Article: To succeed after college, avoid taking out student loans

[disney fan 2013]

Note that I didn't say, "This is your one and only option to taking out a loan!" I said it's one choice; other options for avoiding debt do exist. There's some option for everyone.

Find me an option for paying for medical school with no debt, then! I'd be forever grateful !

 

[bettymae1121]

I can buy into that idea -- to some extent. But in your friend's case, 10 years of paying on a loan just doesn't sound acceptable to me.

I think she paid it off a year or two early. In any case the payments were low, under $200 a month (maybe less than that, I can't remember the exact amount but I know I was surpised how low it was), so she could have easily paid it off much faster if she had really wanted to. The payment "matched" her earning potential out of college, even with the other expenses new grads tend to have, like getting their first appartment and that first car loan, she was able to make ends meet without a huge struggle. She wasn't living the high life but she wasn't misserable and broke, either.

If it's a choice between a reasonable loan and not going to school, or not getting the degree you want, I think for most people it's better to take the loan. "Reasonable" being the opertive word! Of course everyone should try to reduce the cost of school to the extent practicle, but if you come up a bit short, I don't see a problem with a modest amount of loans.

 

[DawnM]

Well, my father did! Of course, that was way back in the late 50s.

He moved back in with his parents in Portland, OR and went to Oregon State (it has since moved to Eugene, but back then it was in Portland.)

He worked summers on a farm for 14 hours a day to pay for school during the year and lived for free with his parents.

15 years ago my roommate was a Medical Student at UCLA. The tuition was $7K per year. Her mother did pay tuition and she paid for her room and board. She did not have debt when she graduated either.

Meanwhile, we had friends who were med students at USC and graduated with over 100K in loans.

Dawn

Find me an option for paying for medical school with no debt, then! I'd be forever grateful !

 

[disney fan 2013]

I've always found it strange that so many people need student loans - or so much in loans. There are eighteen years between birth and college to save. The average student loan debt is $30k or so. That's about $1700 a year that you need to set aside to fund college.

Yes, for a lot of people, $1700 a year is impossible to come up with. But for a lot of people, it simply means making a few sacrifices. Driving a cheaper car. Taking fewer vacations. Skipping the new furniture for the living room. Going out to dinner less often. Saying "no" to expensive sports/dance/etc. And, of course the sacrifices of choosing a college you and your kid can afford - which might mean two years of community college and/or living at home.

It isn't like college costs should come as a surprise.

I think you're forgetting that the average student loan debt is $30k, not the average cost of a college education (not even close). This means that the $30k is already the difference between what the parents have saved and are able to contribute and what the final cost actually is. Add to that the fact that many parents have more than one child who would like to attend college. My parents have 3 of us and asking them to put away an additional $5,100/year would be ridiculous.

Not to mention, I don't see why parents should be responsible for paying for their child's education in its entirety, anyways. My parents put in their work in college, took out their own loans, paid them off, and help me out when they can - I am extremely grateful for this. However, I would never in a million years have expected them to pay for my undergraduate and graduate education! I would also not want my parents to miss out on the vacations that they enjoy so much so that I could take that money for school - they've worked hard their entire lives and paid for their own schooling, they should use that money for some enjoyment.

 

[undertheradar]

I find it amazing how many folks on the DIS are experts in futures. The reality of today's economy is that college is very expensive. Those suggesting state schools are clueless(California is reducing class sizes at state schools). That leaves privates and higher tuition costs. Yes, every parent should be saving for retirement, higher education and paying for affordable housing, all at the same time! Affordable is relative to the market you reside in. When we relocated to Southern California, affordable housing was starting at $600,000. Rentals were $3000. month, apartments were $2700. month. What can be done "affordably" in a small town in the Midwest may not be done for the same money in the Northeast.
Student loans are a reality for many. Filling out the FAFSA is one of the most abusive practices that exists. Remember, colleges are quick to tell you that student loans are financial aid. What is more insulting is that household income dictates if you are allowed work study. It isn't that our son isn't willing to work, we have too much income(by government standards) for him to get work study included in financial aid. The system is flawed, it does not consider cost of living when calculating family contribution.

 

[disney fan 2013]

Well, my father did! Of course, that was way back in the late 50s.

He moved back in with his parents in Portland, OR and went to Oregon State (it has since moved to Eugene, but back then it was in Portland.)

He worked summers on a farm for 14 hours a day to pay for school during the year and lived for free with his parents.

15 years ago my roommate was a Medical Student at UCLA. The tuition was $7K per year. Her mother did pay tuition and she paid for her room and board. She did not have debt when she graduated either.

Meanwhile, we had friends who were med students at USC and graduated with over 100K in loans.

