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

[MrsPete]

Interesting article. The theme is that student loans affect student's after-graduation lives more than they expect.

http://www.dailyfinance.com/story/t...g-out-student-loans/19454252/?ncid=webmaildl6

 

[Tiana]

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[polineedyan]

This is something that we talk about a lot here at home. I have a ton of college, no degree, and make more money and work less hours than my boss. When our oldest was solicited for tech school, the packet talked loads about how the majority of available jobs today do not require a 4 year degree, but a shorter more specialized program. There are certain jobs that require certification via a degree, without question.
If youre going 4 years, make sure you loan as little as possible. Do NOT keep the refund. Thats where a LOT of college agers get into trouble. Taking more than they need so they can have spending money. Only loan what goes to the school, send the rest back. Better yet, dont take any loans..Opening up grants to part timers really helped in this sense.

 

[TiffanyK]

Thanks for the article. We've had a lot of these kinds of discussions around here lately. Dd graduates from high school in just a few weeks. Although she was offered scholarship money at several schools, the cost is just too high and requires too much debt. She made the decision to live at home and attend the community college. She has several friends who do the same, but there are plenty who are heading off to private schools. She would rather be going away to one of the great schools we looked at, but she doesn't want that much debt.

 

[ssawka]

I think it is preposterous to think that you can go to college without student loans. The article does hit on a couple of good points such as opting for public school versus private school, but they forgot to mention a few other points.

• Be careful with picking a major. This is not to say that your major solely determines your career path, but if you spend 4 years getting a liberal arts degree without intending to go right to grad school, then you are in for a rude awakening when you enter the job market. I have several friends that picked a major because they were "interested in it" without looking at the earning potential. It is important to be happy in your career, but you also need to pay the bills.
• Parents should not be paying for their kids education unless they can really afford it. Too often, parents forego saving for retirement in order to pay for their kids education. You are going to be a bigger burden to your children if you are not prepared for retirement than if they have to take out student loans.
• When getting out of college, especially in this economy, it is important go to where the jobs are, and be willing to leave your family behind if necessary.
• If at all possible, do an internship while in school and don't be in such a hurry to graduate. It is far better to graduate with at least some experience under your belt.
• If the the housing market is still strong in your area, seriously consider buying a house. This is what DW and I did about a year and a half after we graduated. We continued to pay the minimum student loan payment and in a few years, we were able to refinance and pay off all of our student loans.

 

[goofyisinphilly]

I think it is important to have a plan for what you want to do after college. Get a job is not a plan.

My degrees are in Piano Pedagogy...teaching piano. Everyone thought I'd never make a living. Sure, I had work some retail jobs while building my studio. However, I now make the almost the same amount as my husband who has a MS in computer science.

Loans aren't bad in and of themselves. Just make sure they are going to fit with your lifestyle after you get out of school.

 

[Sadie22]

I think it is preposterous to think that you can go to college without student loans. The article does hit on a couple of good points such as opting for public school versus private school, but they forgot to mention a few other points.

• Be careful with picking a major. This is not to say that your major solely determines your career path, but if you spend 4 years getting a liberal arts degree without intending to go right to grad school, then you are in for a rude awakening when you enter the job market. I have several friends that picked a major because they were "interested in it" without looking at the earning potential. It is important to be happy in your career, but you also need to pay the bills.
• Parents should not be paying for their kids education unless they can really afford it. Too often, parents forego saving for retirement in order to pay for their kids education. You are going to be a bigger burden to your children if you are not prepared for retirement than if they have to take out student loans.
• When getting out of college, especially in this economy, it is important go to where the jobs are, and be willing to leave your family behind if necessary.
• If at all possible, do an internship while in school and don't be in such a hurry to graduate. It is far better to graduate with at least some experience under your belt.
• If the the housing market is still strong in your area, seriously consider buying a house. This is what DW and I did about a year and a half after we graduated. We continued to pay the minimum student loan payment and in a few years, we were able to refinance and pay off all of our student loans.

