<p>A poster in another thread linked to this website that should be a real eye-opener to anyone who thinks that student loans are the answer to their problems. Read the article and then scroll down to the slideshow and read the stories of all the folks who took out tens of thousands of dollars in loans for their educations and will never get out from under.</p>
<p>How in the world is this kid going to pay off nearly $200,000 dollars in student loans working as a photographer! Good Lord, who is advising these kids…</p>
<p>It looks like no advice was coming. And she complains that little of the payment goes toward principal. I guess she needs a basic finance course on how interest is accrued.</p>
<p>Yeah, where do you think that kids are learning this stuff? They don’t necessarily get this stuff in a class in high school, and if their parents didn’t go to college they probably have no idea how student loans actually work. Some colleges are (deliberately) vague about how college financing works, implying (without actually saying) that everyone can find a way to make affording college work. </p>
<p>Personally, my rule of thumb is that you should limit yourself to the federal maximum Stafford loans when choosing a college. Parent PLUS loans are out, as are any private loans that are worse than the unsubsidized Stafford loan. And don’t even think about using a credit card in place of a loan; I understand why this student felt the need to do that, but if you’re at the point when you’re using payday loans, credit cards, loans from the Mafia, and other high-risk financing strategies to pay for something, you probably can’t really afford that thing and you should think really hard about it before you get started.</p>
<p>Something about that story doesn’t add up…she had $192K after two years of CC and two at an art school? What art school could possibly be that expensive that two years would be over $175K…even if some of that was accrued interest, it just doesn’t make sense.</p>
<p>This student maxed out federal loans “early on.” The student should not have had to borrow much for CC. Once at the expensive school, the student still could only borrow at the annual max each year. The max for a dependent undergrad is $31,000 … 5500+6500+7500+7500=$26000. This student would still have had another $5000 after four full years of borrowing at the annual max. The student states that the limit was reached “early on.” What this means is that the student took quite a few years to get through CC & borrowed a bunch each year … then went on to the expensive school & kept borrowing. </p>
<p>I think we REALLY need to teach students about loans, interest, etc … BEFORE they reach college age.</p>
<p>^ Absolutely agree. Our HS has a required “Connections” class that does an overview of econ among other things. Basic finance and loans would fit in there.</p>
<p>^ I was thinking along the same lines. High schools should have a mini-course on college financing as well as basic money management. If I ran the world I would require parents to attend sessions as well, and do it in junior year.</p>
<p>It’s heart breaking to come on here and hear from kids who have worked really hard during their high school careers with the idea that the money would somehow take care of itself if only they got a high enough GPA. And too many parents don’t talk to their kids about the family finances.</p>
<p>Could it be that this student was living in a high cost of living city and some of those loans were used for rent/utilities/food and other living expenses? I’m thinking of places like NYC or San Francisco where the costs of housing can be very high if you don’t find roommates etc. Maybe she had a car, needed camera equipment for her major, etc. It sounds like her expenses were not monitored very carefully.</p>
<p>But I do agree…that seems like a LOT of money for even three years of study (assuming it took an extra year to complete the gen ed requirements).</p>