Dawn

That's very nice of the parents in those two situations who had the financial means to support their children. I currently live at home, paying rent, and work 67 hours/week. I do have enough money to have a reliable car, pay bills, etc., and I am lucky that my DBF has gotten a great job out of college and will be paying for our upcoming trips (otherwise, I would obviously not be going on them). My medical school's tuition is $27,680/year and I will be moving 1,000 miles away from home to attend, meaning I need to pay for room and board, as well. Even if I was living at home and still working those 67 hours/week, I wouldn't have the money to cover the $28,000 PLUS money for books, lab fees, liability insurance, matriculation fees, lab attire, required computer programs..... The list goes on. The late 50s and 15 years ago sound like completely different times than now, unfortunately .

 

[crisi]

Yes, but that gets to the whole "go to a college that is affordable" The four year state university I graduated from is $24k. Not a year. $24k for tuition for four years. (It would actually be $24,016 at this years tuition rates).

And yes, life happens, which is why some years you put away more and some years you put away less. There were years when we put away nothing for our kids college. And years where we got bonuses that went straight into their 529s. In the end, it evens out. But college has to be a priority from when they are little. Not a top priority, but a priority.

Make it a priority, start when they are little, and choose an affordable college. Then it isn't "preposterous" that your kids can go to college without loans - not for anyone who is taking regular vacations to WDW.

And I don't think I should use my money for my enjoyment if it means my kids are going to have to put off buying a home, getting married, and having children. Frankly, that sounds like a bad trade. I figured I was going to make sacrifices for my children.

 

[disney fan 2013]

Eta

 

[kamik86]

Don't forget that the more you save the less you get in aid. If my parents had saved 24K more money for my college education I would have exactly the same amount of college debt. Why because then I wouldn't have gotten a 6K per year need based grant. Add that to the 11,000 per year of merit based aid I had and my private school really wasn't much more then a public one.

I had 22K in student loan debt I haven't paid much off but that is because my job is paying for a masters program that I put my student loans in deferment for (0% interest is nice) and I'm just saving the money until the deferment ends. If I don't decide to spend the money on something else (DVC?) I will be able to pay the whole thing off by the time I finish grad school (I have half the amount in a bank account now)

 

[VAN]

We were fortunate to get both of our kids through a four year school with no loans. How did we do it? Both of the kids worked part-time since they were 13 years old and worked through college. Both DH and I work but live within our means ... while friends are buying the great big new houses, we very happily stayed in a home that suited our needs and budget. We availed ourselves of the local community college and/or had the kids live at home and commute to the local university.

We continued to save for retirement and vacationed (frugally), but put off some of the home decorating that would have been nice, but not necessary. We don't eat out much either (I'm too cheap to pay expensive prices for something I can fix at home for a fraction of the cost!! LOL.)

We have been fortunate with continued employment and our children have been fortunate in having jobs ... not always fun ones, but ones that paid for gas, miscellaneous expenses, etc.

I don't think there is a one-size-fits all answer, but I am concerned when I see some of my nieces and nephews go through college taking loans but have never had jobs!!! It's amazing what they think (or don't) an employer will say to read on their application/resume that they are 23 and have never had a job!!!

Anyway, I digress.

 

[crisi]

I find it amazing how many folks on the DIS are experts in futures. The reality of today's economy is that college is very expensive. Those suggesting state schools are clueless(California is reducing class sizes at state schools). That leaves privates and higher tuition costs. Yes, every parent should be saving for retirement, higher education and paying for affordable housing, all at the same time! Affordable is relative to the market you reside in. When we relocated to Southern California, affordable housing was starting at $600,000. Rentals were $3000. month, apartments were $2700. month. What can be done "affordably" in a small town in the Midwest may not be done for the same money in the Northeast.
Student loans are a reality for many. Filling out the FAFSA is one of the most abusive practices that exists. Remember, colleges are quick to tell you that student loans are financial aid. What is more insulting is that household income dictates if you are allowed work study. It isn't that our son isn't willing to work, we have too much income(by government standards) for him to get work study included in financial aid. The system is flawed, it does not consider cost of living when calculating family contribution.

But where does the money come to fund the system? I'm a liberal, I think it would be great if we could fund college for everyone coming out of high school who wanted it. But we can't afford it as a country - I'm also a fiscal conservative. Someone has to pay for college - its the parents, the kid, charity, or the taxpayer. There isn't enough charity to go around, and new taxes to fund college are not going to go over. So we are left with parents and the kids.

 

[disney fan 2013]

Yes, but that gets to the whole "go to a college that is affordable" The four year state university I graduated from is $24k. Not a year. $24k for tuition for four years. (It would actually be $24,016 at this years tuition rates).