No one in our family took out loans. We had scholarships and summer jobs. For our children, good grades, the Eagle Scouts award, consistent work histories, school activities and the willingness to choose the schools offering the most financial aid were key.

If they had not had the good grades to get the four-year scholarships, community college would have been an economical way to start.

Internships both in college and after college were key as well.

No loans for graduate school, either. Some graduate schools pay the students to attend, in the form of free tuition, a teaching assistantship, or research grants and fellowships. Many businesses pay for all or part of graduate education for their employees.

Some parents buy a house near a college where their children can live during college. Extra bedrooms are rented out to pay the mortgage.

 

[MrsPete]

That's why I joined the Army, well, actually, it wasn't THE reason, but a nice benefit!

Not only is my degree free, but I'm MAKING thousands of dollars from my GI bill.

When I was 18 and just finishing high school, I never considered the military; however, if I could go back in time, knowing what I've learned in the 20+ years since then, I'd absolutely enroll.

I think it is preposterous to think that you can go to college without student loans.

I agree with most of the specific points you made, but I don't understand how it can be "preposterous" to go to college without loans. I did it without a single dime of help from my parents, although it was years ago and I think it's harder now financially. I do agree that most people can't go to THE SCHOOL, have a car and maybe an apartment, live it up on weekends, and have only a little part-time job . . . but people who look for cheaper alternatives can find them.

Speaking only for myself, I decided early on that loans were just not a choice I was going to make, and I never re-visited that choice -- nothing "preposterous" about it. I didn't attend school full-time every semester. I did work an awful lot; my best-paying job was Dorm RA, which gave me a free room instead of a paycheck. I did quite a number of small things, which added up to avoiding loans.

No one in our family took out loans. We had scholarships and summer jobs. For our children, good grades, the Eagle Scouts award, consistent work histories, school activities and the willingness to choose the schools offering the most financial aid were key.

If they had not had the good grades to get the four-year scholarships, community college would have been an economical way to start.

This is our gameplan too. We're working on building good "academic resumes" at this point, we've saved . . . and we have a back-up plan if those things aren't enough (specifically, that'll be living at home and attending the nearby university, which is a fine school but not my 16-year old's first choice). We are not considering loans as a possibility.

 

[ZephyrHawk]

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.

 

[Camping Griswalds]

I'm in the other camp I guess. I actually think its better to go to college where you want to, get the education and degree you want, and take out a loan. I think of student loans like an electric bill, or telephone bill...a necessary evil, but the end result is worth it. I have a Junior in High School, so we are actively looking at college, both public and private. I don't think either should be excluded related to money at this point. In actuality sometimes the private colleges have more funding, so are actually able to give better grants and it can be cheaper to attend a private university over a public one. I also don't find the room and board excessive, compared to living at home. It would cost me that much to feed and house my child at home.

FWIW, I went to a 4 year college for 2 years and lived on campus, and then went to a community college to get a nursing degree. So its not that I am saying a community college might not meet your individual needs better than a 4 year college. But I think it is not something that depreciates with time. A good education is worth the loans. Even if your education is in something that you don't immediately have a job in that field, I believe there is no greater gift to give ourselves than a great education!

 

[eliza61]

Interesting article. The theme is that student loans affect student's after-graduation lives more than they expect.

http://www.dailyfinance.com/story/t...g-out-student-loans/19454252/?ncid=webmaildl6

One problem I always have with financial articles and gurus is that, as with most things in life, the situation is never, ever as cut and dry as the articles make it sound.

Is the author advocating not going to college if you can't foot the bill?
Does the author say what to do if you want to be a doctor? the simple "don't borrow money" is easy if you can pay tuition for med school. If you can't and you want to be a doctor, lawyer, Indian chief your options may be few.

