I’m really late to this thread. I read all the comments, and I get a distinct feeling that many of us don’t know people in our own lives who have taken stupid student loans. I know several. The common thread among the people I personally know, is that they were first generation college students, or that their parents were just so distracted by their own personal problems and so darned thrilled about the college acceptance that they fell into the “We’ll figure it out later” mindset. Examples:
One kid solved the loan problem by only taking out one year of loans for a very expensive private college, and then securing an ROTC scholarship for the last three years. This was after I sat down with his mom and told her this was crazy, that they could not afford this college.
One kid took loans for four years of a good very expensive Jesuit college… and then loans for that same college’s law school. He is really crushed by the debt, which he will be paying off for a very long time. His parents were and are clueless.
I agree with posters above who stated that students and parents should be required to have financial counseling before loans are given. I think they should be required to have face to face counseling every year, and be required to look at exactly how much the monthly payments will be, and exactly how much they will pay over the lifetime of the repayments. And maybe go over expected salaries for people with their majors.
People can be financial idiots. I know the parents of the two examples I gave above were not really aware of what they were agreeing to. And neither were their kids. Both sets of families were going through rough personal times, and the parents were just thrilled that their kids had been accepted to these colleges.
One of the families I mentioned above also got sucked into an interest only adjustable rate mortgage back in the days when that was a thing. But they were able to refinance once a family member figuratively slapped them upside the head and pointed out the problem. They had assumed that the mortgage lender wouldn’t lend the money if they couldn’t afford it. I think that mindset is what sucks people into taking out more in student loans than they should.