A lot of people seem to assume you get handed a 18 point font piece of paper that says, "You agree to borrow $70,000 for a student loan." Mine was hundreds of pages of legalese and I didn't even know what the total of my 11 loans were until I graduated and consolidated.
Your impression of the documents you were asked to sign does not comport with my recollection of the contracts I was presented with. As federal loans are a fairly standardized product, you can trivially find their contracts online.
This document, in style and length, comports with my recollection of what I signed ~15 years ago.
8 pages; approximately the length of an apartment lease. The language should not tax the reading comprehension abilities of a college student.
Representative sample:
Interest on this note will accrue at the Variable Rate (as defined below), beginning on the first Disbursement Date, on the principal balance advanced and on the Capitalized Interest, Fees, and Other Amounts, until the principal balance and all interest are paid in full. The Variable Rate will be used to calculate interest during the entire term of this Note, and following the maturity of, or any default under, this Note; there is no initially discounted, premium, or other rate that will be used to calculate interest under this Note.
Because college students are a much higher risk. You can argue that 8% is too high, but you can't argue that college students are more likely to pay back loans than big banks.
> but you can't argue that college students are more likely to pay back loans
Well actually, yes you can. Student loans are not dischargable in bankruptcy proceedings. That distinction is only shared with criminal court ordered penalties.
In other words, they are guaranteed a payback of the loan, plus fees and interest. Even if that means garnishment of your Social Security. But look at the bright side: they do go away if you're dead.
Edit: Evidently mentioning that Educational Loan debt is not dischargable is somehow a very unpopular thing (given my and other karma scores). It will also be a very unpopular thing for the 43 million people with their collective $1.3 trillion in debt. I wonder how many have or will default? And, what will that do to our economy?
Well said. I've always cringed when people say that (even though I am very liberal). You can argue that 8% is too high, you can argue that it's in the nations interest to give loans at 1-2% and accept that they will lose some money due to default, but the comparison to big banks is useless.
Also, big banks borrow at essentially 0% when talking about the Fed Funds Rate, which is for overnight loans.
Students aren't allowed to declare bankruptcy on their loans now, and if they stop paying their wages will be garnished. I think we those types of conditions the interest rate could be lowered a bit.
The bankruptcy prohibition is why you even see loans in the single digits.
You have a typical 18 year old with zero credit history and zero real income. You have a loan that may take many years to repay, but unlike a mortgage there is no house to repossess if the loan goes bad. You can't repo a degree.
A good exercise is to imagine that you're a lender writing checks with your own money. Would you even make loans to somebody majoring outside of STEM? What interest would you charge especially given other options for investing your capital? How would you have to adjust your interest rates if students were allowed to declare bankruptcy to discharge their debt to you?
Agreed. Private lenders wouldn't take the risk at a price most people would accept.
I believe this is the problem with getting the government involved in the loans. It obscures the true cost.
Who knows what the college system would look like today without federal funding? Maybe distance learning or a more focused associate degree would have developed.
> The bankruptcy prohibition is why you even see loans in the single digits.
No, the reason you see loans in the single digits is because the government is both the sole lender (since the Health Care and Education Reconciliation Act of 2010) and sets the rates by law.
What private lenders would accept was only relevant when there were private lenders.
> There are numerous private lenders that offer student loans.
Not federally subsidized ones; the program under which such loans were offered through private lenders in addition to directly by the government was discontinued several years ago (as noted in the grandparent comment.) The upthread comment was about interest rates on federally subsidized loans.
OK yes. That's correct. I think perhaps it's easy to read your comment and think that there aren't private lenders at all anymore. I just wanted to point out that this is not the case.
You're correct that private student loan lending is no longer subsidized and hence the rates tend to be higher.
But loan payments delayed cost the loaner money. We also have loan forgiveness programs. You pay 10% of your income for 20 years and whatever you have left is forgiven.
> Students aren't allowed to declare bankruptcy on their loans now
If you mean they can't discharge the loans when they declare bankruptcy, this is a popular myth that, while it has some relation to fact, is not actually true -- it is difficult to discharge student loans in bankruptcy (and more difficult for some than others), but they are not impossible to discharge.
Aren't there a lot of protections for these loans? I thought they could not be discharged through bankruptcy, et cetera. My intuition is that this would reduce risk; seems a bit odd.
COmpany A borrow 80k and goes bankrupt - that money goes to collections and comes out of the assets of the company, very unlikely the full amount will be paid back
Alternatively, Person A borrows 80k in student loans and goes bankrupt. 100% of the 80k will still be collected from the student, as student loans are not dischargeable debt. Person A's wages will be garnished, debt resold to collection agencies, credit adversely affected, and yet still the entire amount will be paid back.
If you think the scenario where its possible you never get your money back is less risky, i have a bridge I'd like to sell you.
If you think that student loans are systematically overpriced you should consider starting a student loan company that charges a lower interest rate. There are ample backers for this sort of thing if you have strong enough evidence for your thesis.
Or maybe student loans are pretty much a commodity product in which sellers viciously compete to provide the lowest possible price so the interest rates we see are commensurate with the actual risk being taken.
i didn't say student loans are overpriced, i said a student loan is lower risk than most other types of loan, since it is non-dischargeable debt.
That is the argument i'm making and your response doesn't address any of it.
also, in case you arent aware, the overwhelming majority of student loan debt has been financed through federal and state government programs, not the private market "in which sellers viciously compete to provide the lowest possible price" as you seem to believe
1) Loans are priced based on their risk! Saying student loans are actually less risky than lower priced loans IS saying that they are overpriced.
2) You are correct that most student loans are financed by government programs. That allows them to undercut even the viciously competing private market because the government isn't trying to make a profit. So that makes the loans even cheaper which makes your assertion that they're overpriced more, not less, ridiculous.
Also, there have been several bills proposed to congress to lower the loan rates, and to allow refinancing of existing loan rates. Anyone saying federal loan rates are determined by some actuary calculating risk is plainly wrong.
Yes, but there are many bumps and time passed until many of those loans are paid back. And if the debtor does not have enough money, there is nothing to repossess. These loans also starts getting paid back at least 4 and likely more years later. As other people noticed, if it is such a great investment, people should start student loan companies and offer loans with less interest.
If that were true, you'd expect competitive pressure to push the interest rates down to 1% or lower. Do you claim that the banks are colluding (think "The Informant") to rip students off?
Not really, because private student loans have to take you to court to get a judgment against you. Also, in some cases they can be easier to get discharged in bankruptcy, and they're subject to statute of limitations laws for collections.
There's still the time / opportunity cost of money, and it's possible that a loan might not be repaid at any given rate. The interest would reflect this. And inflation risk would have to be factored in.
There's also a case that might be made that offering of loans isn't entirely competitive. Dynamics of that, and implications on interest rates resulting from that condition could be interesting to explore.
Well, what's your point, then? You were replying in a thread about whether the 8% interest rate is justified. The comment you replied to claimed that it was, because of the higher risk. Clearly this means all risk, not just risk of default.
Also, risk of default is non-zero. Google the Brunner test.
I don't think this comment should be downvoted, it was so have an upvote BUT:
I don't think this matches most peoples' experience. I think it usually goes like this...
You walk into the "financial aid" office where you sit nervously while they ask you meaningless (to the cost) questions while they click at a spreadsheet. After you stew for a while they present you with a price that looks like it could fund a trip to the moon (the 'list price'). You panic and then they say "but don't worry, financial aid"!
What you don't know is that while they're piecing together your "package" what they are really doing is figuring out how much they can borrow on your behalf to claim for themselves. After they've exhausted every external loan, grant and scholarship out there (its a big list and they are good at their job) they declare the rest of that impossible number a generous scholarship provided by the university. You made it! Welcome to Scruew U! You're so relieved just to be in the door you start signing paper as fast as it comes at you. That number looked impossible but somehow you're in! It looks like they busted their butt to help you out, but really, they figured out how to extract maximum payment from you, used car salesman style.
It will take you a long time to figure out exactly what your responsibilities are with regard to that witch's brew of loan, scholarship, and grant. Just wait until next year when you're invested and some of your grants and scholarships expire or reduce!
This is something that the Consumer Financial Protection Bureau has been working on. They've hired designers have A/B tested different versions of a simplified disclosure forms. You can see examples here for other loan types: http://www.consumerfinance.gov/know-before-you-owe/compare/
You pretty much do get a piece of paper that says you borrow X dollars.
One problem is you get one piece of paper each year for 5 years. The total amount sneaks up on kids.
If they had to see an estimated borrowing amount for the total degree, they might do things differently.
Especially since families tend to blow their wad the first year. Use their small savings to pay for the freshman year and then all the sudden there is no money for two.
Wait a minute, we are talking about college age, not about 6 year olds. How difficult it is multiplying x with 4? It is not a precise amount, but if the parents have $10,000 and x is 8.000, how hard is it to figure out upfront that college is going to cost a LOT more than that?
So I was one of these kids for the better part of college. The issue is that you dont care because you don't have options. You're already in college and stressing out about oweing $100k isn't productive. You look at your loans once you're done with school and need to pay them back.
They also don't provide information in real terms. Sure, I owe a ton of money, but I have no idea what that means to me. How much per month for how many years? They're finally starting to give this information to students, but when I was in, it was all very opaque.
Even once they are in repayment, many people don't understand loans. One of my friends posted on facebook his frustration with how his principal never seemed to be going down. I was able to explain to him how amortized loans work (pay the accrued interest and then any remainder goes towards principal) and he was much less frustrated after that (I think he even started paying extra to pay down the principal).
Edit: If you search online, there is a lot of info about subsidized vs unsubsidized, income based repayments vs standard repayment, etc, but not of the (small) sample of sites I looked at explained repayment in simple terms of what does my monthly payment go towards (principal vs interest).
> One of my friends posted on facebook his frustration with how his principal never seemed to be going down.
That's one of those really basic things that I'd bet well over half the adult population of the US couldn't explain, if asked. Like how marginal tax rates work.
David Letterman: "The lottery is the tax you pay for not paying attention in math class."
Once one has taken algebra (and paid attention) to the point of studying compound interest, one should be sufficiently forewarned about loans.
As for your remark about half the adult population: I truly fear you may be correct (it may even be greater - half the population has an IQ of only 100, after all. What IQ is required to understand compound interest? And then there's the training - making sure it is in place). If so, then perhaps stronger vetting systems for obtaining loans should be put in place.
All in all, good arguments for increasing the numeracy of the population at large and, barring that, putting mechanisms in place that prevent them from unwitting personal fiscal disasters. Unfortunately, to do so in the USA would be viewed as a form of fiscal, and therefore, political discrimination, so the disasters will continue!
Which leaves only increasing numeracy, Which is well-nigh impossible. Which leaves the task to our not-yet-here AI personal assistants to warn us not to make bad loans. Indeed the best argument for AI may be that we shall need AI to save us from ourselves, in ways both big and small.
We are getting ready to send our youngest off to college next fall. The three of us (wife, myself, kid) talk about it, work the math and calculate repayment amounts and length in years together. It is the only way to do this. My daughter wants to understand the finances and we want her to. She also will have to agree in advance when it is time for the final selection of school and loans that the balance is doable. Much coaching along the way. I have an Engineering and Chemistry Degree and wife is an accountant.
The good news is she will be majoring in Mechanical Engineering with a concentration in CS and EE. Still we want student loan amounts to be reasonable.
Met a young person recently that got a sociology degree and had >$100K US in loans. She is making like $30,000. This is totally absurd.
I know a lot of people who are in a similar situation to the Sociology major you described (well, not quite that bad a ratio, but not far off). They all have opted for the income-based repayment plan and are basically resigned to the fact that they'll be paying several hundred dollars a month towards the loans for basically the rest of their lives. It feels kind of like an education tax that gets used really inefficiently. Actually, since most people I know in this situation are getting a little help from their parents it's effectively an inheritance tax.
Worst still a large number of companies are springing up offering refinancing on private loads that offer absurd terms and drag debtors further into the hole. These refi companies are to debtors what for-profit schools are to blue-collard workers.
Parents are not as involved in the decisions as much as they should be and they have bought into the notion that private liberal art universities are much better than public. But that is not uniformly true and outcome data shows earning power is not that much greater for many liberal art majors from private schools. (full disclosure: I work for a private liberal arts university)
I'm a perfect example of the problem you just described, parents basically let me handle all applications, pick my school, my major, and I ended up choosing an out of state school that was vastly beyond my means (~45k/yr). Parents who payed tuition ran out of money (after mortgaging the house to get my older brother through, and covering ~2 years of my education where I secretly took fewer credits to lessen the burden on my family).