Are you a success if you can't get a job in a field that excites you because author said don't take out a loan to fund school? So now you're debt free in a dead end job you hate?

Best advice?

research out the wazoo!! and make a plan based on yur students life.

Heck, I'm over 50 and about to return to school for a culinary degree. It's always been a passion of mine and I want to pursue it. I'll be taking out a student loan to pay some of the tuition. I'll survive, I am in a different situation in that I already have a mortgage but right now I also have a kid in college so one of us has to take a loan out.

 

[MrsPete]

I'm in the other camp I guess. I actually think its better to go to college where you want to, get the education and degree you want, and take out a loan. I think of student loans like an electric bill, or telephone bill...a necessary evil, but the end result is worth it.

I disagree, and the article says that something like half of all student loan recipients are being "held back" in various ways -- the article mentioned delaying marriage, children, etc. -- because of the loans. I don't know anyone who can't buy a house because his telephone bill is so high. I'd rather go to a lower-priced school that wouldn't mortgage my future earnings.

One problem I always have with financial articles and gurus is that, as with most things in life, the situation is never, ever as cut and dry as the articles make it sound . . . Does the author say what to do if you want to be a doctor? the simple "don't borrow money" is easy if you can pay tuition for med school. If you can't and you want to be a doctor, lawyer, Indian chief your options may be few . . . Are you a success if you can't get a job in a field that excites you because author said don't take out a loan to fund school? So now you're debt free in a dead end job you hate?

I agree that no article will address all the multiple circumstances that exist. But there are always options for doing it less expensively:

You want to be a doctor but don't have a rich daddy? If you have the grades, the Army will put you through school. Or you could opt for something in the medical field that doesn't require as many years of schooling (nursing, physical therapy, etc).

And I don't believe that the choice is "Do exactly what you want, or find yourself in a miserable, dead-end job." I like my job, but I can see several other paths I could've taken that would've also been fulfilling.

 

[bettymae1121]

I don't think it's that a person takes out loans for college, but how big those loans are. A friend of mine went to a rather expensive private college to get a teaching degree. Between her parents (who had the means) and a small trust fund left to her by her grandfather, and a part time job, she only had take out relatively small loans for her share of the bill. Even on a teacher's pay she paid off the loans w/in 10 years of graduating without any problems.

Conversely, another friend of mine also went to a $$$ private university (one of the top ones in the midwest) and graduated with honors with a degree in economics. Her family didn't have the money and even a good paying part time job isn't going to cut it. She took out loans for all of it and lived off of credit cards to boot (her parents told her this was sound financial planing!!!) Within a few years she had to file bankruptcy because the crappy job she had (3rd in as many years. Turns out a degree in economics doesn't translate into high paying jobs) didn't have health benifits and she got sick. But student loans aren't discharable in bankruptcy. She is now a housewife (she doesn't work, her husband holds down two jobs to support them! She says she's too busy helping her sister with child care to find a job) and is still paying on those outragous loans.

So, it seems to me it's a combination of the size of the loans and the job potential your degree gives you. A $100k loan for a person to go to medical school is realistic, most docs can afford the payments after graduation. A but a $50k loan for a degree in basket weaving is like a 100 ton ancor around your neck.

 

[Camping Griswalds]

Well I disagree about the "Join the Army" thing. What if you are morally opposed to war? What if physically you can't join one of the services? Does that mean you shouldn't go to college or Med School? And if one of my kids wants to be an MD, yep, they will have to take out loans. I am a nurse. Trust me, if you want to be a doctor, settling for a nurse or physical therapy would not be satisfying. I imagine most careers are like that. I see it as a fear thing. And the last thing I want is my 18 year old not choosing to do what they want and desire in life for fear of not getting a job, or fear of not picking the right thing, or fear of paying off loans. Now is the time to dream big. Now that being said, if my child gets a scholarship to one school, and would have to take loans out to attend a different school, I would point out the pros and cons, but ultimately the choice would be his.

