<p>My rule of thumb is that the maximum for students - the absolute maximum - should be no more than the U.S. government is willing to subsidize with the confidence that you can pay it back - in other words, the four-year total for subsidized Stafford loans. </p>
<p>Starting salary is WAY too much (unless one hopes to be a barista.)</p>
<p>Agree with mini on that. Both of my kids have/had unsubsidized Staffords to pay back, but under $20,000. We felt they should have some contribution to their own education and paid all the tuition and room and board bills upfront for them while in college. They just need to pay something back after they are out there working. Older son paid off his loans within a year. Younger son graduates in May and will have to start paying off his loans later in the year. Both engineers but even so, would never want them coming out of undergrad having to pay off loans equivalent to their starting salaries. The less debt for undergrad education, the better . Period. $100,000 debt for a political science degree from Goucher is absurd.</p>
<p>Re: #239 and “the total amount you owe should be less than your starting salary after graduation”</p>
<p>However, some students and parents have over-optimistic expectations of post-graduation earnings for a given major*, or do not have enough information to set appropriate expectations (post-graduation surveys at colleges by major are scarce, and there is considerable opposition to the idea here on these forums).</p>
<p>*In particular, the common belief that all STEM majors have good well paid job prospects is not accurate for biology and chemistry.</p>
<p>For what it is worth, the current Stafford loan limit is $31,000 (for all four years), of which $23,000 may be subsidized.</p>
<p>Virginia Tech’s career survey has pay levels by major in a handy table:
[Virginia</a> Tech Post-Graduation Report: Salaries reported](<a href=“http://www.career.vt.edu/scripts/PostGrad2006/Report/DetailReportSalaries.asp?College=00&Majors=Y&Cohort=2011-2012]Virginia”>http://www.career.vt.edu/scripts/PostGrad2006/Report/DetailReportSalaries.asp?College=00&Majors=Y&Cohort=2011-2012)
It also has post-graduation outcomes by major:
[Virginia</a> Tech Post-Graduation Report: Plans or status after graduation](<a href=“http://www.career.vt.edu/scripts/PostGrad2006/Report/DetailStatus.asp?College=00&Majors=Y&Cohort=2011-2012]Virginia”>http://www.career.vt.edu/scripts/PostGrad2006/Report/DetailStatus.asp?College=00&Majors=Y&Cohort=2011-2012)</p>
<p>*Re: #239 and “the total amount you owe should be less than your starting salary after graduation”</p>
<p>However, some students and parents have over-optimistic expectations of post-graduation earnings for a given major*, or do not have enough information to set appropriate expectations (post-graduation surveys at colleges by major are scarce, and there is considerable opposition to the idea here on these forums).</p>
<p>In particular, the common belief that all STEM majors have good well paid job prospects is not accurate for biology and chemistry.</p>
<p>So true. Too many assume that their first job (no matter the major) will pay $50k+ per year. </p>
<p>Another common mistake is that students and co-signers assume that the newly employed grad can live at home for free to make it easier to quickly pay back the loans. The problem is that the new job may not be within commuting distance from Mom and Dad’s. Or, the new grad may have a SO and not want to live at home anymore. ;)</p>
<p>Also, I’ve noticed that some low-income Plus loan parents assume that their “soon to be good income child” will easily be able to pay back their Plus loans. What they often don’t realize is that a single person earning $40k+ per year is going to get hit much harder with taxes than the lowish income family is.</p>
<p>UCB…</p>
<p>Love the first Virginia Tech link. Thanks.</p>
<p>Why should it be discharged? There are lots and lots of students out there, across the country, who had their colleges convincing them that large amounts of debt was a good thing. He is not the only one. The colleges benefitted. They do not care at all. They got their profit. But, HIS loans should not be excused unless everyone else who has gone through this has theirs excused.</p>
<p>And if you owe the total amount of your first year salary, it is STILL too much. My husband and I are in STEM. Our first born was born with health problems and was in the NICU. My husband’s salary was equal to our balance on the student loans. But here we are, 18 yrs later, and owe more than twice what we owed 18 yrs ago due to interest. And we pay $1000 a month. AND, we are trying to figure out how to get our children through school with all this. We told them that we will not allow them to take out more than $20,000 in student loans (the federal limit for GSL) for the entire duration of their college years. Iowa State University had me taking out tons of student loans, even though I had zero parental contribution when I went to college. (I was legally an orphan, and did not have parents). They had me taking out 3 types of loans (no cosigner was needed, I had no parents!) and we are STILL paying those off now.</p>
<p>dstark, I’m curious why you so adamantly suggested “discharging” the loan. Why wouldn’t you want to see at least partial responsibility taken here? Why would you suggest this person get a complete free pass here? Surely this isn’t an all or nothing situation. Why wouldn’t you advocate that the student still make some effort to pay off a loan he took-perhaps he didn’t totally understand the implications of his loan (although one could argue that you should never take a loan without making sure you understand the terms and consequences fully), but you have to know that he certainly realized that he was borrowing money, not receiving a scholarship, and that he would at some point be obligated to make payments on his loan. Why are you so willing to propose that he bear NO responsibility here, that due to his ignorance of the consequences of his actions, he should receive a complete and total free pass? A full scholarship if you will, in spite of his promises to the contrary, and in contrast to many others who work very hard to come up with the money for a college education or who borrow judiciously and work hard to pay off their debt?</p>
<p>I am not that adament. The school can eat some of the loan. Lenders can eat some. The student can take responsibility for some of the loan. </p>
<p>In bankruptcy, a borrower can get rid of his loans…
The wealthy can get rid of their loans…
The poor can get rid of their loans…</p>
<p>Students…not no fast. </p>