So I dropped out and am now working for a recently funded start-up, making a decent amount of money with promises of more if I can work at a level that can elevate the company itself. I intend to finish a different degree over the next ~3 years (CS -> Philosophy). Needless to say none of this would've been possible had I not spent thousands of hours learning software development in my free time, such that the degree I ultimately get, or if I even have one at all, is much less important.
However I don't blame my parents at all for my poor decisions. I think today's youth need to be taught financial responsibility.. some how. Maybe mandatory minimum-wage work during high school? I don't know. This is all so ridiculous you would think it could only happen in theory. Financial institutions finding a way to take hundreds of thousands of dollars from the adult population using their children as a proxy and the parents being grateful to do it..
Housing is killer. On-campus was over $600/mo, higher than median apartment rent, and they shared with 3 other students. There's no reason student housing should be half or more the expense of attendance over the same period.
It always shocked me that for the amount American students pay for on-campus housing that they don't even get their own room.
Here while rooms might be only slightly bigger than a jail cell (room for one single bed, a desk, small closet and a bathroom w/shower); they also cost less and students get their privacy. They still share a kitchen and other spaces.
It is like student housing in the US is still set up like it is really cheap but actually costs insane amounts of money.
I paid somewhere between $1,200 and $1,400 per month to share 180 square feet with one other person, and I was lucky not to be sharing with two other people. I could never prove it, but I strongly suspect either the university or their contractors were making a handsome profit off of on-campus housing.
> Housing is killer. On-campus was over $600/mo, higher than median apartment rent, and they shared with 3 other students.
That's insane. The whole point of on-campus housing is to provide very cheap but spartan accommodations. If nearby apartments are cheaper, there's no point to it.
This has long ceased to be true at many American universities. The dorms command a premium because they're on-campus (short walk to class and dining halls, many of which are right in the dorms) and they foster an integrated social environment that you can't fully appreciate when living off-campus typically.
Dorms are also becoming increasingly luxurious in some cases. In my old college suite, we had maids come by every morning to take out our trash and recycling and every weekend they'd thoroughly clean the entire bathroom, shower, sinks, and toilet. Just to be clear, these were private bathrooms in individual suites that they'd clean, not just the shared communal bathrooms.
1) Opportunity cost: The land on campus, due to being near campus stuff, has appreciated a lot in value, so it doesn't make sense to use as dorms (instead of whatever else) unless you can charge out the nose for it.
2) Access to loans "for education" is easy to get, and this counts as part of the education package, so students figure to pay for not having to park or to walk as far.
On-Campus Housing is advertised heavily by universities as contributing to greater participation and "improved likelihood of success in college and beyond".
One practical benefit is you can roll out of bed 20 minutes before class, skipping the morning commute and hour of looking for parking (oversold lots), then walk home after class. You live at school. I've never done this.
And everyone who lives around you is a student and maybe not a couple with a wailing newborn in the middle of a divorce arguing every night at 3am, a group of problem teens with working parents that hang out outside your door smoking and being obnoxious (both the kids and parents), or someone who locks their howling dogs in the bathroom for 10+ hours a day during their shifts.
If you couldn't spend your student loan on housing, you can bet rent would be lower.
>>One practical benefit is you can roll out of bed 20 minutes before class, skipping the morning commute and...
I never understood this. If a person doesn't have the discipline to wake up early(unless he/she has been studying all night), further incentivizing their laziness is barely the solution to their problems.
And let's be frank, staying living at school doesn't translate to more time for studies. It generally means you waste more time with friends.
It is absurd. Some people say you shouldn't pursue what interests you for that amount of money, but I think that's the wrong way of looking at things. Our world is more valuable for the sociologists and other non STEM people. We also really only have this one shot to pursue what we love.
But for the individual with a massive student loan and no way to repay it is a problem even if they better the world overall.
Part of the problem is that for some majors supply massively exceeds demand. Stem definitely isn't immune from this issue.
Unfortunately due to politics nobody (schools or government) is up-front about where jobs exist and shortages occur. A lot of the time when you hear about a "shortage" it is actually just whining that wages are too high.
> Unfortunately due to politics nobody (schools or government) is up-front about where jobs exist and shortages occur. A lot of the time when you hear about a "shortage" it is actually just whining that wages are too high.
There's no absolute fixed quantity of any good or service (including labor in particular job roles) that is "correct"; "shortage" and "market clearing cost higher than I prefer" are actually equivalent concepts, not things that people misleading conflate.
The other problem is one of lag. It takes 4-6 years between choosing a school/degree and applying for your first job. There may very well be a genuine shortage in your chosen field when you start college, but that is no guarantee that there will still be one when you start applying for jobs.
Yes bout not with an unblanced amount of debt. My oldest got a sociology degree and is working part timne and living at home. All with our good graces. She wants to be a librarian and has to pretty much get a MLS. She will incur some student debt along the way. But it won't be a huge amount. She will mostly pay for graduate school out of her salary.
She has zero undergraduate debt. But that is because I took a pay cut and went to work for the university she went to. Tuition was free. I'm very glad I made that decision. As mentioned about my youngest is getting an Engr degree so the free tuition does not count because where I work does not have a Engr program.
That is a big risk. If she does she is likely to stay with STEM. Computer Science or Math + Statistics. That lowers the risks some. We have and will continue to have conversations about them risks.
You sound like a great parent who really cares about their daughter, so I feel like I should leave a final point. In my anecdotal experience as a recent CS undergrad, STEM, and particularly engineering, CS, and Mathematics, paths seem to generate the most stress on students because their environments tend to skew social norms (gender imbalances, workloads, social stereotypes).
I believe a full perspective of any degree should include its potential impact on a students social life, because lets face it it's a contributing factor to why students want to go to college and IMO we derive a lot of our happiness (especially at that age) by our social interactions.
That said with love and support like the kind you seem to be providing, she should be able to succeed at anything.
Te college experience and social life aspect is one of her driving forces for deciding. So far she is getting in the schools she has applied for (1 left to hear from and one that is two step process and step 1 is done). We will be making college visits to 3 of the fourt schools again to get the feel.
She is driven by the desire to change society for the better and thinks she can do this via a mix of engineering and political policy influence. She has experience lobbying at the state and federal level already successfully. S this is what drives her.
All of this is complicated by cost factors and home much grant and loans are offered. The final weeks in April will be stressful as the financial aid award letters come in. Exciting but nervous times.
I work with a lot of young guys who are stressing about their loans. You make a good point.
What are they supposed to do? These days you absolutely need a college degree to have a chance in the workplace so you have to take the loans if you like it or not. No options besides having a rich dad.
You don't need rich parents. You need parents who plan ahead. My parents put two kids through college with savings and zero student loans or other financial aid, and they had quite modest incomes.
I know that may not feel rich to you, but it definitely makes you the exception to the rule. Most students receive some amount of financial aid, especially in 2016 after decades of massive inflation in tuition costs.
If that number is still too high they should earn credits at a community college and transfer into the state university after their Sophomore year.
I get incredibly frustrated when you have people complaining after they chose to forgo their own state's perfectly decent university to go to another state's. You get practically the same education for 5x the price.
True, but you excluded housing/food costs. On-campus housing is typically required for the first 2 years. Even off-campus, you have to sleep somewhere and eat.
First off, it totally depends on the state. Small rural states, like in most things, get completely screwed on this metric, as Wisconsin and UMaine do not even begin to offer the same education, depending on your desired career path. That and the small states are also on the whole the more expensive schools, too.
I'm sure there are arguments to be made about just getting out of small states, but rarely are such simple-minded solutions useful for issues like this.
Personally, I think loans are a red herring. I think it's an arms-race between academic institutions and increasing tuition [0]. Adjusted for inflation, even the so-called affordable state schools have increased 14% over the past five years. Private schools actually went up less, when adjusted for inflation, but I'll let you RTFA.
The only glimmer of hope is that state schools have almost kept up with inflation for the past three years, and if the trend continues tuition might STABILZE for the next few years at roughly 25% more than it cost to earn a degree 30 years ago. Seriously, what the fuck?! How do you account for that?
>>You're already in college and stressing out about oweing $100k isn't productive.
This is one of the reason why as an Indian, I decided not to do my MS in the US. Though I could have. The reason is simple, you will rake up a huge loan back home in India.
Most of friends who came to US for their MS had only horror stories to tell. A loan amount too huge to pay off working a job in India, perennial stress of paying off that loan(often taken against a house/plot in India) and doing small part time jobs for food and sustenance in restaurants. Add to that a good college is beyond affordable, and a degree in By-The-Freeway college is next to useless(but still costs a lot in Indian money). After all that you will be stuck fighting a Visa system, with a multi year green card struggle.
And even after all this, while you are in your late 30's(or early 40's), you have to buy a home(and pay those loans for the remainder of your enjoyable life), worry about retirement, getting kids settled and save for health care expenses.
There are lots of reasons for this, in my experience. Firstly, entrance counselling is provided right at the beginning. That is when students are at peak optimism, and most unaware of the realities of living on their own, much less understanding their debt obligations. Secondly, I think students have already made the decision by the time it gets to entrance counselling. This should happen before or during the acceptance process, when kids are making the decisions about which school to attend (and how much it will cost them immediately and in the future). Thirdly, the online system I was in lacked specific examples and calculators to make the thing seem real. If they had given me a sliding bar to play with and see what my monthly payments would be, it might have made a big difference. Maybe not, though, because I didn't really know what to expect to pay in rent or mortgage either.
If you're old enough to go to college you should know you should read papers before you sign them. Not an excuse, even if public schools didn't teach how compound interest worked, which they do.
I don't think it's entirely fair, I think the expectation is that students know they need to go to college and they understand they can only go to college via loans. Accordingly, they know that the terms are what they are, there really isn't much variation, so they just go ahead and sign the papers to get it over with.
There should be counselors for this sort of thing too. However, I can't fault an 18-20 year old for not really having any sense of scale about how much >$50k is, even if they understand the paperwork clearly. They likely haven't slogged through years of work in a job they hate just to make ends meet. Any experience up to that point is likely with little bills and a low paying job. Even if these loans were made interest free, the principal getting that high in the first place is the larger issue. This is when the decision gets to the parents, and the drum beat for as long as I've been alive has been "go to college to get a good job!", conveniently ignoring the trade schools and other opportunities.
It seems difficult to teach the hard lessons and experience of personal finance without them actually being hard lessons. Unless something else is driving everyone to accept student loans.
Most of those adults are treated like legal children up to and beyond their first year of college. There's a lot of paperwork adult students can't even fill out by themselves when applying for college until they're 24 unless they've been emancipated.
My SO went back to school for another degree as an established professional, and her university addressed her graduation paperwork "To the parents of...". If colleges aren't even comfortable addressing the people they intend to graduate as independent adults, what opportunities do you see students have in filling that role themselves?
And for some, loans are their only opportunity to attend school. It takes experience most don't yet have to realize that $1000 is a lot of money to spend and not a lot to have. To those, it's. "just the cost of college".
It is definitely worrying, though perhaps not surprising.
Many people who aren't accustomed to dealing with {figures, values, numbers} won't put much time into doing a back of the envelope calculation, and perhaps didn't put much thought into it. My best guess is that for these folks, "millions" or "billions" simply means "a lot, a really big number that I don't know/can't estimate right now".
I don't know how that particular question was phrased, and whether or not you were allowed to answer with "I don't know", or whether that option was presented as one you could answer with.
"We do find that students with higher expected
contributions are more likely to be unaware that
they have federal debt (or any debt). This may be
because these students’ parents made the decision
for them to take out loans, perhaps with the informal
understanding that the parents would later pay it
back (note that students can usually obtain loans on
more favorable terms than their parents). In some
cases, the lack of knowledge about cost and debt
may stem from parents proactively managing their
children’s decisions about education."
And that the first study was an informal survey conducted by LendEDU, a company that recommends and reviews student loan refinance companies.
That said, I think confusion and misinformation about loans likely does have a large contribution to the US student loan debt. It is unclear how statistically founded the contribution is.
I am from Europe, where higher education is inexpensive, and have very little understanding on the implication of such loans in someone's life.
But now this thought occurred to me: how can a 20-something person go out and start a company (as I often read on stories here on HN), leaving on zero or little income for a while (until you find investors, I guess), when I'd expect people to need a steady income to at least go even with the monthly loan payments?
This is one barrier to entry in startups. This barrier is probably lower now than any time in history due to efficiency provided by technology, but it's still there.
You simply can't. I'm a 20 something with hella debt. Would love to go out and do my own thing or even work at a smaller company for less money, but more responsibility. Unfortunately that's not really an option for me. My #1 priority is to get out of debt as fast as possible.