And yes, life happens, which is why some years you put away more and some years you put away less. There were years when we put away nothing for our kids college. And years where we got bonuses that went straight into their 529s. In the end, it evens out. But college has to be a priority from when they are little. Not a top priority, but a priority.

Make it a priority, start when they are little, and choose an affordable college. Then it isn't "preposterous" that your kids can go to college without loans - not for anyone who is taking regular vacations to WDW.

And I don't think I should use my money for my enjoyment if it means my kids are going to have to put off buying a home, getting married, and having children. Frankly, that sounds like a bad trade. I figured I was going to make sacrifices for my children.

My parents have said that they would give up their Disney trips numerous times - I would NEVER take that money from them. They have sacrificed enough already. My sister and I have rare medical conditions that have taken plenty of their money over the years. Like I said, I went to undergraduate school (yes, in-state, public school) for free. Medical school is a different topic. My parents also put away money for college for the three of us, but once you fill out that FAFSA and they find out you have saved up money, you can say goodbye to most chances for financial aid.

Sure, there are many, many jobs that don't require a graduate school education or even a college education at all, for that matter. But should only the people whose parents have saved up $100,000+ per child be allowed to become doctors, lawyers, etc.? Doesn't seem very fair.

 

[disney fan 2013]

But where does the money come to fund the system? I'm a liberal, I think it would be great if we could fund college for everyone coming out of high school who wanted it. But we can't afford it as a country - I'm also a fiscal conservative. Someone has to pay for college - its the parents, the kid, charity, or the taxpayer. There isn't enough charity to go around, and new taxes to fund college are not going to go over. So we are left with parents and the kids.

I just don't think it's fair that, when it is such a different situation depending on where you live in this country, the same rules apply to everyone. But, I also realize that there is never going to be enough time or resources to go through case-by-case. Thus, taking out loans is a reality and I'm not complaining about it, simply pointing out that for some people, it needs to be done.

 

[DawnM]

Well, you aren't accounting for living at home and not working 67 house per week.

Is there a med school closer?

UCLA's med school is now 18K per year. So it is more than it was 15 years ago, but it is still quite reasonable IMHO.

I am certainly NOT saying you shouldn't go and get a loan. There are some professions that require advanced degrees that will pay enough when you get out to warrant/justify taking out a loan.

BTW: My dad did not have a car when he was in med school. His mom got a job (nurse) near his school and they drove together and he used their car.

Dawn

That's very nice of the parents in those two situations who had the financial means to support their children. I currently live at home, paying rent, and work 67 hours/week. I do have enough money to have a reliable car, pay bills, etc., and I am lucky that my DBF has gotten a great job out of college and will be paying for our upcoming trips (otherwise, I would obviously not be going on them). My medical school's tuition is $27,680/year and I will be moving 1,000 miles away from home to attend, meaning I need to pay for room and board, as well. Even if I was living at home and still working those 67 hours/week, I wouldn't have the money to cover the $28,000 PLUS money for books, lab fees, liability insurance, matriculation fees, lab attire, required computer programs..... The list goes on. The late 50s and 15 years ago sound like completely different times than now, unfortunately .

 

[crisi]

I just don't think it's fair that, when it is such a different situation depending on where you live in this country, the same rules apply to everyone. But, I also realize that there is never going to be enough time or resources to go through case-by-case. Thus, taking out loans is a reality and I'm not complaining about it, simply pointing out that for some people, it needs to be done.

And I said up front that for a lot of people they do need to take out loans - for some people college is seriously out of their reach without loans. But it certainly isn't preposterous for many of the people here to manage to save $1700 a year. We've just had a thread on dance costumes......

 

[DawnM]

Housing cost is the #1 reason we left Southern California. We want our children to live in a place they can afford to live on their own.

We will not qualify for any aid. We make too much money to qualify but too little to actually pay for private school.

I am NOT clueless at all and at this point we plan to offer our children the local 4 year college and living at home. Anything beyond that they will have to pay the difference.

CA state schools are some of the cheapest in the country BTW.

Dawn

I find it amazing how many folks on the DIS are experts in futures. The reality of today's economy is that college is very expensive. Those suggesting state schools are clueless(California is reducing class sizes at state schools). That leaves privates and higher tuition costs. Yes, every parent should be saving for retirement, higher education and paying for affordable housing, all at the same time! Affordable is relative to the market you reside in. When we relocated to Southern California, affordable housing was starting at $600,000. Rentals were $3000. month, apartments were $2700. month. What can be done "affordably" in a small town in the Midwest may not be done for the same money in the Northeast.
Student loans are a reality for many. Filling out the FAFSA is one of the most abusive practices that exists. Remember, colleges are quick to tell you that student loans are financial aid. What is more insulting is that household income dictates if you are allowed work study. It isn't that our son isn't willing to work, we have too much income(by government standards) for him to get work study included in financial aid. The system is flawed, it does not consider cost of living when calculating family contribution.

