A hammer can fall on someone’s foot and break a bone. A wrench can be dropped and crack a tile floor. Pliers- wow. So many dangerous things can happen when misusing pliers.
Honestly- any TOOL can be dangerous if used by someone who doesn’t know how to use it. But we’d be living in caves with a precarious food supply if humans hadn’t learned (a long time ago) how to create and use tools effectively and safely.
I’ve pushed back on the OP many times on this VERY misleading trope, so I won’t bore other readers with the narrative. But our society is filled with people– new grads, mid-career professionals, and old folks like me- who are contributing members of society, paid or paying off their loans, living prudently, paying taxes, doing something positive for the world, as a result of the education they got THANKS TO LOANS.
Want to live in a country where only the children of the rich get to choose a career- everyone else just becomes whatever it is that’s the fastest and cheapest path to a job? I don’t. I know someone who manages a large department at a pharma company. He’s a pharmacist, worked for several years at a compounding pharmacy, then a managerial role at a large hospital system, now in R&D. His story? First in his family to go to college. Guidance counselor in HS suggested a pharm tech certificate at the local CC. In and out. His Pell would mostly cover it, he’d live at home and take the bus.
I know the “Student loans they aren’t good” crowd thinks he should have just come to terms with his own reality and gotten the darned certificate and kept his mouth shut. But some people can’t be kept down. And guess what- paying off your school loans diligently, living within your means, working hard– millions of people do it. And I’m sure there are pharma companies who hire pharm techs. But those techs with community college certificates don’t lead large departments, and they don’t make ANYWHERE near what senior managers do, and they will scrimp and save until the day they retire because they were penny wise and pound foolish about NOT getting on a career path with financial potential and job security.
That’s anecdotal but statistically loans are not coming in small amounts (the average debt is above the federal limit) and there is a high rate of default, interesting given all the delays of payment during COVID.
Sure many will not have issue and get by. Many will also have their lives wrecked because it’s hard for a young person to say no or for parents to deny their children.
I would agree many students/families end up borrowing more than they should. I wouldn’t summarize that by saying the right amount of loans for all students/families is $0. But I agree that at least in a large number of cases in gross terms, students/families fail to draw a reasonable limit, and end up with well-founded regrets.
My personal experience in such circumstances is overly simplistic advice from anonymous strangers will likely be seen as not credible and therefore won’t do much good. Not that every student/family is amenable to help at all, but I feel like more good is done by explaining the possible consequences of excessive debt, and then showing them how there might be reasonable compromise options where they can limit (but maybe not entirely eliminate) their borrowing.
One reason TO take a loan is the idea that the student might have some “skin in the game”. How do folks feel about that as a valid reason to take a loan? Of course, with all the federal limits, etc. in mind, so I’m not talking about the parent plus loans or other loans like that.
Yes, the media loves the stories that relate but statistically, as shown in an article I posted above, many are in way over their heads - and it’s because they decided to pursue their education at any cost.
And lenders don’t help - by encouraging.
I’m glad for the federal limits - the $27K and $100/$200K.
I wish private loans were removed so no one can get in over their skis - because while many make it, many don’t.
Oh, and when I said “subject to deletion,” I meant that they will be deleted. And they will be deleted without notice or further explanation, since the explanation was already provided.
I personally would not do this. Loans have fees and interest has to be paid. Perhaps the student can pay the parent directly (like the parents can create their own loan). It’s like - when I lived home in my mid 20s, I paid no rent and would not charge my kids if the same were to happen to them. Others pay their parents rent.
To me, if you can afford to pay in full, you pay in full. If you can’t, then you figure out how - which is kind of what the article I posted is saying - even if it’s CC.
After that, then you look at alternatives - such as loans - of a nominal amount.
Some might say - but i want to go to a four year school so a two year shouldn’t be in play. It seems to me, more and more states are funding the two year education - so sometimes there’s a tradeoff - and less debt is a worthy tradeoff to have.
I think it’s maybe more about the loan as an emotional way to have the student feel like they have an obligation to make whole on the student loan. The “paying the parent rent” style is a bit different, in my view. That’s one where you intuitively know that your parent won’t throw you out on the street. Your “real” loan might.
Anyway, just an observation that the psychological component may have some value to families and might be a reason to take a loan.
My daughter has a friend from a FGLI family. They grew up poor. Her friend’s middle school guidance counselor saw something in this friend and got them a full ride to a well known private HS. From there they went to college on almost full FA (small loan) and then attended professional school, with loans. This friend is now making a very high 6 figure salary because of loans, and is paying them back.
I am not able to say a lot without getting political, but I do not want to live in a country where only the wealthy get to go to medical or PA school (for example) or get an engineering degree, and everybody else can just do something else.
Not only will we lose an incredible amount of talent, but we will also lose representation. We will start to see young people from families of low means who do not see people like themselves in these careers.
Loans are not always bad, and many need them and pay them back responsibly.
I agree with your other part. I’m a fan of the new limits but you are correct, it will exclude more kids and that part troubles me.
But In more cases than not, those kids will be lucky they can’t / don’t have onerous loans. This one you described is not the norm as you noted free private high school and nearly free college.
That’s not most kids.
The social implications are extreme - the rich get richer and it’s not good. But it’s also unfair to saddle a huge bulk of these kids with debt they can’t get out of and then taxpayers to clean them up.
