6 alternatives to an expensive undergrad degree, avoiding massive student debt

Dave_Berry · February 25

"... The average millennial is saddled with thousands in student loan debt; those in the graduating class of 2018 have an average student-loan debt of $29,800. They also still rely on their parents for money, have an overall net worth of $8,000 (which is worse off than previous generations), and are delaying life milestones such as buying a house, as Business Insider's Hillary Hoffower reports.

As our ongoing Master Your Money reveals, debt has shaped the millennial generation. Here's how Gen Z can avoid falling in the same trap." ...

https://www.businessinsider.com/heres-exactly-what-to-do-to-avoid-massive-college-debt-2020-2

austinmshauri · February 25

Many of these ideas aren't workable for a lot of people. Going to community college will make many students ineligible for grants at 4-year schools. If a student wants to enter a field that requires a college degree, attending trade school won't get them the degree they need, and if apprenticeships at big name companies were so readily available students would be lining up for them. I don't know if early college is an affordable option for most low income families. The ones I know of cost a good deal of money. And the military isn't a scholarship service. I wish people would quit promoting it as if that's what it's purpose is.

happymomof1 · February 25

There are a lot of details missing in that interview, e.g. How did the older sister finish college with $50k in debt when the standard federal loans come to $27k? What are the interviewee's GPA and test scores?

For a kid with grades and test scores that aren't in a merit-aid range, and without a lot of financial resources, the CC to 4-year route is likely to be the most affordable. Especially if the 4-year is also in commuting distance. Nationwide, scads of people get their educations that way. So it is entirely possible that the interviewee is making the best choice for herself.

saillakeerie · February 26

I think its a good idea for people to look at various options. That may not work for everyone isn't a reason to ignore them. Lifetime earnings increase with a college degree have historically been more than enough to justify/repay $30-40k in student loan debt. Given all the complaints about student loan debt (typically referred to as a "crisis") and inability to repay, that college benefit dynamic has changed for many people. So go into it with your eyes wide open. Are there less expensive alternatives? What are the economic realities of the major/path you intend to pursue? To me it would be a good thing if more people thought about those issues. And make whatever choice you want but go into it with eyes wide open.

StPaulDad · February 26

@austinmshauri The military was very clearly not promoted anything like what you describe. In fact the article spent more time pushing back than forward. Enlisting is a great option for some kids that need time to grow up a little and need to build some skills and save some money. It's never been for everyone, but it's a solid option for some.

amsunshine · February 26

happymomof1 wrote: »

There are a lot of details missing in that interview, e.g. How did the older sister finish college with $50k in debt when the standard federal loans come to $27k? What are the interviewee's GPA and test scores?

.

The sister was 23 years old (the one with the $50k in loan debt.) My guess is that the loans were unsubsidized, so with the fairly high interest rates on student loans (pbly around 7%), and maybe if the sister had to defer payments because she wasn't able to immediately get a job that would make student loan payments possible/affordable, the amount has now ballooned to $50k.

bester1 · February 26

Honestly.....to reduce debt, simply pick a school that you can afford. The pressure that kids feel because their parents want to have a "name brand" school has become over the top. Make it simple and pick some school or path you can afford. I think the advice is spot on.

Money expert Dave Ramsey tells students: Skip the ‘dream’ college and go to school where you can afford....
https://www.cnbc.com/2019/10/07/dave-ramsey-tells-students-go-to-school-where-you-can-afford.html

happymomof1 · February 26

@amsunshine - If the older sister had only borrowed the maximum $27k, she would have had to graduate college at about age 14, and not pay at all on that debt, for it to get close to $50k by age 23. So somewhere along the line she accumulated extra college debt. It's possible that she ended up with private loans. It's also possible that she had extra loans such as Perkins loans (last awarded in 2017-2018), and/or additional $4k unsub. each year due to parents being denied the PLUS loan, and/or an extra year of college with $7,500 ($11,500 if the parents were denied a PLUS) for that 5th year. If any of those were the case, then I do understand why the younger sister is opting for the CC to 4-year route.

bjscheel · February 26

She could say she has $50K of loans if parents borrowed/co-signed but she is paying them. My nephew and his wife had a combined $120,000 debt for undergrad- I'm sure their parents co-signed but the kids are paying it.

rickle1 · February 27

Students / parents should seriously consider career path and the effect on lifestyle resulting form loans. High income with predictable path is quite different and far more manageable than low income, unstable path.

S is a finance major with good career prospects. Is taking the max student loan so will graduate with 27k debt (we've paid the interest so it's not ballooning). Should be able to pay off in under 5 yrs (probably three based on income).

D is a performing artist. Is seeking a BFA in theater. Very talented, blah blah blah. We won't allow her to have any debt (which will impact her school choice, but I don't think her career as it's basically all about talent). Unless she is one of the very rare performers who get great gigs and steady work right away, her income will be low and unstable for quite some time. Saddling her with debt would make it really tough to get by and actually affect her choices, likely limiting her opportunities.

Every situation is different.

amsunshine · February 27

happymomof1 wrote: »

@amsunshine - If the older sister had only borrowed the maximum $27k, she would have had to graduate college at about age 14, and not pay at all on that debt, for it to get close to $50k by age 23. So somewhere along the line she accumulated extra college debt. It's possible that she ended up with private loans. It's also possible that she had extra loans such as Perkins loans (last awarded in 2017-2018), and/or additional $4k unsub. each year due to parents being denied the PLUS loan, and/or an extra year of college with $7,500 ($11,500 if the parents were denied a PLUS) for that 5th year. If any of those were the case, then I do understand why the younger sister is opting for the CC to 4-year route.

Actually, if she started at 17 (typical age), borrowing just the unsubsidized loans of 27k, if she had not started paying them off yet by age 23, assuming a 7% interest rate (which I think is conservative), her total would be just under $40k with all the interest accumulating. On top of that, I agree, there may have been Perkins loans and/or possibly additional zero interest loans per year that are sometimes offered by private schools. My D20 just got a package with a zero interest loan offered on top of the unsubsidized amount from a private school. So, yes, there may be more details to ferret out about the sister's situation, but it doesn't seem to difficult for her to have accumulated $50k in student loan debt. The bulk of it could easily been accumulated just from the unsubsidized amounts alone.

roethlisburger · February 27

The average debt $29,800 sounds like it should be manageable with any decent job. It’s less than the average price of a new car.

BuckeyeMWDSG · February 27

I'm surprised tuition benefits through employers like Starbucks, UPS, etc. wasn't mentioned.

coolguy40 · April 8

$29,000 is a manageable amount of debt. It comes out to around $130 a month over 10 years. What's really disturbing are students that get accepted into big private schools and talk about how it's worth taking out $100,000 in private loans...because they'll somehow be rich and pay it off.

Lawyers take out $100,000 in student debt and even THEY have a hard time paying those down...with a law degree. A bachelors degree, regardless of prestige, is nowhere near the level of a law degree. Co-signed private student loans are just as unscrupulous as the subprime loans that destroyed our economy 10 years ago, and they need to be outlawed...or at least limited.

bester1 · April 29

State System of Higher Education votes for a second consecutive year to freeze tuition
https://www.passhe.edu/News/Pages/Releases.aspx?q=2020-04-29-tuition-freeze

6 alternatives to an expensive undergrad degree, avoiding massive student debt

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