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The Psychological Effects of Loan Debt

Taking out student loans? Check out these potential challenges as you make your decisions. https://www.collegeconfidential.com/articles/the-psychological-effects-of-loan-debt/

Replies to: The Psychological Effects of Loan Debt

  • UndercrackersUndercrackers Registered User Posts: 749 Member
    Saw some other studies about woman who are putting off (or opting out of) having children because of student loan debt. We are fortunate enough to be able to cover my D's undergraduate degree, but now she's toying with applying to graduate school. We have made it clear that anything beyond an undergrad is on her dime. Unless you are pursuing a career that absolutely requires additional credentials to gain employment, WHY would you saddle yourself with debt? I think it will take being out in the work world with her peers who are struggling to pay loans while trying to feed, clothe and house themselves before she realizes what a gift she's been given.
  • NorthernMom61NorthernMom61 Registered User Posts: 3,951 Senior Member
    Unfortunately the pain of borrowing is delayed.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,594 Forum Champion
    Many points are right on. “First Choice Fever” and “Whatever s/he wants!”

    We’re constantly hearing things like, “but s/he’s worked sooooo hard, s/he should get to go where s/he wants!!” And “we’re going to make it happen.” ....which is why US parents are drowning in debt paying for college.

    By that, I mean we have so many opportunities before us that we can grow very impwatient about getting what we want.

    Can Dave go in and correct that typo?

  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,594 Forum Champion
    edited February 9
    Debt Can Be A Psychological Burden

    Most of us have experienced the pressure of bills that are due with barely (or not) enough funds to cover them. While this may have been a relatively brief period for us, as we paid down the balances, consider young 20-somethings who see no light at the end of their student loan tunnels.

    By Dave Berry, Co-founder College Confidential

    https://studentloanhero.com/featured/psychological-effects-of-debt-survey-results/ By Shannon Isler


    I am keeping the above as a keyboard shortcut and will be posting it over and over and over again. :)


    I was extremely bothered by a parent who said that she was cosigning a lot of debt ($150k) for her daughter who had a life-long history of anxiety. What? What a recipe for a total breakdown for this daughter once she has loan payments due and not enough money. And the career goal is often modest-paying (journalism). I couldn’t help but think of the S-word, but pray that never happens.
    Post edited by mom2collegekids on
  • lvvcsflvvcsf Registered User Posts: 2,253 Senior Member
    I am of the opinion that HS students are on the whole poor judges of the affect of indebtedness. They typically have not had to provide for themselves, pay bills or manage debt. Debt and the responsibility to pay it back is at best conceptually understood and has never practically affected them. This is why it is so important for parents who should understand this to set boundaries financially. Parents who abdicate this responsibility to their children do them a huge disservice.

    "Many points are right on. “First Choice Fever” and “Whatever s/he wants!”

    We’re constantly hearing things like, “but s/he’s worked sooooo hard, s/he should get to go where s/he wants!!” And “we’re going to make it happen.” ....which is why US parents are drowning in debt paying for college."

    In my opinion this kind of thinking is short sighted. Going to college, regardless of the college, is not the end goal. Their hard work has just begun if they wish to get their degree, become employed and become a productive member of society. Little of that is dependent on the college, nearly all of it dependent on the student. The major beneficiaries of going into that kind of debt is the schools, the lending institutions and the collectors. The losers are the students and parents who end up indebted or the tax payers who will subsidize those who don't pay their federal student loans.



  • SOSConcernSOSConcern Registered User Posts: 3,777 Senior Member
    edited February 7
    Students that have graduated college and are in careers w/o school debt often still have difficulty with managing finances. SIL had $40K in school debt but only paid the minimums during 3 years of FT work (despite his parents advising him to pay it off). Since marrying my budget savvy DD, they have paid down $10K and have it paid off on a reasonable time table.

    The transition to college and what students believe they will do in college major and career is a challenge.

    If parents doesn't have a clue on how to give guidance, look to families in similar situation with older kids that have navigated the waters well.

    Many people cannot retire because they haven't put away any money, and maybe have lived above their means, or had bad luck/bad health, etc. Lots of contingencies to making it through the mine field life can hand out. They haven't worked out getting out of debt nor improved cash flow enough to have a successful retirement.

    Cannot have 'entitled' children when you cannot afford it. There is way too much information out there about the problems with a large amount of student debt for UG degree, or even graduate degree with limited income.

    Many HSs want 'bragging rights' on various colleges their students go to, but those HS counselors and staff are not paying the tuition or going into the substantial debt.