“Mark Cuban says taking out a loan to go to college is the ‘dumbest thing you can do.’ Here’s his alternative”
And then this ‘in touch with us common folks’ plight’ billionaire goes on to give an alternative path that… wait for it……
Will still require many families/students to have to take student loans!
Community College is not free to most students. Student loans are required by many to attend even the cheaper CC schools.
So even these families taking his suggested path are doing the ‘dumbest thing you can do.’
(and the CC to a 4 year program track is not always as easy and straight forward as many seem to think it is- but that is another conversation)
I guess I take insult with an article being posted to support your opinion on student loans that is basically calling out many on this site (and many average families not on this site) as basically dumb for having to do what is necessary for even the basic level of higher education to be possible. I doubt this was your intention (at least I hope not).
I do not think that student loans are inherently bad nor need to be avoided.
With the way the current system is set up- student loans are a necessary tool (for many) to be able to obtain the education that everyone should have access too (even for the cheapest options). And the amount needed and the sacrifices people are willing to make to pay these back are going to be different and unique for each person/family.
The problem (IMO) lies with uniformed borrowers mixed with predatory lenders.
There needs to be a larger push to teach financial literacy leading up to these decisions (so the decision of what one is willing to sacrifice for these loans is actually based on reality) and there needs to be more regulations on lending to prevent predatory practices so that these loans can be realistically paid back on a fair for both parties path.
The one part that I totally agree with you (and this article) about is the idea that one doesn’t have to go to the fanciest school (i.e.. expensive) out there in order to be successful or have a great experience. I wish we could as a society break away from the idea of a prestigious college being the goal that all need to strive for!
Sorry, I don’t see a kid who becomes a phlebotomist instead of an MD (when the kid has the academic chops, ambition, and grit to do so) as being “saved” from having loans if the only affordable option is community college. I think society loses.
I’m not attacking you- but in the media right now there is a whole lotta “classism” in the various debates around student loans. Everyone is fine with a white, upper middle class “striver” looking for fit, optimal challenge in college even if it means some debt (which many upper middle class families end up doing). And most everyone is fine with a merely middle class striver who can patch together merit aid, part-time work, and some need based aid. But once it’s a low income family – and god forbid an immigrant family (now US Citizens, legally, through proper channels) everyone becomes puritanical about loans. OMG, as if the National Debt is the sole responsibility of the college grads dutifully paying down their loans, month by month.
Worth thinking about when we get on our soap boxes vilifying student loan programs. Yes, some people default. But the loan crisis is MUCH more localized than any of “loans are terrible” folks (including the financial experts in social media) want you to believe.
The biggest problem are the for-profit colleges. Nobody talks about that. It’s always the poor kid who wants to study electrical engineering, woe is me, or the middle class kid getting a BA in history. But that’s not the problem. The problem is predatory lending by for-profit colleges (many now owned by private equity firms) who are having kids exhaust their Pell, then max out on loans, and get “degrees” in travel and tourism, court reporting, and forensic analysis….these kids think they’ll be running Disney, becoming litigators and qualifying as medical examiners which is why they believe the debt is justified.
I will say if the point of observing excessive student loans can often have negative consequences was that we should be doing a better job making sure every US kid with the ability and interest can afford a four year degree in a suitable field for them without excessive loans . . . absolutely!
I agree if the point is instead those kids should settle for whatever life they can have without that degree, then not so much for me.
There is no question either 1) some schools are better endowed or 2) their parents are better endowed.
I see more schools, even public, like UTK announcing today - x % are graduating debt free.
They had on a billboard- edit - more than 50% - I just passed it on I-24.
So there is truth to what you are saying - but the Ivies are often either very wealthy students or not so wealthy that are getting a near free education.
Societal change isn’t overnight, it happens over time.
Tell me one school (Ivy or otherwise) where representation of lower-income/minorities hasn’t significantly improved over the last decade.
My concern is when we try to paint a narrative that things are in dire straits today compared to past. No, things are much better today. America is a work in progress and things are only getting better.
I happen to know a number of people who struggled to repay loans, as well as some who defaulted.
I’ll begin with the first group I saw struggle … students who weren’t adequately prepared for college. I’m not just talking about academic preparation. There is a lot more to success in college than high school preparation, although there certainly is a lot to that. In addition, though, preparation includes adequately preparing for transportation needs, a place to study, study skills, the cost of books, time management, among other things (including balancing family and/or work obligations). Programs that support first generation students were gathering steam and were working - then the funding dried up. Students who leave college early on and don’t finish before repayment begins are a large group of those behind on payments.
Next, I will shed some light on loan servicers. They’re awful. Even when they were subject to monitoring and fines for poor service, they were terrible - I can’t even imagine what it’s like now that oversight is not what it was a few years ago. I helped students deal with servicing issues, and I was appalled. They didn’t always give correct information. They liked to suggest “options” that increased student debt, like putting loans in various deferments rather than getting the student into an income based repayment plan. Or consolidating loans as a “solution,” when other options would not increase the loan debt in the way consolidating would. Bad advice, whether intentional or not, is a problem.
Then there’s mental illness. The students I knew who defaulted were struggling with their mental health. It might not be an excuse, but it’s a reason.
I’ll add in colleges - they should be helping students understand what it means to borrow, as well as how repayment works.
I didn’t know any students who defaulted because they simply didn’t want to repay their loans.
goes on to give an alternative path that… wait for it……