I'm certain that there are thousands in a similar situation. People are starting to recognize that the crippling debt is having a negative impact.
See first-time home buyers average age.
It's also going to hurt the next generation, but I can't tell in what way yet. Many of my friends in stable, well-paying jobs are far too broke to consider having children. On the other hand, all of the people I know who didn't get a 4-year degree have kids.
I get the feeling that a lot of them have parents who are well-off and are able to pay their bills. Either that, or they didn't go to college at all to avoid the debt.
I always look at my massive student loan debt and think, "what would it have been like if I had just taught myself programming for four years instead of paying people to teach it to me?"
Well, yes, along with that came a lot of theory and stuff I wouldn't have learned (or wouldn't have even known to learn) on my own that has so far been invaluable to my career. But I'm not sure if that knowledge was worth the cost. I probably won't know for sure until I look back on my life in 10+ years.
As for the life that was pretty unique to college, it wasn't really for me. I enjoy having a job and working much more than I did studying, taking tests, and going to parties.
> how can a 20-something person go out and start a company
Short answer: they never had personal financial hardship to begin with.
There's always exceptions, but the most frequent trait among young startup founders is that they have a great financial situation with their family and can always fall back on that if they fail.
This is the rub that I never understand with right-wing politicians who prize the free market, but then enable things that actively hamper it: tying health care to having a job, tying startups to people who could somehow afford college or just didn't go.
If you want to enable the free market, you have to remove the barriers.
Since when is that a right-wing thing? Employer-provided healthcare started as a result of (left-wing) price controls. And Obama and a Democratic congress purposely avoided that issue when they "reformed" healthcare.
Now hold the phone. Obama and a Democratic congress avoided that issue because it would have had ZERO traction with some huge campaign donors. That's still a mark against the administration, but it's also the reality of a government ruled first and foremost by capitalist lobbies and greed.
Second, left-wing price controls did not start the current healthcare model, empty hospitals beds, profit-based medicine, the great depression and WWII created employer-based healthcare [0].
> Obama and a Democratic congress avoided that issue because it would have had ZERO traction with some huge campaign donors.
You described special interests, not right-wing capitalists. Special interests including people who would be confused then upset about losing their employer-provided healthcare.
> left-wing price controls did not start the current healthcare model
Sure it did, at least as the employer involvement is concerned. FDR froze wages, so employers provided other benefits, like company cars and free healthcare.
I'm not saying there's a clean way to get there (keeping employers and healthcare separate) from here (the current mess). But it's not a right-wing conspiracy or something.
No, but nor was it a left-wing conspiracy either. People in the US like to throw mud at each other about whose to blame for this shitty situation, but we're all in this together.
Also, I fail to see the difference between special interests and capitalists. They may not be right-wing capitalists, but the folks who run Blue Cross, Anthem and Harvard Pilgrim sure as hell didn't want a public option anywhere close to the finished ADA legislation, and they paid big money to make sure that happened.
But either way, something has to give, because health insurance and for-profit corporations are an oxymoron. When you're for-profit and offer insurance, that makes your primary operating procedure to charge as much as you can for the least amount of service.
This is the argument that pisses me off about job creators. I know a plethora of middle class kids that would LOVE to go out on their own, however, even one slip up would ruin them.
We love to praise those who take risks, but it's probably not that much of a risk for most job creators.
People that have loans they need to pay back and no rich parents to pay them for you don't go out and start companies. "Going out and starting a company" is for the economically privileged.
People that have loans they need to pay back and no rich parents to pay them for you don't go out and start companies.
Comments like this may be well-intended but do not provide advice which is useful for people without certain forms of economic privilege and may be perceived as insulting to people without certain forms of economic privilege who did, indeed, go out and start companies.
I don't think that this should be insulting to someone who came from the lower/middle class and started a company. They are the exception not the rule. It just means that what they did is particularly impressive.
I'd like to comment to point out that after almost a day, this has hovered between -1 and +2, receiving at least a dozen votes but almost entirely split. It's clear that many people agree and many people disagree with this comment.
Exactly the problem for many computer science graduates and has been a problem since 2000's at the very least.
It's made worse by the fact that you are dependent on your employer for health care.
Worst case scenario: your wages are garnished due to student loans that cannot be forgiven (bankruptcy not allowed), while your health issues are going unaddressed (with varying levels of long-term consequence).
> how can a 20-something person go out and start a company living on zero or little income for a while?
It's not just starting a company, it's living life.
How can they travel for a year or to understand more about the world as-is so common with 20-somethings from other parts of the world (Aust, NZ, UK, South Africa, Isreal etc.)?
How can they pursue their passion of painting or learning the guitar?
How can they volunteer in the local community to help others?
How can they do anything other than put their nose to the grindstone?
They can't. They're trapped.
Before they've paid off their student loans it's likely they'll have a car loan, a house loan and eventually even have some kids, meaning they'll miss out on all of the above because of their crippling student debt that took away their options.
>Before they've paid off their student loans it's likely they'll have a car loan, a house loan and eventually even have some kids
I wish that were so. The thing about defaulting on student loans means you don't get car loans, home loans, or interest from members of the opposite sex.
Late GenX. Defaulted. It's paid in full now. So is the only car I've ever owned. I won't own a home unless I can pay for it in full. (Probably never at current prices) I'll never have kids. Too old. It's biological.
After wage garnishment, having my tax returns seized, calls at all hours in all places from debt collectors... I'm too debt averse to loan money for anything else. I have no debt now and I will stay that way.
A dollar spent on student loans is the same as a dollar spent on rent, food, or video games from the perspective of how one earns it. The average student loan is presently around $25k; this corresponds to a monthly payment in the ~$250 region. (US student loans are generally paid back over a 10 year interval.)
Entrepreneurs in my social circles generally had personal expense floors in the $1k to $2k region when they started inclusive of student loans; most handled it with either freelancing or working while beginning their companies.
If one borrowed $100k and desires to work for a long period of time without receiving income, I would observe that "income-contingent repayment plans" are a thing and would ask, in trade for this advice, that one take opportunities to tell younger people to make good life choices with regards to fields of study and career paths given one's hard-won experience on the matter.
Well, on some level, if you don't have a job and you had no cosigners then there isn't much that a loan company can do to force you to repay your loans.
Interestingly enough, they can't garnish my contractor work because I don't have an employer (and you also don't pay you SE taxes ahead of time).
It's a terrible idea to pursue that too far (or at all), of course; you really can't discharge these debts by any means other than paying them. So while it's possible to put off paying these loans and I've done it for periods of time, I still pay off my loans, not out of a love of banks but out of a sense of self preservation :D
They don't, they get an investor to throw them a few million for their ridiculous idea and they pay themselves a good salary in a major city. It's not real life.
The first question is Europe does many things better for their citizens. Hell, they do a lot for foreigners too. In the United States, we have been conditioned to believe colleges, and their outrageous cost, are doing us a favor.
For some reason, Americans don't seem to realize when they are being taken advantage of?
I see these guys gallantly paying off the hospital bills. When I tell them the prices they pay are literally 10x more than an entity with collective bargaining power pays; I get this Amercan pride bs. "I--always pay off my debts!". Companies/government counts on this mindset, and exploit it when the opportunity arrives.
Most Americans are in dead end jobs, unemployed, or working a part time, below minimum wage, sharing economy job. You wouldn't know it looking at these posts.
Americans are also prone to making a bad situation look good. See in America, a lot of our sexual self-worth is tied to how much money, and power we have, especially after the beauty wears off. Some of us--pretty up the picture--in order to find a suitable mate. It works differently for females, but that's changing too. And people wonder why Americans take so many drugs?
As to starting a company. Well let's just say a wealthy dad, on one side of the family, is one of the biggest secrets to success in the United States. Of course, no one like to admit just how much dad helps, but almost every success story I have seen involves a sympathetic family member. It's usually dad. He knows just how hard it was to get started in your twenties, if you come from that family?
If I knew what I know now, I would have high tailed it to Europe right out of high school. I was told to give France a shot, but didn't believe anyone in my twenties.
You are not missing anything, on any level by living in Europe! Including your social life. These are just my opinions. I'm sure you will hear a litany of Horatio Alger's who "made it" on their own in opposition to my post.
My wife was subject to very confusing papers that resulted in a federal loan many years ago. To her (she is dyslexic), it appeared to be a scholarship or a grant.
1. She has no degree, yet owes money.
2. Cannot get a better job to pay off said loan.
3. Cannot get official transcript for classes she **has** paid for, because school blocks it.
Ok, so it's a perfect storm that she can never get out of, due to predatory interest (yes ~8% on a federal loan when banks get 0% IS predatory) and 'fines and fees' that exponentially compound.
Worse yet, taxes and wages are garnished. Yet any calls to find how they are taken from the bill falls on deaf ears. Tax return payments alone have at least counted up to $15k... yet Navient cannot answer for it. Nor can anyone else.
So, how do you dig out of this situation? Well, she won't take the solution I recommend: Lie about a degree. But we're looking at this haunting our retirement. But one thing is for sure: we are in it together.
I know this isn't some sort of isolated situation. I can see variants of this being played out time and again; I can only wonder how the fallout of this will affect the people.
Out of curiosity, have you talked to a lawyer, particularly one who does ADA work? I'm not a fan of how some of them operate, but it might be a good talk in your situation.
No, we haven't. She hasn't been in a good enough financial position to properly address it, with legal retainer fees and all. She's also undiagnosed with dyslexia, but we're working on that diagnosis (thanks to the PPACA for our insurance).
I wasn't sure what kind of representation was needed, but you recommend an attorney with ADA experience?
IANAL, but it would be logical, or go see a lawyer of decent reputation that does free consultations. That would point you in the right direction. Your case really sounds like you need to talk to an actual lawyer and not try to deal with it yourself.
In Fall of 1988, I was handed a sheet with my first loan that said how many $ per month the loan payments would be starting 6 months after I graduated and lasting for 10 (15?) years. I take it that's unusual and new students don't get that information?
I heard a news story last fall that said they're doing this at Indiana University, but I went to a different university starting in 2006 and didn't receive anything like that. The story made it seem like a novel and nearly genius approach to making students aware of what they're getting into. It's interesting that it was around in '88, then disappeared, then the economy crashed, and it's coming back.
In the summer of 2014 (after graduation) I was sent to a web site for my loan provider that told me "everything" I needed to know and even quizzed me on it.
I'd say I'm well-informed now but I learned nothing about my loans until I graduated.
The financial aid process is horribly dysfunctional. Some loans, grants, etc, are based on financial need. There's expected family contribution (i.e. they assume your parents are going to cover part of your expenses). There's the PLUS loan that they give to parents, because of course parents should have to take out a loan to even begin to cover what the federal government expects them to pay. If your parent isn't going to pay for you to go to college, it can be unaffordable.
I got screwed in 2008 when my mom was denied the PLUS loan. I tried talking to student financial services for advice. After talking to the dean of my college, I received a large grant in order to cover my senior year. I thought I wasn't screwed anymore, but I got screwed again because nobody told me that a whole other part of my financial aid, "need-based" aid would disappear because my parents are expected to pay so much, regardless of their ability to do so. After that I was still able to pick up a few more grants and scholarships. However, I ended up having to take out private loans to cover much of the rest. I very much do not recommend taking out a private loan to pay for college.
The real absurdity here is that we can have a discussion about student loans and not discuss the fact that non-STEM degrees offer, in nearly all cases, a poor ROI.
That's assuming college degrees are simply worth the monetary value later on, which isn't true at all. May of the students in my class happily know that their non-STEM degree is worth very little when going into a job, but they value their education very highly and have planned out routes for when they finish college. The value of education isn't something that you can quantify by picking an ROI.
Sure there's a non-monetary component to the value of a college education. But if the monetary component is so low that you'll be paying off your college loans until you're retirement age, maybe that means you need to re-evaluate your choices and priorities.
More students need to start choosing the cheaper public institution for that degree because that private school is not providing enough extra value to offset the enormous cost.
Why? It's a luxury purchase like any other. There's nothing wrong with that. As long as people know what theyre signing up for let them do their thing!
If I get a loan to buy a Ferrari I've made a very bad decision from a purely financial perspective. But if that car brings me enjoyment and makes my life more fulfilling then I'm perfectly happy.
Of course, if the Ferrari dealer lied to me and said that the car's value would go up by 40% as soon as I drove it off the lot then thats a different story.
It is probably true that ple ty of college students don't really know what they're really signing up for. And incredibly misleading statistics about the income of people who went to college vs those who didnt certainly don't help. Pretty much every art history and anthropology major that I've known has been acutely aware that their degree isn't really increasing their earning potential much and are perfectly okay with that.
