Student Debt

Paying for College
1

<p>NY Times article:</p>

<p><a href=“http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?_r=1&hp[/url]”>http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?_r=1&hp&lt;/a&gt;&lt;/p&gt;

<p>Much of this is already known by people who read CC.</p>

<p>Two things struck me: </p>

<p>(1) what a financially illiterate country we are. First, credit cards, then mortgages and now colleges. Wake up America - don’t committ yourself to something you can’t afford.</p>

<p>(2) how clueless is the OSU president that he is unaware of affordability. And he gets paid how much per year? He should be fired, and I suspect many others should as well. Totally irresponsible.</p>

2

<p>The article rehashes again the same story that has appeared dozens of times, without adding much new. And it uses the same tired technique of finding a truly pathological case and leading with her sad story. And never once mentions that there are affordable alternatives for almost every student, much less that those affordable alternatives can offer just as good an education as the overpriced and overhyped pricy joints.</p>

3

<p>I’ve been saying for years, ever since I got on this board and realized what was going on with all of these loans that people are taking out, that the practice of putting loans in the financial “aid” package is unethical. I still believe that, now. It’s well known on CC, but it’s not as well known in the general population. And, it’s flat out wrong. </p>

<p>Loans are financial aid for the schools, not for the students.</p>

<p>from the article:</p>

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4

<p>Not familiar with Ohio Northern. I feel for this student who will have a very hard time digging out from under that debt. The article points out that some of the better schools with bigger endowments have graduates with far less in loans. Ohio Northern is doing no kindness to its students.</p>

5

<p>

So they pick one student in the least financially savvy 3% to make a case. I guess it is up to the schools now to decide who can afford to attend.</p>

6

<p>What do you think should be done to help people get a clue?</p>

<p>I ask this in all seriousness. I am considering making a proposal to our intermediate school district to hire me to assist guidance counselors, students, and parents in understanding college financing. I would like to develop materials and presentations that can be used at all levels to educate folks about the cost of a higher education, the realities of financial aid, the pitfalls of excessive borrowing, etc. Our local paper just did an “expose” on college debt today, and I was once again astounded by the financial illiteracy and the complete lack of understanding of the entire process of paying for college. Someone has to take the bull by the horns and provide a real education in this area. I would really like to be that someone, and maybe I could start something that could be used as a model by others.</p>

7

<p>kelsmom, I think there are two separate issues. The first, understanding the college financing process and the realities of paying for college. The second, understanding that just because a place costs more (and/or is ranked higher) doesn’t make it a better school, and that almost anyone can find an affordable path to a worthwhile and life-changing four-year degree.</p>

<p>The first issue is the easier of the two challenges, unfortunately.</p>

<p>To me, one technique that I think would work (for the first challenge) would be to develop a set of concrete examples, each with several decision points, and work through the consequences of each decision.</p>

<p>For example, Mary is considering colleges. Mary is a good-not-great student. Her parents make $70,000 a year, and after paying their monthly expenses and covering their debt payments, have $300 left. They have no money saved for college. Mary has been admitted to State School A, where she could commute, for $8,000 tuition and fees, $1,800 books, $600 commuting cost, $1,500 incidentals. No aid has been offered, but she could take $3,500 in sub Staffords and $2,000 unsub. She has also been admitted to Private College B, with a sticker cost of $50,000, which has offered her $15,000 in merit aid, $5,000 in grants, $1,500 work study, $5,500 in Staffords, and a $23,000 PLUS loan.</p>

<p>What are the implications for Mary and her family if she chooses A? What are the implications if she chooses B?</p>

8

<p>^^Are we assuming that Mary is living on Campus for College B which is included in the COA?</p>

9

<p>I agree that concrete examples are key. Ideally, you would find someone who is willing to be frank about their family’s numbers and thought processes. Too many people think that “everyone else” can pay, so they need to do it for their kids too, when in fact most people don’t have the money and struggle to get the cash together for their kid’s educations. Knowing that many other people are in your same boat is a huge comfort.</p>

