CEO and corporate pay increased faster than was predicted (WS Journal - very much NOT a liberal publication).

This includes your average college grad. Who isn't going to make as much as he thinks he is.
Most kids I've worked with were under the false impression that a high priced education was worth more than a public school one, when for most people that just isn't true. Many educators are just as delusioned. They have been told to turn their noses up to community colleges, when it's really a great deal.
Nobody goes to college assuming they won't last four years, but this happens quite often. At a community college, if you can last 2 years, you come away with an associate's degree - which is worth more than 'two years' in a four year program. Yet few advisors understand this.

Sure, if you qualify for a better deal with scholoarships at a private school, than yeah, go for it. That isn't the case for many kids.

I think most of us think we're going to be able to do the same thing our parents did, and have the same sort of lifestyle, but that's not the reality that's developing. The middle class is getting squeezed, while our politicians do little about it. Instead they distract us with petty side issues.

 

[jeankeri]

The best advice I got as a high school senior was from my English teacher. He basically said, for some careers you need a high cost education to be competitive in that field, for others you don't. Being a teacher, he saw no reason to go to a tony undergrad college, it just wasn't necessary. Same thing for nursing. When my boys are ready for college, we will look at good state colleges if they are undecided senior year. Only if they are determined and sure of their direction would I even consider the higher priced private colleges.

 

[robinb]

Also, having student loan debt is not the most terrible thing in the world. My brother graduated from a private college and private law school owing over $500,000. My sister-in-law had college and medical school loans that were very high also. But they make quite a bit in their fields. I know that they payed off their loans in about 6 years. Now they live in a gigantic house, have expensive cars and vacation in the Figi islands. Would you think that borrowing that money for college and grad school was a mistake on their part? I bet they wouldn't!

By the way robinb, my brother's major WAS anthropology. You can major in a lot of things and still go to law school!

Yes, but your brother didn't stop at a BA. He went onto law school which in turn enabled him to get a well paying job as a lawyer.

 

[mking624]

Yes, but your brother didn't stop at a BA. He went onto law school which in turn enabled him to get a well paying job as a lawyer.

I agree with you. There are certain areas of study that are useless unless you plan on continuing your education. My DH was a history major in college and planned on going to go to grad school to get his Masters (and eventually a PhD) to become a medieval history professor. A BA in history alone would have gotten him no where...unless he went back to school to become certified in teaching (to do high school or grade school, something he wasn't interested in). He's in seminary now doing a Masters of Divinity. Anyway, all that to say you're right...some degrees do need further education to do something with.

 

[dvcgirl]

Also, having student loan debt is not the most terrible thing in the world. My brother graduated from a private college and private law school owing over $500,000. My sister-in-law had college and medical school loans that were very high also. But they make quite a bit in their fields. I know that they payed off their loans in about 6 years. Now they live in a gigantic house, have expensive cars and vacation in the Figi islands. Would you think that borrowing that money for college and grad school was a mistake on their part? I bet they wouldn't!

I don't feel sorry for people with student loans. They have something they didn't have before, an education. I don't think you can get very far in this world with out one.

500K in student loans....for *one* person? Wow, that's the most I ever heard. Typically, lawyers and physicians really don't make the kind of money it takes to pay off huge loans like that during their first years in practice. In fact, many take years to pay down loans that are slightly over 100K. Funding a lifestyle that includes gigantic houses, expensive cars and luxury vacations can also be a huge financial drain.

Remember, because one lives in a such a house doesn't necessarily mean that they can truly afford it . And even if they can afford the lifestyle, the majority of physicians and lawyers never accumulate serious wealth because they often feel pressure from society to "live up to a certain image". I'm not saying that this is your brother at all, just speaking of lawyers and docs in general.

Have you ever read The Millionare Next Door....an older book, out ten years by now I think, but a great read. In their research the authors found that of the millionaires in this country at the time...1996 I believe, only 8% of all millionaires held degrees in law and 6% in medicine. In other words, the authors found that while most docs and lawyers typically earn very large incomes throughout their lifetime relative to the majority of the population....guess what? They also spent a whole heck of a lot of it.

 

[MrsPete]

First of all State schools are NOT, NOT a good deal in all areas of the country, especially the north-east (NJ, NY, CT, PA). Private colleges give out much more money in many cases, and state schools give little IF anything. I have friends who got 3/4 of the money at private colleges and they were not even "exceptional" students (top of their class, super high SAT's).

Yep, when I was in college people from those areas came to our state schools IN DROVES because our state universities were better quality and lower cost than their in-state schools. I'd estimate that 10-20% of the people in my dorm were from up North.