> Why? It's a luxury purchase like any other. There's nothing wrong with that.
Because it's heavily subsidized and regulated. If it these were unsubsidized private transactions subject to the same bankruptcy laws as any other, I'd agree with your sentiment.
At the same time though, we do subsidize a lot of potentially dangerous, and arguably luxurious amenities because a critical mass of people enjoyusing them responsibly. National parks, highways, even medical procedures are all far from safe if you don't understand the risks involved in what you're doing. Most people do understand those risks and safely use these resources, just like most literature majors understand the risks involved in racking up debt to study literature.
Of course, as tuition goes up - and its gone up a lot even since I was in college not that long ago - the relative risk goes up. Maybe there is a lag in really appreciating the magnitude of that risk and we should be more careful.
> Why? It's a luxury purchase like any other. There's nothing wrong with that. As long as people know what theyre signing up for let them do their thing!
If that's what people view it as, and they're ok with how much debt they're going to incur and all of the stipulations that come with that debt, then more power to them. Can't argue with that.
But I think many people are not really doing that value calculation thoroughly or at all. There are a lot of students who sign up for college because that's what they "should" do and they don't necessarily properly evaluate whether the cost is worth it in lifetime earning potential or personal fulfillment.
It's kind of like the housing market before the bubble. Most Americans believed that they "should" own a house and believed that real estate is always a good investment. We all see how that turned out.
That's really just something you tell yourself to feel good about the dire financial situation your students are in.
I mean, yes, spending 4 years with minimal responsibility, partying, and studying great literature and arts is certainly enriching.
However, I'm sure most of your students feel entitled to that experience and would demand a system which would take money from me to pay for it.
Having recently graduated from college, I strongly disagree with the idea that your students offer much to society to the point where I should be paying their way through college. They're free to live in virtual debt slavery. That's their right to decide that the college experience they got was worth it.
My field is research biology (in Pharma, not academia where the pay situation is truly dismal), and the jobs are severely lacking. Even STEM is becoming saturated and will soon just be Engineering and Applied Math.
STEM is a pretty meaningless term. Most of those who say there should be more people with STEM training don't really want more people trained in general relativity, paleontology, deep-sea biology, etc.
I suspect it mostly means they want the government to pay for the types of problem solvers that businesses want, and enough of them to keep the wages low.
I think that's implicit in how hnamazon123 refers to ROI. Who gets the return - the student, businesses, and/or the country - for investing in someone's education?
There's a comment above talking about a sociology degree making 30k. I knew lots of Biology and Chemistry majors who were making that or less right out of undergrad in industry.
But we did it wrong! It's our fault. I guess in a couple decades when there's a total of 2 majors that will actually return your investment we will actually be able to have a productive talk about college costs. Until then, those at the bottom will continue to be told it's their fault.
The data for lifetime earnings for those with and without a college degree suggests otherwise. The most important distinction isn't between STEM and non-STEM (though it is a distinction) but rather between those who graduate and don't graduate, with the second most important being the type of institution -- selective > non selective state > non selective private > for profit.
I've heard this claim being made for as long as I've been alive, and I'd agree that it was probably true 10, 20 years ago.
Since college prices have risen so fast, while wages have gone down, there's a good argument for forgoing school.
The average 18 year old paying $150K for a Sociology degree at some expensive non-ivy private school is going to be making $30K a year with or without his degree, for many years. Besides the loss of 4 years of income, the $150K (which will end up costing 2.5x-3x after interest) would have earned a lot of money invested in the market.
As of 2013, the median earnings for full time workers 25-32 with just a high school diploma was $28,000 and they had a 12.2% unemployment rate. For those with a bachelor's degree, it was $45,500 and the unemployment rate was 3.8%. Those are medians, not averages. Things are only getting worse for high school diploma holders.
It's all well and good to be pissed off at rent seeking credential granting institutions and the employers that lazily rely on them, but that's no excuse for repeating false information that only leads kids astray.
First of all, I'm not so much interested in raw salary as I am with net worth. If Sociologist Jane at 45 years old makes $50K, and pays $10K in loans each year, is she better off than Plumber Joe who makes $35K a year, owns his house, and earns $10K in dividends. How bout 20 years later?
Your statistics are also assuming that it is the college degree itself that is producing the difference in income, and not the individual.
As politically incorrect as it is to say, a good portion of the non-bachelor degree population would not earn much anyway - 'urban' with minimal basic education, immigrants without language skills, low IQ, disabled, etc.
Find me a study based on IQ - one in which similarly intelligent persons are matched on income (not salary) at varying ages, and I'm guessing that in the future, many in the middle IQ range will not benefit from their liberal arts degree.
Depends on how much the acquired knowledge (explicit and implicit), new contacts, friends etc. are valuable to you. People don't just go to college as an investment, to have well-paying jobs in the future. Of course not everyone can afford to do it simply for the knowledge and experience, but colleges aren't just supposed to manufacture white-collar workers, it is a way to have knowledgeable, informed, thinking citizens, in all areas of knowledge.
I'm not sure how you can look at the insanity rife among the student bodies at college campuses today and say that colleges are creating informed, thinking citizens.
It seems like the general advice for many years has been to just get _any_ college degree. If you have a college degree you are supposed to be able to get a good job. I think the main problem with that advice is that it was good advice when a college degree was relatively rare. These days, everyone is expected to get a college degree so the degree itself becomes worthless. Instead students should focus on acquiring some kind of skill in their post-secondary education. For example, a history degree doesn't actually give you any useful skills while a computer science degree gives you skill in writing software which is a high-demand job right now. Actually, many students who get a college degree would be better off going to a vocational school to learn welding or some other skill. They'd probably actually earn _more_ money than whatever job they can get with a generic 4-year degree.
>Actually, many students who get a college degree would be better off going to a vocational school to learn welding or some other skill. They'd probably actually earn _more_ money than whatever job they can get with a generic 4-year degree.
The reason they don't is simple: class. A librarian making $40K/yr is treated better than a welder making $80K/yr.
A lot of people (self included, until a moment ago) imagine this whole thing crashing down when companies realize they can get good candidates without requiring a college degree. But I think that will be a secondary marker. The real tipping point will be when young tradesmen build a cool (as in, expensive) frat-like house, and a few sororities start hanging out with them.
As a few others have expressed similar, I can attest to the sentiments in the article.
I may be one of the more informed with my loans, and this is my understanding of the matter.
My freshmen year I incurred ~$26,000 in commercial loans, with $4500 in federal.
This year I got a residency reassignment and now have only $5500 in federal loans to pay for the whole year.
So I may now the approximate amounts of my loans, and I just summed them and found out I'm about $36,000 in debt. Truthfully that's the first time I've ever seen that figure, and damn it's scary because I have absolutely zero knowledge of how I'm expected to repay that. What are my interest rates, how long do I have to repay, how many months after I graduate am I expected to start paying that down?
The issue is that due to the inflation in college costs this is the only way many of us can afford college, and I'd have to say I'm lucky because I am supported for my living costs by my parents. Otherwise I would be in significantly more debt.
> What are my interest rates, how long do I have to repay, how many months after I graduate am I expected to start paying that down?
All that will be in the contracts you signed. It'd probably be worthwhile to see if you can audit or sit-in on a contracts class with the business college, as the info will be very useful in your future, like when you buy a car or a house.
I hate myself for not knowing anything about them but it wasn't until I was out of college that it even dawned on me I would have to pay for them at all. I honestly thought my parents had that handled and the true cost of college was never made apparent to me. I take full responsibility for this but I really wish this had been made more clear to me. Not just this but also finances, loans, CC's, taxes, etc in general. The extent of the advice I was given from my parents was "Don't spend money you don't have" (subtext being: unless it's for student loans). Past that I didn't even understand how taxes really worked (Again, I take FULL responsibility) and racked up about $15K in taxes while working as a contractor. I had been working since I was 14 but part of that time I was working for my family and the other I was W2'd so I was paying taxes as I went.
"The survey, conducted in January by Lendedu, a company that provides information about loan refinancing options..."
Let's not forget that the company running the survey has skin in the game. It's not at all clear exactly how they categorized different answers. I have student loans. I can tell you a ballpark number for how much I currently owe, but I couldn't tell you precicely down to the cent off the top of my head (they get auto-payed every month and I don't really think about it). If I were a student would I be categorized by this survey as not knowing how much I owe?
Instead of pushing students to loans, why not show them the value of hard work thru college? People make out like it's an impossibility, but it isn't. It isn't fun, and you might not get the 4.0 average you'd want, but it is possible because I've done it. I didn't have a fancy car or a great high paying job. I also didn't go to a well known college, but rather just a smaller college locally.
What we really should be doing is showing students that WHERE they go to college very often doesn't matter at all after graduation, because so much is learned on the job. What matters is the core concepts are given that lays a great foundation for their "real" jobs later.
"I did it in this specific area, so anybody who can't in the entire country is just lazy" seems to be what you're implying here, and that's an incredibly unhelpful position when dealing with tuition that in many places has inflated well beyond what an entry-level work can hope to cover while also dealing with room and board.
No, I'm not. I'm saying a part of maturity is paying and cash flowing things.
It might take a lot longer, and it might be a lot harder and a few less dinners with friends, but it is very possible to cash flow college.
It's a different mindset. What most people think today is you should always have a loan for something -- car, house, college, a little consumer debt... but it's incredibly freeing when you don't have any of that stuff. I wasn't given anything, but I've learned that hard work and no debt can make life so much greater.
Then I did the impossible 6 years ago. :) In Alabama, no less!
I worked through high school, saved several thousand, had a little pay-as-you-go flip phone, an old $1500 car, and rarely ever saw the inside of a restaurant.
All I know is, it worked for me.
That said, costs have been going up... so sure, it does cost more now. If I didn't have the money for a semester, I'd have just had to take less credit hours. Not optimal, but not the end of the world. And much better than paying thousands in interest for a loan.
Alabama may have a lower minimum wage, making it take longer to earn enough to pay for a year of tuition, but they also have a much lower cost of living than most of the country and that's not taken into account in that chart.
You also forget that for a large number of people, that just doesn't work out. Some of us have to help out our parents when we work (yes, even in high school), and that $1500 car could just as easily cost you thousands in repairs as save you money. Add in health problems or other unexpected but vital expenses and you could really be screwed.
College really doesn't have to cost this much, and it DIDN'T cost this much until very recently. Both the professors and the students are getting a raw deal now, and the fact that you were able to limp your way through school by working a lot and occasionally going less than full-time doesn't change any of that.
I didn't know anything about my loans, and only had a ballpark knowledge of the cost of college. And it was fine--I paid off my loans after graduation relatively quickly and with little fuss.
Of course this was because I went to college 24 years ago (dear god I'm getting old). College was far more affordable, and the loan conditions were more humane.
The landscape has changed dramatically. At least part of the problem is parents in my age group not realizing that their children's loans are far more onerous than their own loans were, and failing to give them adequate scrutiny.
I was lucky enough to not have to take out loans, but we did finance my wife's law school education predominantly with loans.
The thing I never understood was the interest rate. It seemed like we were locked into a 6.5% rate no matter what, but others were getting loans at nearly half that rate. I'm not sure if this was based on need (seems like a dumb way to set interest rates), when we first started taking the loans, or what.
Once you graduate, you're able to refinance into a private loan, which will get you a lower rate, but you seem pretty stuck while in school and unsubsidized loans accrue interest while you're in school. Our loans will be paid off in a few short months, but we have been scrimping by the past two years in order to put as much money as possible towards the loans. I'd guess most people don't graduate as undergrads to this type of scenario. With law school, you're hopefully graduating into a nice paying position and are in a better financial place to pay off the loans. I do find it a bit ridiculous that during a period when you could finance a house at 3%, a car at 2%, and could only get 0.5% or 1% on a savings account that the government was collected 6.5% of student loans. Yet, they did, and lots of students are going to be stuck paying multiples of their actual education cost as they pay interest on those loans for 30 years.
There is a government program where if you work in the public sector for 10 years, they will forgive your law school loans. I did the math on this and it ended up costing less money to just pay off the loans as quickly as possible rather than pay 10 years worth of interest on them, while being indentured to a single public-service job that likely pays less than the private sector anyway.
> I do find it a bit ridiculous that during a period when you could finance a house at 3%, a car at 2%, and could only get 0.5% or 1% on a savings account that the government was collected 6.5% of student loans.
That's not entirely true either. They can attack your licensure if you aren't current on your student loans. And for certain high-scholastic-debt careers, also makes you lose your job, and therefore further ability to pay said loans.
