Great article about student loan debt

<p>The</a> Education Bubble, Part 1: Sticker-Shock Debt Becomes An ‘Overwhelming’ Burden | WBUR</p>

<p>The</a> Education Bubble, Part 2: Stricter Institutional Advisement Could Keep Loan Levels Down | WBUR</p>

<p>Thoughts? post them here!</p>

<p>I agree that these are great articles. I know that this is occurring at so many schools. Though I think highlighting those specific schools when so many are doing the same thing is going to hurt them; a bit unfair when they are just doing what the industry is doing, this is a big problem. Colleges are businesses that need to stay afloat and those schools without the funds to give to students to pay and if they do not get enough students who can pay, they will go bust. So they let the kids borrow the money. It goes to the school. The school continues on, and the students, families and banks are left holding the bag. The next financial crisis is likely to be those who default on these student loans. How on earth are these kids going to be able to pay those amounts? You can buy a house with that kind of money.</p>

<p>This probably should also be in the Financial Aid forum.</p>

<p>The comparison of Holy Cross to Simmons is bizarrre and unfair. Holy Cross is much higher ranked, it gets many more applicants per spot, and they are wealthier ones. So if they don't take a few students with high loans, they'll still be fine. Moreso, they school itself is very wealthy, and can afford more aid to students..</p>

<p>The issue of overly large loan amounts is real, but the second article in no way helps or illuminates anything real about it.</p>

<p>When you read threads from students contemplating great debt for undergraduate school, it would be great to have them read these stories. Most adults don't understand compounding interest, so why would we expect high school seniors whose eyes are glazed over after getting in to their DREAM SCHOOL to understand how it adds up?</p>

<p>There needs to be a way to limit private loans for education, but I am no expert on figuring it out.</p>

<p>I swing between feeling sorry for these young people and wanting to smack them up side of the head while yelling: "What were you thinking?" I have been very lucky. My mother told me that I couldn't go to college because we did not have the money, but college was so much cheaper then and I made it. I did borrow $1500.</p>

<p>I'm convinced that if we don't do something about the student loan mess we are going to end up with another horrible recession just as we did when we didn't do anything about the subprime mortgage crisis. </p>

<p>Just like with mortgages, there are some people who shouldn't be taking on any student debt at all, there are some for whom a small amount, $10k or less, is appropriate, there are some who can go up to $20k, or $40k, and even a few people who can go up to $50k or more. The people who should be taking on the most debt are those who are attending top schools that can show evidence of a majority of graduates earning high starting and mid-career salaries, who also are planning to major in a field that paves the way for a lucrative career, have family members that can help them pay off the loans, and probably will defer graduate school so as not to lump another $100k+ on top of the undergraduate loans.</p>

<p>But people attending trade schools and lower-ranked institutions should not be taking on tens, or even hundreds, of thousands of dollars of debt to earn degrees in things like hospitality management where their annual salary may not exceed the annual college of attendance at a private college. </p>

<p>These people probably wouldn't take on the debt if the schools were more forthright in explaining how the loans worked. Students taking out huge debt to go to a trade-focused school are most likely to be from low-income families and not have an understanding of how a loan works, specifically how quickly interest accrues and the consequences if a balance is not paid in due time. To a student used to living in a household where there may not even be enough food to go around, a $40,000 per year salary is huge. They can't fathom that a $1000 monthly loan payment may not be achievable when you throw in renting a decent place to live, eating, a car payment, and taxes. So better education about borrowing from the schools BEFORE matriculation is part of solving this problem.</p>

<p>Another part is maintaining, or preferrably increasing, funding for community colleges, state universities, and outright grants to low-income students so that those students don't find themselves in the position of choosing between not getting a college education or taking on crippling debt.</p>

<p>Finally, we need to extend the penny-pinching ways that we have acquired as a society as a result of the housing crisis to the way we make purchasing decisions as consumers of education. If people are signing the loan agreements with eyes wide open and a full understanding of the terms--which they should be--they need to understand that they will be making sacrifices post-graduation in order to pay down their loans. A monthly payment of several thousand dollars means that all but the highest-earning new grads are not going to be taking many vacations or living large. People need to understand that and decide if a degree from College X is worth it. It bothers me that so many people in these articles complain about how they're never going to be able to afford to have kids or a house. That may well be a sacrifice they have to make to get the education they want. People in America need to stop thinking they can have it both ways and make decisions with an understanding of the ramifications, and then deal with the consequences until they can make them go away.</p>

<p>Why do people take on the loans anyways?</p>

<p>They only do it because they believe they can pay it off.. We should stop promoting that college = ticket to higher salary (pounded in our heads since we are kids). Colleges should stop promoting that college graduates earn way more in the lifetime as non college grad. That is what many people believe and why people actually go to college.</p>

<p>College should be about one thing. To learn. Is the loan worth your education? It is up to you to decide that.</p>

<p>^ Sorry but college is a way to a higher salary. If you want to learn you can go to the library and get some books to read. A college education, in some way, certifies that you have learned a course of study for which an employer is willing to pay you more than someone not trained.</p>

<p>But there are ways that you can get a quality education without taking out loans, you just have to look for them and it may not be a top school.</p>

<p>Perhaps the college loan folks should have to put together one of those forms like we have on our credit cards now that spells it out for you if you choose to pay the minimum (If you pay the $20 minimum on this $2000 bill, it will take you twenty years to pay it off and you will pay a total of $4500--or whatever the figures are). I do not think most young people realize what a payment on an $80K debt will be--with interest.</p>

<p>
[quote]
^ Sorry but college is a way to a higher salary. If you want to learn you can go to the library and get some books to read. A college education, in some way, certifies that you have learned a course of study for which an employer is willing to pay you more than someone not trained.