10

<p>When I gave a talk to parents of elementary students, I asked them to write down what they thought a year of college at a state U costs. They were surprised when I told them the cost, of course. Then I asked them if they could afford to pay that amount of money right now. No one said yes. So I asked if anyone was saving yet for college. No one said yes. Everyone said they can’t afford to save. I pointed out that they will be in no better shape when their child is a senior than they are today, if they are not saving. I asked if their child is going to go to the local community college. Everyone said no … their kid would be going away to school. We then discussed the philosophy of federal aid, the reality of what they will have to pay. I was told that their kid would get scholarships … their kid would just borrow it … etc., etc. </p>

<p>Something needs to change in parents’ basic understanding. College is expensive. Your kid probably won’t get a free ride. You need to save. Borrowing is only acceptable within limits. Loans have to be paid back (in today’s articles, a parent was upset that the loan her kid was offered had to be repaid … ummmm … it’s a LOAN). Kids can receive a fine education at many schools. Figure out BEFOREHAND what you can pay, and share this information with your kid.</p>

11

<p>I really like the idea of you doing two different workshops, Kelsmom: 1. for those with the young kids. 2. One on what to do if you find yourself in a difficult situation, right now.</p>

<p>I like the idea of presenting how to plan, financially, and whatnot.</p>

<p>I also like the idea of how to make it work, now, and have seen some of you ladies and gentlemen really take some students through some tough situations into a successful, if not “dream,” placement. You do it very quickly.</p>

<p>I think you should try to go on That financial planner woman’s show: suzy orman? It would be very useful.</p>

<p>I wonder if CC would let you use some of the stories on here… as anonymous examples.</p>

<p>Good luck. I can’t imagine a better service you could do for a lot of people out there.</p>

12

<p>The idea just came to me today, so we shall see if I have the fortitude to go through with putting the proposal together. I live in MI, and schools are cutting teachers. I would have to really show the “value added” in order to justify my services. The truth is that all the information is out there … many of us on CC know that … but being there is not enough, sadly. Someone has to put it all together and be proactive in getting it in people’s faces even when they don’t know that they need the information. I am tired of reading about the problem but not reading about any solutions. I would so like to be part of the solution.</p>

13

<p>I think you can be. I do.</p>

<p>I wonder, given your background, if you couldn’t write a piece for the NYTimes, and then, branch out from there…</p>

<p>Just a thought. I’d propose to them that you want to write about the solution, and not the “problem.”</p>

<p>I bet they’d take that. I know I would.</p>

<p>Let us know how it’s going.</p>

14

<p>That is a good idea. It would give me some credibility! :)</p>

15

<p>Yes, and you could reach a good sized audience with some solutions. </p>

<p>Plus, there is a book in this, easily.</p>

16

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<p>YES. exactly my thoughts</p>

17

<p>kels, I don’t really any advice for you- but I want to say thank you for doing what you’re doing. IMO, Michigan students are far worse off than the vast majority of students in America. Not only do we have some of the highest tuition rates in the country, but we have absolutely 0 state aid most of the time.</p>

18

<p>The real problem is that the cost of public colleges has skyrocketed. I’m not talking about room and board or $50,000 private universities - I’m talking about the basic ability to afford commuting to a public flagship.</p>

<p>The shocking decline in state support for higher education is a disaster in the making.</p>

19

<p>I agree. But would say that in many states, the non-flagships are still affordable for the majority of commuters - and a motivated student can get a great education at one of them.</p>

20

<p>I’m in college and man, some people are just clueless when it comes to loans and student debt. I mean, I’m going to have debt when I graduate too but I am very aware of it and what I need to do in order to pay if off. I’m going to have around 15 - 18 k in debt. It scares me :X
I have two friends who majored in Sociology and both have GPAs under 3.0. I’m seriously not trying to judge them - my majors aren’t the most lucrative either but I am concerned as to what they are going to do when they graduate and how they are going to pay back their loans. One of them has about 40k+ in debt and the other one has about 45k+ with her mom having another 20k I think in loans. They think they’ll be fine and they’ll go to grad school and/or get a job right away when they graduate. I don’t want to burst their bubble or be mean or judgmental about it so I don’t really say anything - I only say that I’m worried about how I’m going to pay back my loans but they only say that they’re not worried. :x</p>