The scary part is the revocation doesn't have to be for the degree the loan was for. For example, if you tried being a lawyer, and couldn't find a job, you look elsewhere. You decide to join the pipefitters and steamfitters union for plumbing, which requires a license. Later on, the state can remove your license to practice plumbing.
> You can't erase student loan debt with bankruptcy
You can, though its harder than many other categories of debt. That you can't is a popular myth which makes the problem worse, since it discourages people from looking into the possibility of doing so.
You can say that students should know to read paperwork by the time they're entering college and that's fine, but the problem is that (for most) their only avenue towards high earnings is a degree and the only avenue to a degree are loans. Combine that with someone around age 18 who has never had significant income doesn't realize just how big those numbers are and how they'll impact them in the future. We badly need to reign in public college costs and offer student loans at lower rates.
It would have been nice to have been told up front: "Rent will be this much higher (for a building with worse quality due to mass production), which you'll have to pay to get access to the city where the jobs are. Wages will be stagnant by this much, and god save you if you have some kind of health crisis and don't navigate the healthcare system just so."
Anyone saying these kids or their parents should've known better need to get real. Most of the middle and lower class was hustled. Of course, they and those with even fewer protections abroad are still needed to get shit done. That is, only until those jobs can be replaced with automation so profits can be even higher at the top. Humans are so fragile, costly, lazy, biased / inaccurate, and replaceable.
What then? People keep saying that things have never been better, though, so I guess there's that. Meanwhile (anecdote incoming), most of childhood friends are barely scraping by while living with their parents, clinically depressed & flirting with homelessness, or dead. The successful ones are few and far between, and they're typically those that were born with more "intelligence". And by successful, I mean achieving some kind of success that somewhat matches their parent's standard of living.
Most of my friends in the US are in the same position. Then I look at my friends overseas (same age) and they've bought houses, have investments, seem much happier and healthier and less stressed about the basics ...
> Anyone saying these kids or their parents should've known better need to get real. Most of the middle and lower class was hustled.
This may well be true in the general case (and by extension, in the majority of individual cases), but I've started to lose sympathy as I see more and more people who were told about the risks up front but still decide to get degrees that aren't good economic propositions.
Having been through this once and now doing it a second time as a parent the information is available. It is not hidden. The undereducated parents are the ones that need help. But I see well educated parents not pay attention.
My comments apply to the traditional not for profit schools. The for profit ones are probably as you say.
Agreed, the prudent and frugal way is possible, and more accessible than ever for those looking in the right places. And it is rewarding, very rewarding compared to the other option of irresponsibility, when you're small enough to fail hard. Be sure to look the other way as those in a positions of wealth and information advantage make orders of magnitude more progress than you, lest you get discouraged at the complete lack of fairness of it all or overhear them wondering why you're not as successful or as hard-working or as beautiful or as intelligent as them.
In the professional field, we're expected to be specialists, and if you're not, you lose out (comparatively). In life, we're expected to understand and make informed decisions on a huge range of topics, and if you're not, or if you err, it's your fault. Some people have enough support to be picked up, reflect and become stronger and make better decisions next time, but most don't.
If your family and your teachers and your self didn't prepare you to navigate this extremely complex world of maneuvering, intelligent, powerful agents... then what do you do? You suffer and you try to cope and you fight to find some peace by whatever means necessary, ethics be damned. You keep climbing or you fall.
I'm one of those people with "uneducated parents" and it's true they do not know the least about it. My father actually told every single one of his kids not to go to college.
4/5 did (a couple have grad degress) and only 1 of those has been able to make good on their investment (my sister who is a nurse). I love learning and I'm glad I am educated, but I would not do this all again. Americans pride ourselves on being a classless society, but the reality is I was born to blue collar workers and I was meant to be a blue collar worker. The extreme attempt at being a white collar worker has failed most in my family. All we did was get was huge debts that have crippled every one of us through our 20's and 30's.
And then we're told to get on our hands and knees and thank our bosses for the opportunity to never be challenged or build a career. I would rather slit my throat than continue to be lied to about all these "opportunities" I apparently have. I've made plans to do just that if I am going to be forced into another bullshit job where I get to make the world worse all for the "opportunity" to not be challenged or pay off my student loans. It sucks, but I see more virtue in going off and dying.
You sound like you are in a very dark place. It's true student debt is bullshit but your life is so much more important. Screw it. Leave the country before you consider dying. So many people in your boat so hopefully things will change. I am sorry you are going through this...
in grade 12 at my highschool we had a whole unit by the guidance staff about college. We took personality/aptitude tests that were all "tell us about yourself and we'll list some jobs you might consider preparing for"
Among other things, it had five year projections for salaries and job prospects. It said "this is what these people get paid now, and this is how we think it will change". It said "this industry is in demand" or "you will have a hard time finding work doing this"
It's certainly a rigged system, but (anecdote incoming) I know many people in situations such as you describe, and the most that the majority (not all) do about it is complain. I rarely see a true effort put forth to rectify or improve.
It's typically all about how the forces are aligned against them, so why even try. And yeah, I know, learned helplessness is a thing. I get it, trust me, I do, but still...
I'm from India, and I generally have to talk to my younger cousins when they think of choosing courses like Arts, History, Literature and Media studies about impossibility of making a good living with that sort of an academic background. Almost certainly these people will have to do jobs that don't remotely match their education, and are generally low paying. Career is almost non-existent, and then starts the regular whining and hating people from the STEM(and law) branches. In fact even science and technology degrees will get you nothing more then low paying jobs as teachers. Your best bet as a salaried employee is with a engineering degree, medicine and may be law.
I can only understand how much more worse it can be for people in America, with far higher student debts, high rents in cities, unfortunate health interruptions and in a largely credit driven consumerism based economy. You can pretty much spend your whole life paying loans(education, house etc).
Next time while choosing a course, at least make sure it gives you some bare minimal skills. I would even bet, some thing like carpentry, welding or plumbing would be more helpful to making a living than some thing like studying History.
Student loans are not a problem if you're a surgeon/engineer, because you'll make millions of $ during your career, but they are a problem for dummies studying sociology, gender studies etc.
There are few reasons cost of going to college is so high:
(1) More people wanna go - not just from the US, but people all over the world apply to go to US schools.
(2) Government standing behind the loans. This means that universities/banks don't have to screen applicants based on potential future earnings, but loans are given to everyone, which makes going to college much easier and fuels (1)
(3) Brainwashing since early childhood. "People with college degrees make more money" they say. That might be true, but that doesn't mean it's because they went to college and have a piece of paper. They are accepted to good schools because they are ambitious, hard-working, have wealthy parents with connections, talented, lucky etc. - those things are what makes a person financially successful later on in life. But, propaganda makes students willing to put up with high debt and go to college in the first place. It's a voluntary slavery.
> but they are a problem for dummies studying sociology, gender studies etc.
I'd suggest caution before referring to anyone who is earnestly and seriously pursuing sociology and gender studies as a "dummy".
There are probably plenty people who are studying these things without enough awareness of the ROI, but there are also people who are pushing our understanding of these fields for the benefit of our society at large.
For example, if we didn't have people advancing sociology and our understanding of gender, we may not have come as far as we have in respecting people's gender identities, especially when they are non-normative.
They are dummies! How do I know? Evidence[1] and experience(having met a lot of professors/students).
They are completely worthless parasites who were bad at math/physics/chemistry or something like sports/art in high school.
They offer no significant contribution to society and are actually a net negative. You're mentioning gender identities, but they are the ones who primarily care about that BS, so it's self-referential.
Indeed, but it's better to just flag this type of comment than to dignify it with a response (and further dilute the thread). Flagging it guarantees that a moderator will see it, and for something this awful it's an obvious call to ban the account, which we've done.
In case anyone's wondering, you flag a comment by clicking on its timestamp to go to its page, then clicking 'flag' at the top. There's a small karma threshold (currently 31) before those links appear.
Nice goals, but why does that require the participants commit financial suicide?
Its hard to do it with a straight face, but you can kinda pretend that keeping the chemistry lab stocked and the electronics lab bench gear repaired costs $100K/yr. Maybe $10K/yr for some of the individual goof balls I went to class with, but certainly not on average. You can also pretend that paying the PHD student TA stipend costs $100K/yr/student, when the TA is getting less than minimum wage and is on food stamps. But its hard with a straight face to claim that talking about philosophy or gender magically costs $100K/yr/person.
I don't think it should require that they commit financial suicide at all.
If anything, I think it requires a re-think of whether our society undervalues their efforts, and whether the educational costs we saddle them with are hugely inflated.
That should be a valid discussion considering it is debatable how much the income and wealth disparity among professions is correlated with merit and value contributed by those professions to society.
Dave Ramsey has a dim opinion of college loans that should be broadcast further than it currently reaches.
Many, if not most, college students and parents therof seem ignorant of Ramsey's sensible recommendations. As "Lie #4 about college loans" Ramsey declares: "I can’t afford to go to college without a student loan."
from "9 Biggest Lies About College and Student Loans":
Lie 1 is wrong. The uber rich (Gates and Ellison) are not a prescription for how to aim your life as a young person. Also, in the 2008 recession, people without 4-year degrees were hurt far worse and recovered slower than those with degrees.
Lie 2 is reasonable, except in particular majors. My wife was a historic preservation major in undergrad (I think there's less than a dozen in the country, and one happened to be in-state but she would have gone out of state if necessary) and her graduate program was out-of-state for Museum Studies. There are only a handful of these programs in the country, so being out-of-state was not a choice.
3 is also incorrect in my experience. While the employers may not care a lot what's on your diploma, they also don't recruit evenly across universities. Wasn't everyone complaining a while ago that Google was basically where people went after graduating from Stanford?
4. When I was looking at school, the scholarships on those "find scholarships for you" sites were all under $1000. While that's not insignificant, you can't count on getting every one you apply for, and it's not reliable for paying for more than books. Community colleges and living with parents are underutilized, but you eventually have to attend at least 2 years in a 4-year institution if you want the 4-year degree.
5. I wish this had been drilled into me
6. Reasonable, but I don't think it is widely talked about
7. This is complicated. I was in school during the 2008 recession, so there was really no way to know before going in what was going to happen after graduation. Students do need to know it isn't necessarily a given, and this was a big pitfall for me. Unfortunately, our parents' generation didn't know about this because it is different from their experience with college.
8. I've never heard anyone say this, but attendance levels are up in bad years
9. Nobody thinks they're going to need bankruptcy when they start their college education; they're still young and bushy-tailed.
Though I can't recommend it, there would actually be better outcomes if we banned loans for college. Flooding the higher education market with cash has made it less affordable not more. Having people be responsible for the cost up front would make them better shoppers and the colleges more lean. Prices would come back down to reasonable levels.
The downside, of course, is that people who are from poor families never get to attend college. This perpetuates poverty in certain families/neighborhoods/regions and discourages diversity of opinion in universities and the workplace.
Actually (counter-intuitively) college would be more affordable for middle class and the poor in a situation where there are no loans. Consider, there are only a tiny amount of rich people and there are many, many colleges. If there were no loans, colleges would have to make themselves affordable enough to get any enrollment. A large portion of tuition increases have come from bloated administration and useless degree programs. Those would disappear if people weren't given gobs of money in loans.
Sure the price will come way down, but it will still be out of reach for the people who are most likely to perpetuate poverty in their families. Surely the price would not drop below the annual difference in median incomes between those with and without degrees. If I'm going to make an extra $5k a year just for having the degree, I can get my family to cover it. Poor people can't really afford that. In fact, I'd wager there is no price at which it is viable to run a university that doesn't make it unattainable for people with parents living paycheck-to-paycheck.
If colleges are worried about diversity they can do financial aid. Many elite schools do that.
But we aren't doing poor kids any favor putting them tens or hundreds of thousands of dollars of debt for college.
Also, we have community colleges and public colleges. Tuition in my state for community college and a public school is under 30k for a full degree if you mix community and public 4 year. Motivated students could do part time school over 6-7 years while working full time.
The situation is identical to health care. Decades of propaganda that you will pay anything for a 4-yr degree or health care. Pay anything, eh? How much you got? Oh you have $100K of loans, I guess it'll cost $100K then.
This is the pointlessness of the article. Like asking what percentage of heart attack victims know how much their bill will add up to. Oh you say without that treatment I'll die, well then I guess I like that treatment. How much does it cost, well, lets start with how much do you have?
No, the government just needs to stop subsidizing loans. The price of tuition has reason in step with the availability of loans---Colleges and Universities are simply charging the maximum amount they can get away with. The federal government has created an artificial externality in higher education.
Loans are the only way that some students can compete with the other students who get to go to school for free or at a discount. Maybe free money should be banned, or distributed more "intelligently" even if that means spreading it uniformly over everyone who gets accepted.