    Many HSs have 'personal finance' or similarly titled course that is Dave Ramsey videos and workbook. DD2 had this semester course, and it did educate her. DD1 was more of a 'natural budget-er' with her saving and spending patterns.

    A number on paper with payment down the road doesn't 'hit the pavement' until one is paying the payments and not making a dent in the total amount of the debt for many years. I work with someone that got her doctorate (for college teaching) and is retiring at age 62 - will still be making payments on the $100,000 student loan, and she says she will probably be still making payments until she dies (she is not paying much on the principal, evidently, and I imagine it is not a low interest rate). They will have the house paid off by then, but income stream is pretty set from retirement plans/SS. I think she is making a mistake by not paying down the loan and making sacrifices on how they are living, but some people do take risks. I do think she believes her health will be better age 62 to 65 w/o the job.
  • lvvcsflvvcsf Registered User Posts: 2,253 Senior Member
    "Since marrying my budget savvy DD, they have paid down $10K and have it paid off on a reasonable time table."

    I find it interesting that debt can also affect potential relationships. Would you marry someone who has $10's of thousands of dollars in debt? I suppose it would depend on why, their career choices and the commitment to paying down the debt. Two people with significant college debt can easily bring multiple hundreds of thousands of dollars into the relationship. I don't know the legal ramifications of marrying into that kind of debt but that would scare the crud out of me and I can't imagine it being good for the relationship.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,594 Forum Champion
    Sometimes, the first time a kid has to face financial limits on his/her choices is when choosing a college. That can be quite a shock to those whose parents previously provided every need and want with no apparent cost limits.

    The shock can be even worse if the parents delay the cost reckoning until April of senior year, perhaps because they want to delay telling the kid that s/he will face cost limits for the first time. Or the parents themselves have debt based spending habits and encourage more debt
    Quoted from @ucbalumnus


    These are the words that @ucbalumnus also posted a few years ago and they hit the nail on the head. Now I'm keeping them to quote from.

    These times are often also the first time a parent has to face financial limits after always buying and providing for their child’s every whim and desire. Sadly, too many are desperate to make all those unpleasant feelings go away by signing up for any and all loans. Of course, worse feelings then come a few years down the road when the painful loan payments commence.
  • MaineLonghornMaineLonghorn Super Moderator Posts: 37,295 Super Moderator
    An engineer I know is struggling because his daughter wants to go to the same school her boyfriend already attends, even though it is more expensive. She has gotten some great offers at other colleges. Her dad has a spreadsheet and has shown her how much more debt she will be in, but she doesn't seem to get it. :(
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,594 Forum Champion
    An engineer I know is struggling because his daughter wants to go to the same school her boyfriend already attends, even though it is more expensive. She has gotten some great offers at other colleges. Her dad has a spreadsheet and has shown her how much more debt she will be in, but she doesn't seem to get it.


    She doesn’t want to “get it.” She wants what she wants.

    I hope dad holds firm. She’s not going to want to be paying back that debt after she and BF breakup.
  • ssundar100ssundar100 Registered User Posts: 13 New Member
    As a parent with an S19 in his sophomore year and a D17 getting ready to become a freshmen in fall 2019, I could not agree more with the comments above. But I have noticed one thing - our S19 got into a state university with a small scholarship - about 20% of COA. Me the Dad, paid the remaining 80% and wanted to do this for all of his 4 years in college, thanks to all the savings (read as scrounging) in my working life to ensure a debt free education for the children. But then I noticed that S19 did not value the debt free education, despite all our parental advice on " save while you can, don't spend more than you earn - ever, etc.) His student jobs earnings were frittered away on pointless purchases. That is when we the parents, decided that he needs to have a student loan - to understand the value of the free tuition he was getting from Mom/Dad's Bank. So my point is - some debt is needed for every student to get their financial priorities right in life, else he/she graduates with an "entitlement viewpoint" which could land him/her in serious financial difficulty later in life. So I filled out the FAFSA and got him into a student loan during his junior year. Need to wait and see if the monthly loan bill helps or hinders. But sometimes I wonder if we did the right thing...
  • gpo613gpo613 Registered User Posts: 174 Junior Member
    @ssundar100 I have been trying to explain to my D19 about a similar concept. We will come up with $10K a year for school. Plus she has a 529. Now if her COA requires less than our $10K I won't just hand it over to her, but her life will be more comfortable. I might send a few more dollars her way for say a spring break trip, but if I am paying the full $10K that is it. It is capped there. One way I am trying to show her this is I never include the cost of books on the COA. Her books will be her responsibility.
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