Graduates drowning in debt - the Seattle Times articles

Parents Forum
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<p>This morning the Seattle Times had several articles on college loans, their effect on career choices of recent graduates, and some federal programs available to college graduates to help with loan repayment. I thought I’d share the links with the CC community:</p>

<p>[Graduates</a> drowning in debt from high cost of college](<a href=“http://seattletimes.nwsource.com/html/localnews/2008228780_loansmain05m1.html]Graduates”>http://seattletimes.nwsource.com/html/localnews/2008228780_loansmain05m1.html)</p>

<p>[College</a> Guide: picking the right college, getting in, paying for college, freshman year](<a href=“http://seattletimes.nwsource.com/html/collegeguide/]College”>http://seattletimes.nwsource.com/html/collegeguide/)</p>

<p>[New rules help teachers, others wipe out debt](<a href=“http://seattletimes.nwsource.com/html/localnews/2008228788_loansside05m.html”>http://seattletimes.nwsource.com/html/localnews/2008228788_loansside05m.html&lt;/a&gt;)</p>

<p>[What</a> you need to know about paying for college](<a href=“http://seattletimes.nwsource.com/html/localnews/2008228789_loanstips05m.html]What”>http://seattletimes.nwsource.com/html/localnews/2008228789_loanstips05m.html)</p>

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<p>I was just reading those- all those kids who want to go to BostonU & NYU and expect to earn big money on Wall Street right off the bat- should post them on their fridge.</p>

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<p>Not just Bu or NYU but any school where a lot of loans were taken.</p>

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<p>I absolutely cannot see a student taking on $150K of loans himself to get a 4 year degree at Boston U.</p>

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<p>Honestly, I have absolutely no sympathy for this guy. </p>

<p>There’s no reason why he had to spend that much for a decent 4 year degree. If he chose to go to a school, without sufficient aid, and pay that much then that’s his problem. He could have gone to a school that cost far far less and received just as good of an education. </p>

<p>I apply this same train of thought to the current financial crisis. If you were financially responsible, purchased a modest home, fell on hard times beyond your control (eg illness with no insurance) and are now having trouble meeting mortgage payments then yes I truly feel bad for these folks. However, if you purchased a McMansion with 100% financing on some silly ARM and are now realized "gosh darn maybe we didn’t need to obsess with keepin’ up wit dem Jonses since now we can’t even pay or minimum mortgage payments’ then I have no sympathy. Different situation, same attitudes.</p>

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<p>Agreed, no sympathy for this guy whatsoever. I, a college freshman, chose to go a public school for free instead of taking 60k in loans (over 4 years) at a top engineering school. Many people fail to realize just how much money 100k really is…</p>

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<p>Interesting. Some snippets for those who haven’t clicked on the links.</p>

<p>"At a time when deep uncertainty permeates the economy, graduates across the country are entering the workplace with staggering liabilities. The average student debt has doubled since the mid-1990s.</p>

<p>And that burden often has an effect on the most fundamental choices graduates are making about their lives — decisions about home, family and career…</p>

<p>Educators and economists have argued for decades that higher education represents a great long-term investment, thanks to the higher wages graduates can command. Janet Cantelon, director of student financial services at Seattle University, points out that even $300 a month is manageable for most graduates — the equivalent of a car payment — and a good long-term investment.</p>

<p>Yet the payoff is simply not as good as it once was.</p>

<p>Workers with bachelor’s degrees do earn more — an average $51,000 a year, compared with $31,000 a year for high-school graduates, according to the U.S. Department of Labor. But the department also reports that college tuition now costs five times what it did in the early 1980s, and it is rising at more than twice the rate of inflation. Inflation-adjusted wages, meanwhile, have remained stagnant since 2002.</p>

<p>And experts say there are some worrying trends in the rising debt levels — particularly in the precipitous rise in private loans, at least until recent months. More and more of those loans are directly marketed to students, without any oversight or involvement from schools, and often at higher interest rates</p>

<p>In 1997, the federal government financed almost all student loans, with private loans making up just 5 percent of the market, according to the College Board.</p>

<p>But with the government failing to keep pace with costs, the private sector last year wrote at least 22 percent of the loans…"
[Local</a> News | Graduates drowning in debt from high cost of college | Seattle Times Newspaper](<a href=“http://seattletimes.nwsource.com/html/localnews/2008228780_loansmain05m1.html]Local”>http://seattletimes.nwsource.com/html/localnews/2008228780_loansmain05m1.html)</p>

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<p>I have no sympathy either. If you look closely at the breakdown of his loans (which was in the print version, don’t know where it is on the web), he only owed a total of $5,357 to <em>both</em> BU and Seattle U. That’s pretty reasonable, as far as debt goes, but he chose to get himself way more.</p>

<p>Also, he decided to return to BU and was all “guess I’ll just be in debt.” Hello-the UW’s Foster School of Business is great, and would have cost him 1/8th of BU’s cost if he had lived at home.</p>

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<p>I feel sorry for the Boston University person. In my opinion, he made a bad decision. Something you do when you are young and then have to live with it for the next 25 years. I think his life will be more difficult in the coming years, and I can’t imagine those few short years of college in Boston coast were worth it. I can’t see how this could be worth the differential over what he could have paid to go to UW, an excellent school.</p>

