"You’ve heard the horror stories – $50,000 in student loan debt, $100,000 in student loan debt, even $250,000 in student loan debt. But how does it happen? According to The College Board, the average undergraduate tuition for the 2014-2015 school year was only $9,139 for a public four year institution. That means that a four year degree should only cost about $36,500.
Where is all this debt coming from? And why are families struggling to pay it off?" …
It’s coming from families sending their kids away to colleges that cost $50k+ per year when they don’t have the funds to pay for it.
Many kids don’t want to commute to the local public, which would only cost $6k-16k per year.
A few months ago, I posted the following:
(I am using the pronoun "they" to hide gender for add'l privacy)
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I have known this 20-something young person for about a year, and I knew that they had student loans and had not yet graduated from college.
I also knew that the student had started college at a small private LAC, but didn’t know how long they went there or how costs were paid.
The student, I believe, has senior standing but didn’t go to college this semester…got a full time job in late Dec and didn’t return to school. The full time job pays pretty well for someone w/o a degree, but advancement, etc, is very limited.
And, worse, they’re going to be facing the loan payments for ALL THESE LOANs…which I’m guessing will be payments of at least $1000 a month for 10 years.
The major was Criminal Justice. When I’ve asked what the career goal was, I’ve gotten vague answers. I suspect that there may have been a career goal at one point, but now interest in that major has waned. Either way, a career in CJ could never have justified even half that debt.
Now I’ve learned that this person has …omg…over $115k in student loan debt…a mix of federal and (parent co-signed) private loans. (I want to smack the parents for being so stupid…but that’s another story.) The student also owes about $7k in credit cards.
The reason the student mentioned this to me is because the grace period is ending and payments will soon come due.
I guess I just wanted to vent, but seriously I hope that anyone out there that reads this and is considering significant debt (no matter what the major is), really stops and thinks about their post-college years and how hard and how interfering that kind of debt will be.
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Very sad.
Average tuition may be $9139, but students also pay room and board. That piece of data doesn’t
tell the whole story.
Yes, students need another 5-10K per year for room and board if they can’t commute from home.
It’s hard to muster much sympathy for anyone who takes on big debt without doing the math on how he/she will pay it back. That’s just plain stupidity, imo. Why would anyone think they deserve to go to an expensive school if they can’t afford it? Why not CC or State U. if you don’t have the cash? If minimizing debt is a priority, people should think of that before they borrow–not say “poor me” after the fact. Those who drive a Kia or take the bus to work don’t want to hear about how you can’t afford the payments on your Mercedes.
Average tuition may be $9139, but students also pay room and board. T
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Most students commute to college for the simple reason that their parents can’t/won’t pay for R&B. And most parents wont co-sign loans.
I think it’s a perfect storm of several factors . . . our culture is steeped in the idea that college is the key to success. We have become a very debt laden society, both personally and collectively as a nation. Consequently, people are desensitized to debt. We sometimes overestimate the benefits of college and underestimate the actual cost, both in the near and long view. And we live in a “new” economy where college or higher training is often necessary for higher level jobs (not as many factory jobs where you could work your way up).
I know it’s not the answer for everyone, but I’ve been amazed at the dual enrollment program in our county (my son is a home education student). If he goes to a Florida university when he graduates high school next year, he will have over 30 college credits, paid for by our county school district. And hopefully some (if not all) of these credits would transfer to an OOS university as well.
We have to get creative in helping young people see that there is more than one way to achieve a college degree. As parents we have to stop feeling guilty if we can’t cough up $150K for a bachelor’s degree. Times have changed dramatically from when most of us were college students.
I don’t understand the point of this article.
It says big debt comes from going to schools you can’t afford, taking out loans, and not having jobs that pay enough to comfortably pay them off.
Why does that need (yet another) article? And why does said article need to be on 3 pages with 4 paragraphs on each page?
Add to that…grad school, maybe medical,school or law or dental school.
My grad school seems like such a bargain now. Toyed with the idea of going for an MBA while my youngest finished high school, and I could not believe the sticker price. 
Toyed with the idea of offering DD something like covering tuition costs plus $30,000 in cash on graduation if she went to the local branch of the state U. I might still discuss that with 40S50E.
It comes from expenses like housing, meal plans, and basic living costs. I’m going to my 4-year state university and I’m predicting that I’ll be in ~$20,000 in debt solely on living expenses like meal plans and housing. However, I’m not naively going to major in something that won’t garner me a salary to pay off that debt quickly like most people who still pay their student loans well into their 40s.
Room and board is often more like $10,000 to $15,000 per academic year for the student not living at the parents’ house.