And when students graduate with loans, they have to pay for themselves as well as the other students who got free money (via taxes).
'STUDENTS' - this word is the problem. Students are those studying to become engineers/surgeons[producers] and those studying sociology/gender_studies[parasites].
That's why so many people in humanities departments are liberals/communists. How else is a sociology student going to get a smartphone? They have to tax producers, take their money by getting a fake job in some non-profit/government agency/college and receive a salary there[taken from tax dollars].
The word 'student' makes it seem like we're all in this together, but we aren't. Parasites are eating us alive.
I agree with the sentiment 100%, however there is reasonably only so many producers our society needs. We could give the non-producers a basic income. If it's disparate, you end up with class warfare. If there is not a large disparity, the producers stop producing since they can get the same outcome by sitting on their ass. Not sure what the solution is.
Producers are taxed at nearly 50% rate[income + sales tax + property + wage + others] on what they make. If we kill off the parasites, then we would have to work almost 50% less to have the same standard of living as we have now. Imagine: 20 hours/week. You could work 2-3 days and then enjoy the rest. Or 1 person could work and the other one would stay at home and take care of their children.
It makes sense to reward people you love and who are productive. But, these are parasites and the correct course of action is to, not reward them with cash and goods we producers make, but to kill them and enjoy our lives.
>>however there is reasonably only so many producers our society needs.
The bigger problem is in not wanting to be a producer. Producers aren't just Engineers/Surgeons. Plumber, Welders, Carpenters, Drivers etc these guys are producers too.
Producers are people who are exchanging real effort for money. Jobs created(which don't even have to exist), just to provide people a salary are what I would call consumers.
Speaking as a student who graduated not too long ago, here's the reality for those who are saying "we should know better":
1) We aren't required to know shit. Pretty much anyone can get a loan for any amount, depending on what school they're going to. I for one borrowed about $26,000 to go to a local technical college, and that included about 2 semesters of classes in a major I ended up dropping. I was never once questioned about how much was borrowed, or asked to demonstrate any knowledge, just sign on this line and you get free money. How many 19 year olds wouldn't jump at that? I'm not saying that's right, I'm pointing out the fact that if I were going to a bank to buy a house or a car, they would demand a LOT more (proof of income, talk me through the terms, interest, etc.) than a school does.
2) It's basically required. At this point a high school diploma isn't getting you shit if you aren't some startup funded golden child. Someone going out into the market for white collar work pretty much MUST have at least a 2 year degree, and most businesses prefer 4 year degrees. It seems wrong to me that we're billing people for what is more or less an essential part of their resume if they want to do something other than trade skills and that sort of thing, and doubling down on that, it seems insane than the debt incurred is not dischargeable in bankruptcy and can be payed back via seizure of tax refunds and other assets.
3) Entrance counseling is a joke. Yeah I know how loans work, I get this money now, I pay it back later. That does not cover nearly enough, and not to mention you can breeze through it in about a half an hour and fail the tests as many times as you want, as long as you check all the right boxes you can get past it, get your loan and never think about any of that shit again.
I'm not in trouble personally, I make my payments and I'm up to date. It just drives me crazy when boomers are out there saying "we started out with nothing" and my reply to that is "I started 25k in the hole, I would've LOVED to have started with nothing."
The way I had to take out loans when I went to college, I knew how much more in debt I was getting every semester and the total debt. I had gone to a public university in the US. Since I had scholarships, I had to take out "only" $1000-$2000 in loans per semester. Every semester when disbursement time came around, the university financial office would send me an email informing me of all the money that was coming in from scholarships and loans, how much of it would be applied to tuition, and the amount of the rest that would be deposited into my account. If I recall correctly, I think they even made me see the balance before the money would be disbursed. In this way, I knew what my loan balance was when I graduated, and instead of panicking about it, paid it off gradually over several years.
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[ 3.5 ms ] story [ 227 ms ] threadHere's one of the examples for Sallie Mae:
http://www.studentlendinganalytics.com/images/Sallie_Mae_Pro...
This document, in style and length, comports with my recollection of what I signed ~15 years ago.
8 pages; approximately the length of an apartment lease. The language should not tax the reading comprehension abilities of a college student.
Representative sample:
Interest on this note will accrue at the Variable Rate (as defined below), beginning on the first Disbursement Date, on the principal balance advanced and on the Capitalized Interest, Fees, and Other Amounts, until the principal balance and all interest are paid in full. The Variable Rate will be used to calculate interest during the entire term of this Note, and following the maturity of, or any default under, this Note; there is no initially discounted, premium, or other rate that will be used to calculate interest under this Note.
Why are Federally subsidized educational loans at 8% interest, whilst the Big Banks get their money at 0%, or thereabouts?
One invests in the future, while the other breaks it. You can probably guess which does which.
Well actually, yes you can. Student loans are not dischargable in bankruptcy proceedings. That distinction is only shared with criminal court ordered penalties.
In other words, they are guaranteed a payback of the loan, plus fees and interest. Even if that means garnishment of your Social Security. But look at the bright side: they do go away if you're dead.
Edit: Evidently mentioning that Educational Loan debt is not dischargable is somehow a very unpopular thing (given my and other karma scores). It will also be a very unpopular thing for the 43 million people with their collective $1.3 trillion in debt. I wonder how many have or will default? And, what will that do to our economy?
https://www.washingtonpost.com/local/education/national-stud...
Also, big banks borrow at essentially 0% when talking about the Fed Funds Rate, which is for overnight loans.
You have a typical 18 year old with zero credit history and zero real income. You have a loan that may take many years to repay, but unlike a mortgage there is no house to repossess if the loan goes bad. You can't repo a degree.
A good exercise is to imagine that you're a lender writing checks with your own money. Would you even make loans to somebody majoring outside of STEM? What interest would you charge especially given other options for investing your capital? How would you have to adjust your interest rates if students were allowed to declare bankruptcy to discharge their debt to you?
I believe this is the problem with getting the government involved in the loans. It obscures the true cost.
Who knows what the college system would look like today without federal funding? Maybe distance learning or a more focused associate degree would have developed.
No, the reason you see loans in the single digits is because the government is both the sole lender (since the Health Care and Education Reconciliation Act of 2010) and sets the rates by law.
What private lenders would accept was only relevant when there were private lenders.
Not federally subsidized ones; the program under which such loans were offered through private lenders in addition to directly by the government was discontinued several years ago (as noted in the grandparent comment.) The upthread comment was about interest rates on federally subsidized loans.
You're correct that private student loan lending is no longer subsidized and hence the rates tend to be higher.
If you mean they can't discharge the loans when they declare bankruptcy, this is a popular myth that, while it has some relation to fact, is not actually true -- it is difficult to discharge student loans in bankruptcy (and more difficult for some than others), but they are not impossible to discharge.
See, e.g., http://www.usnews.com/education/blogs/student-loan-ranger/20...
COmpany A borrow 80k and goes bankrupt - that money goes to collections and comes out of the assets of the company, very unlikely the full amount will be paid back
Alternatively, Person A borrows 80k in student loans and goes bankrupt. 100% of the 80k will still be collected from the student, as student loans are not dischargeable debt. Person A's wages will be garnished, debt resold to collection agencies, credit adversely affected, and yet still the entire amount will be paid back.
If you think the scenario where its possible you never get your money back is less risky, i have a bridge I'd like to sell you.
Or maybe student loans are pretty much a commodity product in which sellers viciously compete to provide the lowest possible price so the interest rates we see are commensurate with the actual risk being taken.
i didn't say student loans are overpriced, i said a student loan is lower risk than most other types of loan, since it is non-dischargeable debt.
That is the argument i'm making and your response doesn't address any of it.
also, in case you arent aware, the overwhelming majority of student loan debt has been financed through federal and state government programs, not the private market "in which sellers viciously compete to provide the lowest possible price" as you seem to believe
2) You are correct that most student loans are financed by government programs. That allows them to undercut even the viciously competing private market because the government isn't trying to make a profit. So that makes the loans even cheaper which makes your assertion that they're overpriced more, not less, ridiculous.
>Rather, pricing and loan limits are politically determined by Congress
https://en.wikipedia.org/wiki/Student_loans_in_the_United_St...
>Who sets interest rates for federal student loans?
>Interest rates on federal student loans are set by Congress.
https://studentaid.ed.gov/sa/types/loans/interest-rates
Also, there have been several bills proposed to congress to lower the loan rates, and to allow refinancing of existing loan rates. Anyone saying federal loan rates are determined by some actuary calculating risk is plainly wrong.
I wonder if there's a correlation between student loan debt and suicides?
I should have clarified: zero default risk.
There's still the time / opportunity cost of money, and it's possible that a loan might not be repaid at any given rate. The interest would reflect this. And inflation risk would have to be factored in.
There's also a case that might be made that offering of loans isn't entirely competitive. Dynamics of that, and implications on interest rates resulting from that condition could be interesting to explore.
Also, risk of default is non-zero. Google the Brunner test.
They aren't. 2015-2016 federal loans are at 4.29% for undergraduate and 5.84% for graduate/professional.
I don't think this matches most peoples' experience. I think it usually goes like this...
You walk into the "financial aid" office where you sit nervously while they ask you meaningless (to the cost) questions while they click at a spreadsheet. After you stew for a while they present you with a price that looks like it could fund a trip to the moon (the 'list price'). You panic and then they say "but don't worry, financial aid"!
What you don't know is that while they're piecing together your "package" what they are really doing is figuring out how much they can borrow on your behalf to claim for themselves. After they've exhausted every external loan, grant and scholarship out there (its a big list and they are good at their job) they declare the rest of that impossible number a generous scholarship provided by the university. You made it! Welcome to Scruew U! You're so relieved just to be in the door you start signing paper as fast as it comes at you. That number looked impossible but somehow you're in! It looks like they busted their butt to help you out, but really, they figured out how to extract maximum payment from you, used car salesman style.
It will take you a long time to figure out exactly what your responsibilities are with regard to that witch's brew of loan, scholarship, and grant. Just wait until next year when you're invested and some of your grants and scholarships expire or reduce!
One problem is you get one piece of paper each year for 5 years. The total amount sneaks up on kids.
If they had to see an estimated borrowing amount for the total degree, they might do things differently.
Especially since families tend to blow their wad the first year. Use their small savings to pay for the freshman year and then all the sudden there is no money for two.
Edit: If you search online, there is a lot of info about subsidized vs unsubsidized, income based repayments vs standard repayment, etc, but not of the (small) sample of sites I looked at explained repayment in simple terms of what does my monthly payment go towards (principal vs interest).
That's one of those really basic things that I'd bet well over half the adult population of the US couldn't explain, if asked. Like how marginal tax rates work.
Once one has taken algebra (and paid attention) to the point of studying compound interest, one should be sufficiently forewarned about loans.
As for your remark about half the adult population: I truly fear you may be correct (it may even be greater - half the population has an IQ of only 100, after all. What IQ is required to understand compound interest? And then there's the training - making sure it is in place). If so, then perhaps stronger vetting systems for obtaining loans should be put in place.
All in all, good arguments for increasing the numeracy of the population at large and, barring that, putting mechanisms in place that prevent them from unwitting personal fiscal disasters. Unfortunately, to do so in the USA would be viewed as a form of fiscal, and therefore, political discrimination, so the disasters will continue!
Which leaves only increasing numeracy, Which is well-nigh impossible. Which leaves the task to our not-yet-here AI personal assistants to warn us not to make bad loans. Indeed the best argument for AI may be that we shall need AI to save us from ourselves, in ways both big and small.
The good news is she will be majoring in Mechanical Engineering with a concentration in CS and EE. Still we want student loan amounts to be reasonable.
Met a young person recently that got a sociology degree and had >$100K US in loans. She is making like $30,000. This is totally absurd.
So I dropped out and am now working for a recently funded start-up, making a decent amount of money with promises of more if I can work at a level that can elevate the company itself. I intend to finish a different degree over the next ~3 years (CS -> Philosophy). Needless to say none of this would've been possible had I not spent thousands of hours learning software development in my free time, such that the degree I ultimately get, or if I even have one at all, is much less important.
However I don't blame my parents at all for my poor decisions. I think today's youth need to be taught financial responsibility.. some how. Maybe mandatory minimum-wage work during high school? I don't know. This is all so ridiculous you would think it could only happen in theory. Financial institutions finding a way to take hundreds of thousands of dollars from the adult population using their children as a proxy and the parents being grateful to do it..
Here while rooms might be only slightly bigger than a jail cell (room for one single bed, a desk, small closet and a bathroom w/shower); they also cost less and students get their privacy. They still share a kitchen and other spaces.