I don't know where you live MRSPETE but, you are lucky. I graduated in 1994 and my state schools cost more than $10-$12 K BACK then! I'm the opposite of you. If my kids get money from private colleges and want me to pay cash for them to go to state schools, I'd be bummed. We live near excellent private colleges though.

I graduated in 1988. At that point you could be a full-time student here for 5-7K per year.

Don't get me wrong: We have SOME excellent private colleges here, but most of them are just average -- and a few are places for kids with money who didn't work hard in high school. On the other hand, 1/3 of our state universities are absolutely top-notch -- you'd only do better if you went to one of the Ivy League schools. The other 2/3 are very, very good. None of them are "loser schools"; whereas some of our private schools would fit that category.

 

[MrsPete]

This includes your average college grad. Who isn't going to make as much as he thinks he is.
Most kids I've worked with were under the false impression that a high priced education was worth more than a public school one, when for most people that just isn't true. Many educators are just as delusioned. They have been told to turn their noses up to community colleges, when it's really a great deal.
Nobody goes to college assuming they won't last four years, but this happens quite often. At a community college, if you can last 2 years, you come away with an associate's degree - which is worth more than 'two years' in a four year program. Yet few advisors understand this.

I think this is true. Most college grads don't make as much in those first few years as they expect -- and they discover that expenses are higher than they expected too.

I also think community college is a great option. I think guidance counselors know that it's a good fit for many students, but students and parents often won't consider it. Parents see it as evidence that their child is "lesser" than others if they go to community college, so they push the kid into a 4-year program, then when he doesn't make it, he won't go to community college, though he probably could've been successful there. Why do you take a kid who just tolerates high school, who hates to read, and push him into a 4-year college? He's not going to make it! Put him in a community college or trade school and let him learn something that interests him!

My husband went to community college first. He admits that he wasn't much interested in gaining an eduation while he was in high school, and he barely scraped by. After driving a forklift for two years, he decided an education sounded pretty good, and he was serious about college. He earned a 2-year degree, then transferred to a university. It was the right path for him.

Sure, if you qualify for a better deal with scholoarships at a private school, than yeah, go for it. That isn't the case for many kids.

If that path is opened for you, great. Take advantage of it. But around here, few people get that type of offer, and the private school isn't a superior education.

 

[sara74]

Is this deja-vu or what? I seem to remember a remarkably similar thread a fwe months ago....

My personal experience with student loans and financial aid was that I applied to a variety of schools - state and private ones - in my senior year of high school. In fact, a requirement of my senior English class was to complete the application for the state university system whether you were actually planning on mailing it in or not. What I found was that my out of pocket expenses for undergrad were remarkably similar (less than $1000 difference a year!) between the schools that I was accepted to and received the financial aid materials from. Financial aid, in my case, from all of these schools was a combination of work-study programs, student loans and 'family contributions'. And the formula used to calculate that magic figure is the same one used by every school. I went to the expensive private school because they covered the difference in price with grant money. Grant money does not have to be repaid.

So for many, the out of pocket costs are the same no matter where they go to school. It is based on family finances, the number of children in the family and what their ages are. The students who get the real squeeze are ones whose parents have a 'good' income but didn't save for the kids to go to school. For me, with relatively poor parents, I qualified for a lot of aid money.

Now I am 6 years out of dental school. I pay just under $300 a month for my loans, they are at less than 3% interest and are spread out over the next 25 years. Yep, 25 years! But I make more interest on my bank account than I pay on the loans so I have no incentive to pay them off early. And as far as delaying anything. Not for us. House, kids, marriage. I just am thankful that DH was not so shortsighted to not want to marry me because I had student loans. That's a pretty narrow viewpoint since those loans enabled me to have a career that I bought our house, and I put him through his residency when he was making nothing (dental residencies don't even pay what medical ones do!)

 

[JudicialTyranny]

I think most of us think we're going to be able to do the same thing our parents did, and have the same sort of lifestyle, but that's not the reality that's developing. The middle class is getting squeezed, while our politicians do little about it. Instead they distract us with petty side issues.

So what's your solution? Let me guess - tax the "rich" more and distribute it. Many people you would consider "rich" are the people that start and own the businesses that would employ your children.

Putting your hopes and dreams of your prosperity in politicians is a losing strategy.

What I wonder is why more people don't question what these colleges and universities are doing with these tuition dollars. Are they being spent wisely? Are they being spent on things other than education and research? Are they requiring our kids to take courses that will ultimately have little value to their careers, but given for the primary purpose of employing adults and satisfying certain special interest groups or board members or administrator's agendas?

It seems as if they just keep increasing tuition fees year after year at twice the rate of inflation (or more) and it's just accepted and never questioned.