 

[crisi]

My parents have said that they would give up their Disney trips numerous times - I would NEVER take that money from them. They have sacrificed enough already. My sister and I have rare medical conditions that have taken plenty of their money over the years. Like I said, I went to undergraduate school (yes, in-state, public school) for free. Medical school is a different topic. My parents also put away money for college for the three of us, but once you fill out that FAFSA and they find out you have saved up money, you can say goodbye to most chances for financial aid.

Sure, there are many, many jobs that don't require a graduate school education or even a college education at all, for that matter. But should only the people whose parents have saved up $100,000+ per child be allowed to become doctors, lawyers, etc.? Doesn't seem very fair.

I'm not saying there shouldn't be loans...just that it isn't preposterous for people to pay for college for their kids. It is a doable thing - especially at an undergrad level.

 

[undertheradar]

The problem with the FAFSA is there is no calculation for cost of living. A family living here in Socal for 20 years paid a lot less for real estate than a family moving here in the last 8 years. So even though they have lower income, the mortgage cost would probably be much lower. Taking that into account, the family contribution is flawed. As for going the community college route, there are too many students for too few class openings! Students are taking classes just to fill schedules in order to remain full time in the eyes of the insurance companies. Due to so many people being out of work, the schools are swamped with people returning to get courses in at lower costs. At the same time, the number of courses and the number of student slots are being reduced. There is no one size fits all answer when it comes to college.

 

[deerhart]

I don't think it's preposterous that you could go to undergrad without student loans. I know a bunch of people who did (both myself and DH, for instance). However, it is a bit preposterous to think you can go to professional school without loans (although I have to admit I know at least one person who got his law degree entirely on scholarship). I think the article takes a poor view of what constitutes "success". For some it's making money right out of the bag, for others it's becoming a doctor or lawyer or other professional, regardless of how long they have to suffer under the heavy weight of student loans.

There are LOTS of consideration in determining schools to attend beyond costs. For example, if you want to go to a competitive professional or graduate school, your going to need a better undergrad and most likely no CC because of the competition.

Its not impossible to do something like law school just on scholarship. It would depend on the school your attending and your financial situation. We had actually planned for me to do law school and only take out enough loans to cover the gap between my 3/4 tuition scholarship. Unfortunately, DH lost his job and we had to make up income from somewhere (1st year full time law students are STRONGLY discouraged from working.. in fact we are actually barred from working, but they don't have any way to stop you) Despite the scholarship and after DH went back to work only taking out enough to cover tuition and get us by (he tok a 50% pay cut *sigh*) and working, I still ended up with a ton of professional school loans.

Now its DH's turn (he's got summer school and the fall semester left and he's done).

 

[disney fan 2013]

Well, you aren't accounting for living at home and not working 67 house per week.

Is there a med school closer?

UCLA's med school is now 18K per year. So it is more than it was 15 years ago, but it is still quite reasonable IMHO.

I am certainly NOT saying you shouldn't go and get a loan. There are some professions that require advanced degrees that will pay enough when you get out to warrant/justify taking out a loan.

BTW: My dad did not have a car when he was in med school. His mom got a job (nurse) near his school and they drove together and he used their car.

Dawn

For the field that I am going into, the closest one is in western CT, which is a 2.5 hour drive from my house. I have certainly thought about going there, but the 5 hr/day commute doesn't seem justifiable, with regard to the cost of gas around here and the time that would be taken away from when I could be working. I'm pretty sure I would have to buy a new car to get me through 6 years of doing that, as well (train would be double the cost of gas, plus I'd need to drive to the train station and pay to park in the garage.... The joys of living in rural RI). If I just lived in CT, the cost of living there is much higher than the cost of living in FL (where I am probably going, instead). Additionally, the FL school is year-round, so I will finish in 3 years rather than 6 at the CT school.... So when you look at the $25,000/year tuition in that sense, it is actually seems to cost less than the school you discussed.

The list of comparisons could go on forever, and I understand where you're coming from, but I just can't understand how some people can say that there is a way for everyone to avoid taking out loans....

I think the problem comes from making hasty decisions and not looking at every aspect of a situation. I went to my bottom-choice undergraduate school because it gave me a full scholarship. I work a lot (at jobs that are not fun, LOL) and rarely go out. I am coming away from undergrad with a small loan which I will pay off next month. I think I have done my best in looking at all sides of the situation when choosing the most financially-beneficial graduate school, but I would absolutely love if someone had some insight as to how to avoid the loan! I would not be afraid to admit that I am wrong if there is indeed a solution somewhere out there.