[/quote]
</p>

<p>It is that way cause we made it that way. What if there was no college? The whole entire job pool would be filled with high school grads. But when we started to pump out the college grads, employers started to hire them instead. Now everyone has to go to college to be in favor in getting a good job. We did it to ourselves..</p>

<p>This would not be a problem if college was cheap but it isn't.</p>

<p>Perhaps private education loans should not be afforded the protection of being considered student loans that cannot be bankrupted. I honestly don't know if that is how it works, but if a private loan is charging the girl in the article 15%, it should not be given all the govt loan protections.</p>

<p>Does any one know off hand if private loans are protected from BK like Stafford/Plus/Perkins loans?</p>

<p>Personally I would have told my kids no loans other than govt loans, there is no valid reason to take more. And that crazy 15% accruing from day 1, that is horrible. I can understand how the girl in the article signed what her parents gave her to sign, she believed they knew best and that they were looking out for her.</p>

<p>Great articles from wbur. These should be required reading for high school students.</p>

<p>Garland, I did not like the way they did the comparison either. But the situation is true and is a problem. I know a number of kids who went to private schools that are not that well known at all; they would have done as well or better going to a state school, community college. However, their preference would not have been a problem except for the fact that they really could not afford those private schools and there was no way in the world that they were going to make more graduating from such school as opposed to going to com college and state schools. Then, as the article illustrates, they graduate holding a bag of loans that is outrageously high. I don't see how they are going to repay those loans, and many have those loans because their parents could not pay for college. Those same parents are not going to be able to help them with those loans either. </p>

<p>This is madness on part of those colleges to encourage kids to do this sort of thing. How can they possibly justify churning out kids from low income homes owing more money than the value of the house their parents may own (if they are so lucky)? This is unconscionable to me.</p>

<p>I've mentioned a friend's daughter who is $80K in debt. Like those kids in the article, she just did not think about it while going to school. She took whatever loans she could get and frankly, lived quite well on them. Now she has to repay them and her monthly payment is larger than her pay from the coffeehouse where she works. Many of them have concurrent schedules because they are private loans and are not integrated with the government ones. The interest rates are higher than the government loans too. How can a financial aid office let these kids borrow these amounts without a good heart to heart talk on the impllications of owing that much money?</p>

<p>The point of the comparison had nothing to do with the ranking of the schools but rather how the administrations looked at student debt. It was a good piece and really opened my eyes as well in terms of how ill-informed many students are when they start out.</p>

<p>Cpt, I would not be too quick to assume the FA officers are encouraging this at all. The ones that post on CC seem to indicate the exact opposite is true, and I know a few personally who try to discourage kids from borrowing up to their limits just to receive refunds they truly don't need. Unfortunately, these warnings fall on deaf ears...imo, the parents need to be closely monitoring the student's borrowing if at all possible. Unless I know the kid has a fantastic scholarship, I cringe every time I hear a parent say their kid does everything and they have no idea about the FA/loan situation.</p>

<p>Neman--it definitely has to do with the ranking of the schools. Holy Cross, being more highly ranked, gets many more applications per spot than Simmons. Thus, they can simply not take students who can't afford to go there. There'll always be another student to take that place. This is not a difference in philosophy; it's a difference in ability to fill a freshman class.</p>

<p>"Another part is maintaining, or preferrably increasing, funding for community colleges, state universities"</p>

<p>why is that if some student loan debt holders default, and maybe get some future govt bailout, thats going to lead to another depression, but subsidies for state schools are just fine and dandy? I mean I understand the preference for state school's from the students POV, but as a citizen? If the benefit of an elite education isnt worth 200k per student, why and how does it suddenly become worth it when that elite education is provided by my states public flagship, and is paid for with my tax dollars, dollars I COULD be using towards my DD's tuition at a private university? </p>

<p>Also, I think there is considerable misunderstanding of the financial crisis - as if it were inevitable heaven sent retribution for the sin of prodigiality. It was about the amount of exposure the big financial institutions had to the housing market, and the lack of transparency of that exposure. </p>

<p>What proportion of total financial assets in the USA are student loans? Esp student loans in excess of 50k? What is the distribution of those loans like across financial institutions? Are there derivatives based on those assets? What are the capital reserves of those financial institutions? will they be appropriately regulated, and will systemic risk be managed?</p>

<p>Those are the questions that need to be asked to determine if student loans threaten a new financial crisis. Its quite possible that large loans are a poor idea for students, and they may also violate your personal values, without actually endangering the economy.</p>

<p>'cringe every time I hear a parent say their kid does everything and they have no idea about the FA/loan situation. '</p>

<p>as a bell-huey parent, I will never be in that situation :)</p>

<p>
[quote]
If the benefit of an elite education isnt worth 200k per student, why and how does it suddenly become worth it when that elite education is provided by my states public flagship, and is paid for with my tax dollars, dollars I COULD be using towards my DD's tuition at a private university?

[/quote]

Because there's a benefit to the whole community in having an affordable quality education that's available to the whole community. </p>

<p>COI DISCLAIMER: I work in public higher education.</p>

<p>garland - I think the point we should take away from this is that not all schools deal with informing students about financial aid in the same way. Some , like Holy Cross, talk to students about the implications of big loans, others, like Simmons, do not. I don't know anything about how other schools approach this,and I'm not going to to speculate. What is important is that families understand that the schools are not in charge of explaining debt. Some still will, but others won't. Every family - both parents and students - needs to understand what is going on in terms of finances. Parents need to be sure that kids , who may not be savvy at all about money, haven't gotten in way over their heads.</p>