However, living at the parents’ house and commuting is not zero cost, since the student consumes food and utilities and has commuting costs. Many parents do willingly subsidize those costs, just as they subsidized them for the student while s/he was in high school. But it is also often the case that those costs are “hidden” in various other parts of the household budget, rather than being a line item of room and board support for the student, so many do not actually know what these costs are.
Well I have an idea.
A family that highly values education but has a low paying clergy job for father.
A child that earns a very good scholarship (1/2 tuition) at a very expensive university. $60,000.
Very litttle discussion about the impact of debt.
A master’s degree - $20,000 for the first year. No debt for the second year (FLAS scholarship plus stipened awarded).
Then, law school (because you have to earn enough to start paying back the loans!) Excellent 1/2 tuition scholarship again. But STILL another $40,000 in loans.
So you see, it adds up. But it can be worth it for some people. I may have to pay back $600 a month for 30 years. But I have had a world class education that I never would have been able to afford to pay for otherwise. VERY low interest rates. Doesn’t even make sense to pay the loans off early. Makes more sense to invest the money.
For some of us, who don’t have family money, taking out the loans is an investment in ourselves that we are willing to make.
There is pretty simple answer to this not very complicated question.
If people are constantly buying what they cannot afford (including college education, Grad. School education, etc.), they will accumulate debt. Simple arithmetic at the 1 grade level. if accumulated purchases exceed income, then one will have debt. What am I missing here? Why is this a question at all?
Don’t forget books, and supplies. THey can easily be $1,000 a semester. Having to buy text books that cost $200+ each is ridiculous. Why is a text book worth $200?
Sure you can buy used books, or rent books, but it’s still expensive for four years.
I think Forbes needs to follow up this article on ‘massive student debt’ with an article on ‘the coming college education bubble’.
Followed by a nifty article on “dog bites man”.
The worse financial decision one can make is to take out loans and not graduate.
I am with CValle.
My family income before taxes is about 50K, and we pay self-employment taxes so the IRS gets a huge chunk of that. The only way our kids could go to college was by borrowing nearly all of the cost of the state school for daughter #1, and borrowing to make up the difference after very generous scholarships to an expensive private school for daughter #2.
No commutable public available for #1 and she needed the Ed and higher math courses that were not available at the CC. No public school in the state that offered the 3+2 PA program that daughter #2 wanted, and the private was the cheaper one after scholarships.CC was not an option for her due to the PA pre-requisites and the odds of acceptance into PA school without the 3+2.
They both have hefty loans to pay, but they were willing to see it as an investment. D1 has increased her student’s performance on state tests by a huge percentage, is on her state curriculum committee and orientation committee. She is highly respected by her supervisors and students. Clearly she was born to teach.
D2 is also highly regarded by her supervising physician and he gives her patients that he does not know what to do with. She has picked up cardiac issues that he has missed and dealt with many difficult cases, spends her evenings researching. When I visit her small town people come up to me and tell me that she has saved their lives, or lives of people they know.
She would have gone to medical school if money were no object, but made the decision to do the PA route to lessen the amount she had to borrow. She still regrets that a bit, and is looking into going back to school to be certified as a midwife. She would like to do OBGYN specialty but PAs are not allowed to deliver babies, limiting her GYN options.
Their lives would be a lot easier without loan payments but they would not go back in time and do things differently. Job options without a college degree are dismal.
I’d be interested in more of the story of the first one. Good clinical psychology PhD programs are fully funded - they waive or cover your tuition and pay you a yearly stipend around $20-30K. You should come out of it with no, or very little, debt.
The problem is if you go to a weak clinical psychology PhD program that is not funded, or go to a PsyD program - which is supposed to be the “professional” version of the PhD program that is focused only on clinical practice and not research, but reflects that with never being funded. Personally, I think it’s silly, because PhD programs are already professional preparation for careers in clinical psychology - the research part is just as important as the clinical/practice part - but that’s another rant altogether. As you can see from the case study, both of these are unwise decisions, because you come out with large debt without the salary to repay it. Clinical psychologists don’t make all that much - their median salary in 2012 was $68,900.
But it’s an interesting point. Sometimes the students make very wise financial decisions in undergrad and then make unwise choices on the graduate level - because professional degrees are so uncommonly funded. Often they’re undecided on what to do next so they think graduate school is a logical step, or they don’t do research on the kind of salary they can expect to make post-grad school and whether they’ll be able to repay their loans with that salary. My advice for undecided students is always to find a job and work! Save some money, and get to figuring out what you want to do before spending money on graduate school.