It is like student housing in the US is still set up like it is really cheap but actually costs insane amounts of money.
That's insane. The whole point of on-campus housing is to provide very cheap but spartan accommodations. If nearby apartments are cheaper, there's no point to it.
Dorms are also becoming increasingly luxurious in some cases. In my old college suite, we had maids come by every morning to take out our trash and recycling and every weekend they'd thoroughly clean the entire bathroom, shower, sinks, and toilet. Just to be clear, these were private bathrooms in individual suites that they'd clean, not just the shared communal bathrooms.
1) Opportunity cost: The land on campus, due to being near campus stuff, has appreciated a lot in value, so it doesn't make sense to use as dorms (instead of whatever else) unless you can charge out the nose for it.
2) Access to loans "for education" is easy to get, and this counts as part of the education package, so students figure to pay for not having to park or to walk as far.
One practical benefit is you can roll out of bed 20 minutes before class, skipping the morning commute and hour of looking for parking (oversold lots), then walk home after class. You live at school. I've never done this.
And everyone who lives around you is a student and maybe not a couple with a wailing newborn in the middle of a divorce arguing every night at 3am, a group of problem teens with working parents that hang out outside your door smoking and being obnoxious (both the kids and parents), or someone who locks their howling dogs in the bathroom for 10+ hours a day during their shifts.
If you couldn't spend your student loan on housing, you can bet rent would be lower.
I never understood this. If a person doesn't have the discipline to wake up early(unless he/she has been studying all night), further incentivizing their laziness is barely the solution to their problems.
And let's be frank, staying living at school doesn't translate to more time for studies. It generally means you waste more time with friends.
But for the individual with a massive student loan and no way to repay it is a problem even if they better the world overall.
Part of the problem is that for some majors supply massively exceeds demand. Stem definitely isn't immune from this issue.
Unfortunately due to politics nobody (schools or government) is up-front about where jobs exist and shortages occur. A lot of the time when you hear about a "shortage" it is actually just whining that wages are too high.
There's no absolute fixed quantity of any good or service (including labor in particular job roles) that is "correct"; "shortage" and "market clearing cost higher than I prefer" are actually equivalent concepts, not things that people misleading conflate.
She has zero undergraduate debt. But that is because I took a pay cut and went to work for the university she went to. Tuition was free. I'm very glad I made that decision. As mentioned about my youngest is getting an Engr degree so the free tuition does not count because where I work does not have a Engr program.
You wanting to do what you want has nothing to do with how much you might get paid for doing it.
I believe a full perspective of any degree should include its potential impact on a students social life, because lets face it it's a contributing factor to why students want to go to college and IMO we derive a lot of our happiness (especially at that age) by our social interactions.
That said with love and support like the kind you seem to be providing, she should be able to succeed at anything.
She is driven by the desire to change society for the better and thinks she can do this via a mix of engineering and political policy influence. She has experience lobbying at the state and federal level already successfully. S this is what drives her.
All of this is complicated by cost factors and home much grant and loans are offered. The final weeks in April will be stressful as the financial aid award letters come in. Exciting but nervous times.
What are they supposed to do? These days you absolutely need a college degree to have a chance in the workplace so you have to take the loans if you like it or not. No options besides having a rich dad.
If that number is still too high they should earn credits at a community college and transfer into the state university after their Sophomore year.
I get incredibly frustrated when you have people complaining after they chose to forgo their own state's perfectly decent university to go to another state's. You get practically the same education for 5x the price.
So add another $10K to your number.
I'm sure there are arguments to be made about just getting out of small states, but rarely are such simple-minded solutions useful for issues like this.
Personally, I think loans are a red herring. I think it's an arms-race between academic institutions and increasing tuition [0]. Adjusted for inflation, even the so-called affordable state schools have increased 14% over the past five years. Private schools actually went up less, when adjusted for inflation, but I'll let you RTFA.
The only glimmer of hope is that state schools have almost kept up with inflation for the past three years, and if the trend continues tuition might STABILZE for the next few years at roughly 25% more than it cost to earn a degree 30 years ago. Seriously, what the fuck?! How do you account for that?
[0] http://trends.collegeboard.org/college-pricing/figures-table...
This is one of the reason why as an Indian, I decided not to do my MS in the US. Though I could have. The reason is simple, you will rake up a huge loan back home in India.
Most of friends who came to US for their MS had only horror stories to tell. A loan amount too huge to pay off working a job in India, perennial stress of paying off that loan(often taken against a house/plot in India) and doing small part time jobs for food and sustenance in restaurants. Add to that a good college is beyond affordable, and a degree in By-The-Freeway college is next to useless(but still costs a lot in Indian money). After all that you will be stuck fighting a Visa system, with a multi year green card struggle.
And even after all this, while you are in your late 30's(or early 40's), you have to buy a home(and pay those loans for the remainder of your enjoyable life), worry about retirement, getting kids settled and save for health care expenses.
[0] https://studentloans.gov/myDirectLoan/whatYouNeed.action?pag...
It seems difficult to teach the hard lessons and experience of personal finance without them actually being hard lessons. Unless something else is driving everyone to accept student loans.
Most of those adults are treated like legal children up to and beyond their first year of college. There's a lot of paperwork adult students can't even fill out by themselves when applying for college until they're 24 unless they've been emancipated.
My SO went back to school for another degree as an established professional, and her university addressed her graduation paperwork "To the parents of...". If colleges aren't even comfortable addressing the people they intend to graduate as independent adults, what opportunities do you see students have in filling that role themselves?
And for some, loans are their only opportunity to attend school. It takes experience most don't yet have to realize that $1000 is a lot of money to spend and not a lot to have. To those, it's. "just the cost of college".
The most worrying part to me. 59% can't estimate things like this within ~two orders of magnitude?
Many people who aren't accustomed to dealing with {figures, values, numbers} won't put much time into doing a back of the envelope calculation, and perhaps didn't put much thought into it. My best guess is that for these folks, "millions" or "billions" simply means "a lot, a really big number that I don't know/can't estimate right now".
I don't know how that particular question was phrased, and whether or not you were allowed to answer with "I don't know", or whether that option was presented as one you could answer with.
"We do find that students with higher expected contributions are more likely to be unaware that they have federal debt (or any debt). This may be because these students’ parents made the decision for them to take out loans, perhaps with the informal understanding that the parents would later pay it back (note that students can usually obtain loans on more favorable terms than their parents). In some cases, the lack of knowledge about cost and debt may stem from parents proactively managing their children’s decisions about education."
And that the first study was an informal survey conducted by LendEDU, a company that recommends and reviews student loan refinance companies.
That said, I think confusion and misinformation about loans likely does have a large contribution to the US student loan debt. It is unclear how statistically founded the contribution is.
But now this thought occurred to me: how can a 20-something person go out and start a company (as I often read on stories here on HN), leaving on zero or little income for a while (until you find investors, I guess), when I'd expect people to need a steady income to at least go even with the monthly loan payments?
I'm certain that there are thousands in a similar situation. People are starting to recognize that the crippling debt is having a negative impact. See first-time home buyers average age.
(recent college grad)
I always look at my massive student loan debt and think, "what would it have been like if I had just taught myself programming for four years instead of paying people to teach it to me?"
I hope you learned theory and underlying principles, as well as experienced the life that is pretty unique to college.
As for the life that was pretty unique to college, it wasn't really for me. I enjoy having a job and working much more than I did studying, taking tests, and going to parties.
http://www.bloomberg.com/news/articles/2015-05-21/if-your-pa...
"If Your Parents Are Still Paying Your Bills, You're Not Alone"
Short answer: they never had personal financial hardship to begin with.
There's always exceptions, but the most frequent trait among young startup founders is that they have a great financial situation with their family and can always fall back on that if they fail.
If you want to enable the free market, you have to remove the barriers.
Since when is that a right-wing thing? Employer-provided healthcare started as a result of (left-wing) price controls. And Obama and a Democratic congress purposely avoided that issue when they "reformed" healthcare.
Second, left-wing price controls did not start the current healthcare model, empty hospitals beds, profit-based medicine, the great depression and WWII created employer-based healthcare [0].
http://www.npr.org/templates/story/story.php?storyId=1140451...
You described special interests, not right-wing capitalists. Special interests including people who would be confused then upset about losing their employer-provided healthcare.
> left-wing price controls did not start the current healthcare model
Sure it did, at least as the employer involvement is concerned. FDR froze wages, so employers provided other benefits, like company cars and free healthcare.
I'm not saying there's a clean way to get there (keeping employers and healthcare separate) from here (the current mess). But it's not a right-wing conspiracy or something.
Also, I fail to see the difference between special interests and capitalists. They may not be right-wing capitalists, but the folks who run Blue Cross, Anthem and Harvard Pilgrim sure as hell didn't want a public option anywhere close to the finished ADA legislation, and they paid big money to make sure that happened.
But either way, something has to give, because health insurance and for-profit corporations are an oxymoron. When you're for-profit and offer insurance, that makes your primary operating procedure to charge as much as you can for the least amount of service.
We love to praise those who take risks, but it's probably not that much of a risk for most job creators.
Comments like this may be well-intended but do not provide advice which is useful for people without certain forms of economic privilege and may be perceived as insulting to people without certain forms of economic privilege who did, indeed, go out and start companies.
Are you one of these people?
If not, you shouldn't be speaking for them.
It's made worse by the fact that you are dependent on your employer for health care.
Worst case scenario: your wages are garnished due to student loans that cannot be forgiven (bankruptcy not allowed), while your health issues are going unaddressed (with varying levels of long-term consequence).
It's not just starting a company, it's living life.
How can they travel for a year or to understand more about the world as-is so common with 20-somethings from other parts of the world (Aust, NZ, UK, South Africa, Isreal etc.)?
How can they pursue their passion of painting or learning the guitar?
How can they volunteer in the local community to help others?
How can they do anything other than put their nose to the grindstone?
They can't. They're trapped.
Before they've paid off their student loans it's likely they'll have a car loan, a house loan and eventually even have some kids, meaning they'll miss out on all of the above because of their crippling student debt that took away their options.
They always have options.
They choose not to take them, but they have the options.
Not accepting responsibility for those choices is the 100% guaranteed way to make sure it keeps happening.
I wish that were so. The thing about defaulting on student loans means you don't get car loans, home loans, or interest from members of the opposite sex.
Late GenX. Defaulted. It's paid in full now. So is the only car I've ever owned. I won't own a home unless I can pay for it in full. (Probably never at current prices) I'll never have kids. Too old. It's biological.
After wage garnishment, having my tax returns seized, calls at all hours in all places from debt collectors... I'm too debt averse to loan money for anything else. I have no debt now and I will stay that way.
Entrepreneurs in my social circles generally had personal expense floors in the $1k to $2k region when they started inclusive of student loans; most handled it with either freelancing or working while beginning their companies.
If one borrowed $100k and desires to work for a long period of time without receiving income, I would observe that "income-contingent repayment plans" are a thing and would ask, in trade for this advice, that one take opportunities to tell younger people to make good life choices with regards to fields of study and career paths given one's hard-won experience on the matter.
Interestingly enough, they can't garnish my contractor work because I don't have an employer (and you also don't pay you SE taxes ahead of time).
It's a terrible idea to pursue that too far (or at all), of course; you really can't discharge these debts by any means other than paying them. So while it's possible to put off paying these loans and I've done it for periods of time, I still pay off my loans, not out of a love of banks but out of a sense of self preservation :D
For some reason, Americans don't seem to realize when they are being taken advantage of?
I see these guys gallantly paying off the hospital bills. When I tell them the prices they pay are literally 10x more than an entity with collective bargaining power pays; I get this Amercan pride bs. "I--always pay off my debts!". Companies/government counts on this mindset, and exploit it when the opportunity arrives.
Most Americans are in dead end jobs, unemployed, or working a part time, below minimum wage, sharing economy job. You wouldn't know it looking at these posts.
Americans are also prone to making a bad situation look good. See in America, a lot of our sexual self-worth is tied to how much money, and power we have, especially after the beauty wears off. Some of us--pretty up the picture--in order to find a suitable mate. It works differently for females, but that's changing too. And people wonder why Americans take so many drugs?
As to starting a company. Well let's just say a wealthy dad, on one side of the family, is one of the biggest secrets to success in the United States. Of course, no one like to admit just how much dad helps, but almost every success story I have seen involves a sympathetic family member. It's usually dad. He knows just how hard it was to get started in your twenties, if you come from that family?
If I knew what I know now, I would have high tailed it to Europe right out of high school. I was told to give France a shot, but didn't believe anyone in my twenties.