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<p>The math does not make sense on the BU guy- his parents got divorced and stopped contributing $7K a year for 2-3 years (they for sure did year 1), that is $21k more than planned, but his financial aid improved with the new situation, so of that $150k owed, less than $20k is due to the parent split up; therefore that is not the reason he is in ove rhis head, that made it, what 10-15% worse, but it is not the major component, his original plan put him there.</p>

<p>My DDs had offers that would have resulted in this picture, hard to turn down schools like USC or Vassar (several years ago, so before some of todays programs limiting home equity and limiting contributions based on income) for a UC, but sure glad we did. There was a lot of peer pressure to take the most prestigious offer</p>

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<p>Wow, 150k is RIDICULOUS. He will be 53 when he gets that paid off (if he only makes the minimum payments). It just makes me sick to even think about.</p>

<p>Not to get off topic, but, how much debt is too much, in your opinion? For two and a half years at the University of Washington, I would have to go into approximately $20,000 of debt. For four years at Grinnell, I think it might be something like $30,000. I mean overall debt - not per year. The reason I would spend less time at UW is because they will accept all my dual enrollment credits for sure, while Grinnell probably won’t. Is twenty to thirty thousand dollars of debt manageable? </p>

<p>Some background info - I own a 2005 sedan outright, with no loans, and I am planning on driving it until it is a piece of junk and the engine falls out from under it. I have slightly over 1k in my retirement account. Hopefully when I leave for college in fall 2009, I will have more like five or six thousand in there. I will also save for college, but of course that will basically just make my EFC go up even more. In general, I am very good with my money and I save whatever I can. I’m eighteen, and I graduated in June 2008 and I am working for a year before I go to school. What do you think?</p>

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<p>Don’t blame him, blame the school. He’s just a victim of a blooming business that higher education has become today.
Why is BU’s tuition higher than Harvard’s anyway? Do they offer a better education than Harvard, is that why they’re paying their professors more because they are better? Bunch of BS.</p>

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<p>“Why is BU’s tuition higher than Harvard’s anyway?”

  • the price of everything usually is dictated by market. Who do you blame? Consumers, aka - application pool. It is not a BS. Why people are applying to all those school with high tuition and no Merit Scholarships bits me. All my education and my H’s was paid by my various employees - all from UG thru Grad School. My D’s tuition and part of R & B is covered by Merit Scholarships. She graduated at the top of her class but never considered any of those elite schools that do not offer Merit Scholarships. The only explanation that I see in regard to huge loans for UG education is that people want to have them. It is not clear where complain fits in this picture?</p>
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<p>Look through the history of Boston University. They were in deep financial straits a few decades ago and John Silber came in and turned things around using an education as a business model. And they’ve come back well. I have a degree from Boston University but it was paid for by my previous employer when tuition was a lot less than what it is now. Is it worth it? I don’t know. I work with a guy with a son there on the 5-year program and this guy is spending $100K/year for three kids (one at BU) and he will be doing that for two more years. I think that BU provides a good education. $50K worth compared to state schools? No. But you do get one of the nicest workout centers in the country. There was a survey several years ago that showed that BU was the fittest college in the country.</p>

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<p>Well, there is another thread that asks if the economy is changing college decisions and one thread that asks what the Great Depression did to parents/grandparents college education. A third thread addresses Wachovia freezing funds of over 1000 colleges and mentions the effect of the present situation on college endowments.</p>

<p>Bottom line: Students aren’t going to be able to get those level of loans.</p>

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<p>Add to the above that according to an economist I was talking to that the bailout will take up to a year or possibly year and a half to have an effect, will make it all worse. Not the greatest of economic times to need to borrow.</p>

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<p>question for anyone with knowledge: what bank/lender will give a 20 year-old with no job that much credit? Checking BU’s website, it appears to me that outside loans require a co-borrower; thus, if I’m reading correctly, someone else (parent?) had to co-sign.</p>

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<p>Who knows what wild and crazy loans the private lenders were pushing through in those pre-bailout days! A co-borrower would have been required to get a loan of lower interest. Would someone have loaned a kid that kind of money without a co-borrower and then charged him a higher interest rate? And then sell that loan to someone else who would have sliced and diced it up into a complex derivative?</p>

<p>Mmmm–yeah, I’ll bet that’s what happened.</p>

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<p>No sympathy here either. My D opted for a public university that gave her close to a free ride and a guaranteed seat in vet school instead of an Ivy that would have cost us $45,000/year. She has never looked back with any regret.</p>

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<p>Here is the link to the part two:</p>

<p>[Local</a> News | With no way out of trouble, more students likely to default | Seattle Times Newspaper](<a href=“http://seattletimes.nwsource.com/html/localnews/2008231488_loandaytwo06m.html]Local”>http://seattletimes.nwsource.com/html/localnews/2008231488_loandaytwo06m.html)</p>

<p>^^The BU guy’s story is an extreme case. And how many student borrowers know the fact that student loans are not discharged in bankruptcy filings?</p>

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