<p>It’s bs.</p>
<p><a href=“http://therealdeal.com/issues_articles/defaulting-on-purpose/[/url]”>404: This page could not be found;
<p>“For what it is worth, the current Stafford loan limit is $31,000 (for all four years), of which $23,000 may be subsidized.”</p>
<p>Right. So $23k is MAX.</p>
<p>Why should the loans be discharged? Because it’s good for the country, good for business, and good for you. Just like Donald Trump’s bankruptcies. Has absolutely nothing to do with personal ethics, personal responsibility, and all that other nonsense. </p>
<p>And as for those other students who didn’t have big loans? Well, life’s not fair. I didn’t get in on the cheap starter home and sell it for a couple of mil either. I don’t see folks particularly angry with the Donald.</p>
<p><a href=“Once a Student, Now Dogged by Collection Agencies - The New York Times”>Once a Student, Now Dogged by Collection Agencies - The New York Times;
<p>[Economist’s</a> View: Should You Feel Guilty About Walking Away?](<a href=“Economist's View”>Economist's View: Should You Feel Guilty About Walking Away?)</p>
<p>Goucher tab seems to be over 50k per year. Who picked up the other 100k?</p>
<p>[Why</a> Bankruptcy Won’t Erase Student Loan Debt | TIME.com](<a href=“http://business.time.com/2012/02/09/why-cant-you-discharge-student-loans-in-bankruptcy/]Why”>Why Bankruptcy Won't Erase Student Loan Debt | TIME.com)</p>
<p>"If you’re struggling to pay credit card debt, car loans or even gambling debt, you can wipe the slate clean in bankruptcy. Struggling to pay your student loans? Sorry, you’ll just have to figure that one out on your own.</p>
<p>In an effort to shed light on a policy they say “doesn’t make any sense,” a group of bankruptcy lawyers issued a report on Tuesday that highlights the need to change the U.S. bankruptcy code so that it offers college grads relief from inescapable debt loads. In the report from the National Association of Consumer Bankruptcy Attorneys (NACBA), four out of five of the 860 lawyers surveyed said the number of potential clients they encounter with student loan debt has “significantly” or “somewhat” increased over the past 3 to 4 years."</p>
<p>Some suggest an even more conservative limit on student loans that a student should be willing to take, which is half of the new graduate pay level for the student’s major, or the subsidized Stafford loan limit (whichever is lower).</p>
<p>ucb --</p>
<p>Thanks for the Va Tech link.</p>
<p>Agreed that not all STEM majors have good job prospects (i.e. bio and chem majors).</p>
<p>" Um, do any of these people read the Wall Street Journal? Strategic defaults are the American way… Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time. </p>
<pre><code>Morgan Stanley, for example, is a gigantic corporation. As of the second quarter, it boasted total capital of $213.2 billion. It certainly has the ability to make good on obligations… But earlier this month Morgan Stanley said it would turn over five San Francisco office buildings to lenders rather than pay the debt on them. Why? … “This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.” Smells like a strategic default to me.
It’s not just happening in real estate. According to Standard & Poor’s, through Dec. 18, 262 corporations had defaulted on bonds they had sold to the public, twice the total of 2008 and “the highest default count since our series began in 1981.”… Sometimes companies default on these bonds because they’re broke (see: Lehman Bro.). But sometimes they simply default because they don’t want to pay out for them. Investors and managers, who have spent hundreds of millions of dollars on personal toys, aircraft, headquarters buildings, and compensation, simply can’t seem to find the cash to stay current on debts. …
There’s no doubt that homeowners are defaulting strategically. And the surprise may be that, given market conditions, there aren’t more strategic defaults. A paper by University of Arizona law professor Brent White suggests that bourgeois values are actually keeping people from walking away from bad home loans. Most people underwater on their mortgages stay current “as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences.” In addition, he notes, societal norms push individuals “to ignore market and legal norms under which strategic default might not only be a viable option, but also the wisest financial decision.”
Of course, corporate managers and financiers don’t suffer from these neuroses. Do you think billionaire investor Sam Zell feels any guilt or shame because his buyout of the Tribune Co., which had $12.9 billion in debt, ended in a Chapter 11 filing…? Rather than worry about whether Americans will take cues from modest homeowners who make a tough decision not to stay current on debt, perhaps we should worry about middle-class Americans taking cues from billionaires and Fortune 500 companies…"
</code></pre>
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<p>This. Reduce the easy availability of money, and the cost of some colleges will go down. It’s no coincidence that college costs rose so quickly as money became easier and easier to get. </p>
<p>Lenders should be required to use good underwriting standards, and that includes not lending too much to those who are not going to be able to repay the loans. We require these standards in every other lending arena! They should apply here, too.</p>
<p>I wonder how many people here realize that minors – yes, kids under 18 – can legally get education loans without a co-signer? My son signed his first (and only) college loan documents when he was 15. No co-signer needed, the loan is not dischargeable in bankruptcy, and he could have taken loans at 16 and 17, too. This was a Stafford loan. It’s solely his. There aren’t many loans a minor can take and be solely responsible for, but this? Yup.</p>
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<p>Exactly. It’s the same thing that happened to housing prices when mortgage money became so easy to get. How is this not obvious?</p>
<p>Those who ignore history are doomed to repeat it.</p>
<p>As I’ve said before, a dependent student can take out FAR more than $23K in loans on his/her own. If parents get declined for PLUS, the maximum is the same as an independent’ students which comes to about $60K. Maybe more by the time the first payment is due even without forebearance because the unsubsidized part which is more than half the amount start accruing interest the minute the funds are released, and those rates ain’t no deal. Throw in some Perkins and we are talking some serious debt here for some kids all by their lonesomes.</p>