northeastmom

joecollege, Absolutely right about annual increases. College will be out of reach for many more families if nothing is done. This does not even take into account private loans, and parent loans that families take out to pay their efc. I am not worried about the student who feels entitled to a private education, but more the student who is trying to go to a public U.

lkf725

07DAD,
I don't know if you were talking about me, but I am agreeing with you. Nobody is entitled to the education of their choice and folks have to make decisions they can live with. I just wanted to add that people see what they want to see (ie, loans = aid) and I do believe that colleges take advantage of that desire or desperation. The only reason they would subtract loans from the total is to make the bottom line less hideous than it really is. If people are too stupid to acknowledge the real bottom line, that is their problem.

(we did not even consider loan amounts listed on our financial aid statements, just the total that would ultimately come out of our pocket)

07DAD

lkf725-- I got the feeling that you saw the reality and the problem.

joecollegedad--take UCBChemEGrad's suggestion and look at the banner ad for the astrive student loan

The stats you give indicate a total debt at graduation of $15K-$30K for your D's target schools. The astrive loan has a monthly payment of between $91.57 and $131.93 after graduation PER $10K borrowed.

Using the $30K debt and increasing it by 25% you get a $37.5K total debt. Using the higher monthly payment amount (which can be avoided by paying $75.77 per month during 48 months of college) that is $494.96 a month after graduation. Using the lower rate, the monthly on $37.5K is $343.37. Obviously, if she goes to the school with the lower after graduation debt ($15K + $3.75K increase) her payments will be approximately $175 to $250 per month.

There is no reason to dispair. With minimum wage going up, in 4 years any 40 hour a week job would service this debt. I hope this helps quantify the reality. One way to minimize the cost of college is to apply at private schools where your D's "profile" is at the top end of the stats. They can really do anything they want to get the "package" where you need it.

I still suggest that anyone that can do as little borrowing as possible.

joecollegedad

lkf, would that everyone were as smart as you. That's why they are going to college, I guess. I have to think about that statement.

Continuing the theme of improving communication between college and applicant, in the cost sheet presented to a student, then,

1) the loan amount should NOT be included in the deductions from the sticker side, but

2) the loan should be expanded to include the total amount the student will pay, with interest, and this should be ADDED to the total cost of the college.

compare THAT.

tokenadult

YES! It may be interesting to you, joecollegedad, since you say you are new to the process, to take a look at a site

http://www.maguireassoc.com/serving/..._officers.html

by a college management consulting firm in which the firm points out that colleges can use their "financial aid" offers to sell their colleges to prospective students. You want to save money; they want to make money. Sometimes you the parent get better value by paying more out of pocket to get a better education for your child, as the article I cited earlier pointed out,

http://www.economics.harvard.edu/fac...s/aidpaper.pdf

but anyway all the colleges that send you letters will be trying to PERSUADE you, and not necessarily making it clear to you what the best value comparison is. Buyer beware.

Irene

I have a lot of sympathy for Yoder and his family, but it seems odd to blame the lenders for his death. And I'm unclear on why he could not find SOME kind of employment in the year since he got his MS. I don't think temp agencies are picky about credit history. If he was too mentally ill to work, then that's a different story, but still, it is unfair to blame the people who lent him money.

higherlead

"I have a lot of sympathy for Yoder and his family, but it seems odd to blame the lenders for his death...it is unfair to blame the people who lent him money."

Tony Soprano said the same thing. All he did was lend his HS buddies money to play poker and now he is the bad guy. People are unreasonable.

gery_sun

I think that part of the problem lies in some misconceptions about the wages of the university graduates on the real job market. I have checked several sites about the yearly earnings in different jobs, according to the degree you have completed. They state that a bachelor of biochem sciences earns between 30k and 40k $ a year, and a master - 75k-80k $! If this were the situation on the real market no one would have problems repaying their loans. I suggest we start a thread in the finaid section about the income in different fields and ask parents and graduates post more precise information about the degree, demands of the market and the yearly/monthly income. This will really help some students who use the Internet as the primary source of such information.

aisgzdavinci

*wow .

07DAD

higherlead and gery_sun are right on about the problem and the solution.

For the student and the lender the transaction is very much like financing gambling.

The student is using the loan proceeds to gamble on her future employment and income level. Therefore, the student (not the lender) has the "up side." And as highlead indicated, reasonable people understand that the gambler cannot reasonably expect to walk the debt if her gamble doesn't pay off.

The lender is loaning on a transaction where there is no collateral and the borrrower probably doesn't meet credit-worthy standards at the time of the loan.

Since society seems to want there to be these high risk student loans available, the lender covers the risk through higher interest rates and Congress has made it impossible to discharge student loan debt in bankruptcy. The non-discharge provisions seem reasonable since the borrower/student gets to keep what she used the money to acquire (her education).

gery_sun and tokenadult have identified the problem and a potential solution to the student's assessment of the risk/reward of borrowing for college. The study tokenadult cites identifies that even top candidate students don't all make a rational choice in assessing loans because some students focus on getting as close to a free-ride while in college as possible without looking at the repayment "downside" of loans.

gery_sun 's point is well taken, that in order to assess whether borrowing "X" amount of money to get a degree in a particular field is a wise decision, the student needs to have a better handle on the reality of the market for people with that degree. I fear however that no matter how detailed the information on the future employment and income side becomes, human nature and the reality of "wishing and hoping" will prevail and people will get into debt well beyond what is prudent.

The new increase in Pell Grant money will encourage more students who do not have the present means to pay for college to enroll. It remains to be seen if this greater grant money replaces loans or if the student just puts less money into paying as she goes. If it results in students putting in less, and borrowing the same as before, the problem is not going to get better.

On a slightly different note, I heard several admissions officers speak on the topic of "investing" in one's education. They all said that their experience was that students who have to earn some of what college costs while in college have a personal investment in the process, get better grades, graduate more quickly and behave better while in college that those who have college paid by other sourses.

swimcatsmom

Much as I appreciate my D getting a Pell grant and happy as I am about the new increase, it is a drop in the bucket of total college expenses even for a State U. The max Pell this year was $4310 - next year and the year after it will be $4800 - nice to have the extra $500 in grant money instead of loans but hardly enough to tip the scales in the decision to attend or not attend college for financial reasons. Especially as the COA will probably increase by substantially more than the increase in the Pell. By the time the Pell hits it's new maximum of $5400 in 2012 the COA at most (all?) colleges is sure to have increased by more tham the $600 extra. My Ds State U went up by more than that this year.

RaymondChaki

I think that the loans for universities are a good invent, but I believe that its their fault. The college's guy fault because he got loaned alot and he didnt want to stop.

josepv7

THis i quite a storyy...whata shame he made that desition... He would've think better and would killed himself.

zorro

Just because all I can afford is a Volkswagen, should Bentley or Rolls Royce feel sorry for me and sell me one of their models for a pittance? People need to know their finances and their overall situation in life and plan sensibly for their tomorrows!

uyulove

Did he know if he doesn't graduate and stay in school forever, he doesn't have to pay his school debts?? (or at least that's what I heard in my loan counseling session) They'll keep on growing but since he killed himself anyways it wouldn't have hurt to just get several Ph.Ds and stay alive...