 

[HeatherC]

I think the sad part today is that when we took out loans ....all those years ago! we kind of knew that we would get a job after college and be able to pay off those loans within a reasonable time period.

But..now with the skyrocketing cost of college and lots of kids taking out over $100,000 plus in loans, unfortunately, the salaries they are making when they do graduate, combined with the higher cost of living nowadays, it makes it virtually impossible for them to pay them off in a few years and still pay their normal living expenses.

My first job out of college in 1987, I was paid $29,000 a year...which was great then. I don't think that salary has changed much in the last twenty years, but the cost of living and college has certainly shot up.

 

[Camping Griswalds]

Well said Heather C!

 

[crisi]

I think it is preposterous to think that you can go to college without student loans. The article does hit on a couple of good points such as opting for public school versus private school, but they forgot to mention a few other points.

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.

 

[MrsPete]

I don't think it's that a person takes out loans for college, but how big those loans are.

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.

Well I disagree about the "Join the Army" thing. What if you are morally opposed to war? What if physically you can't join one of the services?

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.

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.

I agree, but I think that most people just aren't very good financial planners. They figure that they have years to get started saving, they figure they'll save once the child's out of day care, they assume the child'll get a scholarship and/or financial aid, they don't look into the actual cost of college, or other things just seem more immediately important at the time.

 

[Planogirl]

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'll only say that sometimes life happens.

People can lose jobs and have unforeseen expenses and savings can take a hit. Also, funds set aside for college can take a hit due to the economy. Been there.

Anyway, student loans aren't inherently bad. It all depends on what the student wants to do. As one who is stuck in a dead end job (for now!) I only urge DS to follow his dreams as much as possible. Loving what you do gets you places IMO.

 

[disney fan 2013]

Well I disagree about the "Join the Army" thing. What if you are morally opposed to war? What if physically you can't join one of the services? Does that mean you shouldn't go to college or Med School? And if one of my kids wants to be an MD, yep, they will have to take out loans. I am a nurse. Trust me, if you want to be a doctor, settling for a nurse or physical therapy would not be satisfying. I imagine most careers are like that. I see it as a fear thing. And the last thing I want is my 18 year old not choosing to do what they want and desire in life for fear of not getting a job, or fear of not picking the right thing, or fear of paying off loans. Now is the time to dream big. Now that being said, if my child gets a scholarship to one school, and would have to take loans out to attend a different school, I would point out the pros and cons, but ultimately the choice would be his.

This is exactly how my parents coached me and I am glad that they did. Your children will thank you (if they're not already!) for having this attitude. I will be graduating from undergrad in a few weeks and when I was choosing colleges, I applied to schools with a wide variety of costs. Although I was accepted at every school with scholarships, the school that I ended up choosing was originally my last-choice school, but they gave me a full scholarship. I couldn't turn that down and went - it was the best decision of my life. I absolutely loved my time there and I am so sad to leave.

I did take out a small loan ($2,500) during my freshman year because I just didn't have enough money for the room & board aspect saved up from high school. However, I have been working throughout college and was able to pay for room and board, books, gas, cell phone bill, and a couple of Disney trips each year, too! It's all about how you budget your TIME (being able to work, keep up with classes, and participate in extracurriculars) and money. If you do it right, it's perfectly fine to take out a loan. I now have that $2,500 saved up to pay off, too, after graduation.

Now, I will be attending medical school starting in January. The school that I am attending does not give out scholarships to any first-year students - they wait to see how you perform there and then gradually give some out. However, the cost of medical school is outrageous and any other scholarships I can find will by no means cover it. I am taking these next 7 months off of school to work full time, but that will obviously not give me the extra money, either. I just want some padding and "emergency" money, but the rest will have to be taken out in loans. I would NEVER consider not going to medical school because of the cost! The fact that someone would even say "just be a nurse or a physical therapist instead" has me .