You are not missing anything, on any level by living in Europe! Including your social life. These are just my opinions. I'm sure you will hear a litany of Horatio Alger's who "made it" on their own in opposition to my post.
http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-...
Alternatively, one can spend a few decades saving money and then try something on one's own. Very far from optimal, but it's all some people can do.
Worse yet, taxes and wages are garnished. Yet any calls to find how they are taken from the bill falls on deaf ears. Tax return payments alone have at least counted up to $15k... yet Navient cannot answer for it. Nor can anyone else.
So, how do you dig out of this situation? Well, she won't take the solution I recommend: Lie about a degree. But we're looking at this haunting our retirement. But one thing is for sure: we are in it together.
I know this isn't some sort of isolated situation. I can see variants of this being played out time and again; I can only wonder how the fallout of this will affect the people.
I wasn't sure what kind of representation was needed, but you recommend an attorney with ADA experience?
I'd say I'm well-informed now but I learned nothing about my loans until I graduated.
I got screwed in 2008 when my mom was denied the PLUS loan. I tried talking to student financial services for advice. After talking to the dean of my college, I received a large grant in order to cover my senior year. I thought I wasn't screwed anymore, but I got screwed again because nobody told me that a whole other part of my financial aid, "need-based" aid would disappear because my parents are expected to pay so much, regardless of their ability to do so. After that I was still able to pick up a few more grants and scholarships. However, I ended up having to take out private loans to cover much of the rest. I very much do not recommend taking out a private loan to pay for college.
This completely boggles my mind. It's insanity.
More students need to start choosing the cheaper public institution for that degree because that private school is not providing enough extra value to offset the enormous cost.
If I get a loan to buy a Ferrari I've made a very bad decision from a purely financial perspective. But if that car brings me enjoyment and makes my life more fulfilling then I'm perfectly happy.
Of course, if the Ferrari dealer lied to me and said that the car's value would go up by 40% as soon as I drove it off the lot then thats a different story.
It is probably true that ple ty of college students don't really know what they're really signing up for. And incredibly misleading statistics about the income of people who went to college vs those who didnt certainly don't help. Pretty much every art history and anthropology major that I've known has been acutely aware that their degree isn't really increasing their earning potential much and are perfectly okay with that.
Because it's heavily subsidized and regulated. If it these were unsubsidized private transactions subject to the same bankruptcy laws as any other, I'd agree with your sentiment.
At the same time though, we do subsidize a lot of potentially dangerous, and arguably luxurious amenities because a critical mass of people enjoyusing them responsibly. National parks, highways, even medical procedures are all far from safe if you don't understand the risks involved in what you're doing. Most people do understand those risks and safely use these resources, just like most literature majors understand the risks involved in racking up debt to study literature.
Of course, as tuition goes up - and its gone up a lot even since I was in college not that long ago - the relative risk goes up. Maybe there is a lag in really appreciating the magnitude of that risk and we should be more careful.
If that's what people view it as, and they're ok with how much debt they're going to incur and all of the stipulations that come with that debt, then more power to them. Can't argue with that.
But I think many people are not really doing that value calculation thoroughly or at all. There are a lot of students who sign up for college because that's what they "should" do and they don't necessarily properly evaluate whether the cost is worth it in lifetime earning potential or personal fulfillment.
It's kind of like the housing market before the bubble. Most Americans believed that they "should" own a house and believed that real estate is always a good investment. We all see how that turned out.
I mean, yes, spending 4 years with minimal responsibility, partying, and studying great literature and arts is certainly enriching.
However, I'm sure most of your students feel entitled to that experience and would demand a system which would take money from me to pay for it.
Having recently graduated from college, I strongly disagree with the idea that your students offer much to society to the point where I should be paying their way through college. They're free to live in virtual debt slavery. That's their right to decide that the college experience they got was worth it.
I suspect it mostly means they want the government to pay for the types of problem solvers that businesses want, and enough of them to keep the wages low.
I think that's implicit in how hnamazon123 refers to ROI. Who gets the return - the student, businesses, and/or the country - for investing in someone's education?
But we did it wrong! It's our fault. I guess in a couple decades when there's a total of 2 majors that will actually return your investment we will actually be able to have a productive talk about college costs. Until then, those at the bottom will continue to be told it's their fault.
Since college prices have risen so fast, while wages have gone down, there's a good argument for forgoing school.
The average 18 year old paying $150K for a Sociology degree at some expensive non-ivy private school is going to be making $30K a year with or without his degree, for many years. Besides the loss of 4 years of income, the $150K (which will end up costing 2.5x-3x after interest) would have earned a lot of money invested in the market.
It's all well and good to be pissed off at rent seeking credential granting institutions and the employers that lazily rely on them, but that's no excuse for repeating false information that only leads kids astray.
Your statistics are also assuming that it is the college degree itself that is producing the difference in income, and not the individual.
As politically incorrect as it is to say, a good portion of the non-bachelor degree population would not earn much anyway - 'urban' with minimal basic education, immigrants without language skills, low IQ, disabled, etc.
Find me a study based on IQ - one in which similarly intelligent persons are matched on income (not salary) at varying ages, and I'm guessing that in the future, many in the middle IQ range will not benefit from their liberal arts degree.
It was also relatively cheap. People work for a summer, at minimum wage, and afford college for the rest of the year.
You have to demonstrate value to employers; to anyone with whome you desire to exchange goods or services for money.
Simply having a college degree is a very weak signal for value.
I'll guess that most of the people who gave you that advice probably learned it some 30-40 years ago, when it was more applicable.
The reason they don't is simple: class. A librarian making $40K/yr is treated better than a welder making $80K/yr.
A lot of people (self included, until a moment ago) imagine this whole thing crashing down when companies realize they can get good candidates without requiring a college degree. But I think that will be a secondary marker. The real tipping point will be when young tradesmen build a cool (as in, expensive) frat-like house, and a few sororities start hanging out with them.
I may be one of the more informed with my loans, and this is my understanding of the matter.
My freshmen year I incurred ~$26,000 in commercial loans, with $4500 in federal.
This year I got a residency reassignment and now have only $5500 in federal loans to pay for the whole year.
So I may now the approximate amounts of my loans, and I just summed them and found out I'm about $36,000 in debt. Truthfully that's the first time I've ever seen that figure, and damn it's scary because I have absolutely zero knowledge of how I'm expected to repay that. What are my interest rates, how long do I have to repay, how many months after I graduate am I expected to start paying that down?
The issue is that due to the inflation in college costs this is the only way many of us can afford college, and I'd have to say I'm lucky because I am supported for my living costs by my parents. Otherwise I would be in significantly more debt.
All that will be in the contracts you signed. It'd probably be worthwhile to see if you can audit or sit-in on a contracts class with the business college, as the info will be very useful in your future, like when you buy a car or a house.
Let's not forget that the company running the survey has skin in the game. It's not at all clear exactly how they categorized different answers. I have student loans. I can tell you a ballpark number for how much I currently owe, but I couldn't tell you precicely down to the cent off the top of my head (they get auto-payed every month and I don't really think about it). If I were a student would I be categorized by this survey as not knowing how much I owe?
What we really should be doing is showing students that WHERE they go to college very often doesn't matter at all after graduation, because so much is learned on the job. What matters is the core concepts are given that lays a great foundation for their "real" jobs later.
It might take a lot longer, and it might be a lot harder and a few less dinners with friends, but it is very possible to cash flow college.
It's a different mindset. What most people think today is you should always have a loan for something -- car, house, college, a little consumer debt... but it's incredibly freeing when you don't have any of that stuff. I wasn't given anything, but I've learned that hard work and no debt can make life so much greater.
I worked through high school, saved several thousand, had a little pay-as-you-go flip phone, an old $1500 car, and rarely ever saw the inside of a restaurant.
All I know is, it worked for me.
That said, costs have been going up... so sure, it does cost more now. If I didn't have the money for a semester, I'd have just had to take less credit hours. Not optimal, but not the end of the world. And much better than paying thousands in interest for a loan.
You also forget that for a large number of people, that just doesn't work out. Some of us have to help out our parents when we work (yes, even in high school), and that $1500 car could just as easily cost you thousands in repairs as save you money. Add in health problems or other unexpected but vital expenses and you could really be screwed.
College really doesn't have to cost this much, and it DIDN'T cost this much until very recently. Both the professors and the students are getting a raw deal now, and the fact that you were able to limp your way through school by working a lot and occasionally going less than full-time doesn't change any of that.
Of course this was because I went to college 24 years ago (dear god I'm getting old). College was far more affordable, and the loan conditions were more humane.
The landscape has changed dramatically. At least part of the problem is parents in my age group not realizing that their children's loans are far more onerous than their own loans were, and failing to give them adequate scrutiny.
The thing I never understood was the interest rate. It seemed like we were locked into a 6.5% rate no matter what, but others were getting loans at nearly half that rate. I'm not sure if this was based on need (seems like a dumb way to set interest rates), when we first started taking the loans, or what.
Once you graduate, you're able to refinance into a private loan, which will get you a lower rate, but you seem pretty stuck while in school and unsubsidized loans accrue interest while you're in school. Our loans will be paid off in a few short months, but we have been scrimping by the past two years in order to put as much money as possible towards the loans. I'd guess most people don't graduate as undergrads to this type of scenario. With law school, you're hopefully graduating into a nice paying position and are in a better financial place to pay off the loans. I do find it a bit ridiculous that during a period when you could finance a house at 3%, a car at 2%, and could only get 0.5% or 1% on a savings account that the government was collected 6.5% of student loans. Yet, they did, and lots of students are going to be stuck paying multiples of their actual education cost as they pay interest on those loans for 30 years.
There is a government program where if you work in the public sector for 10 years, they will forgive your law school loans. I did the math on this and it ended up costing less money to just pay off the loans as quickly as possible rather than pay 10 years worth of interest on them, while being indentured to a single public-service job that likely pays less than the private sector anyway.
You can't repossess an education... yet.
The scary part is the revocation doesn't have to be for the degree the loan was for. For example, if you tried being a lawyer, and couldn't find a job, you look elsewhere. You decide to join the pipefitters and steamfitters union for plumbing, which requires a license. Later on, the state can remove your license to practice plumbing.
List of states with such laws on the books: http://www.jwj.org/wp-content/uploads/2015/02/State-Laws-and...
Bloomberg discussing the particulars of license revocation due to default: http://www.bloomberg.com/news/articles/2015-03-25/these-stat...
Findlaw discussion: http://blogs.findlaw.com/greedy_associates/2015/04/defaultin...
... But you still owe the loans, because even the private educational loans were also federally backed.
You can, though its harder than many other categories of debt. That you can't is a popular myth which makes the problem worse, since it discourages people from looking into the possibility of doing so.
Anyone saying these kids or their parents should've known better need to get real. Most of the middle and lower class was hustled. Of course, they and those with even fewer protections abroad are still needed to get shit done. That is, only until those jobs can be replaced with automation so profits can be even higher at the top. Humans are so fragile, costly, lazy, biased / inaccurate, and replaceable.
What then? People keep saying that things have never been better, though, so I guess there's that. Meanwhile (anecdote incoming), most of childhood friends are barely scraping by while living with their parents, clinically depressed & flirting with homelessness, or dead. The successful ones are few and far between, and they're typically those that were born with more "intelligence". And by successful, I mean achieving some kind of success that somewhat matches their parent's standard of living.
This may well be true in the general case (and by extension, in the majority of individual cases), but I've started to lose sympathy as I see more and more people who were told about the risks up front but still decide to get degrees that aren't good economic propositions.
My comments apply to the traditional not for profit schools. The for profit ones are probably as you say.
In the professional field, we're expected to be specialists, and if you're not, you lose out (comparatively). In life, we're expected to understand and make informed decisions on a huge range of topics, and if you're not, or if you err, it's your fault. Some people have enough support to be picked up, reflect and become stronger and make better decisions next time, but most don't.
If your family and your teachers and your self didn't prepare you to navigate this extremely complex world of maneuvering, intelligent, powerful agents... then what do you do? You suffer and you try to cope and you fight to find some peace by whatever means necessary, ethics be damned. You keep climbing or you fall.
4/5 did (a couple have grad degress) and only 1 of those has been able to make good on their investment (my sister who is a nurse). I love learning and I'm glad I am educated, but I would not do this all again. Americans pride ourselves on being a classless society, but the reality is I was born to blue collar workers and I was meant to be a blue collar worker. The extreme attempt at being a white collar worker has failed most in my family. All we did was get was huge debts that have crippled every one of us through our 20's and 30's.
And then we're told to get on our hands and knees and thank our bosses for the opportunity to never be challenged or build a career. I would rather slit my throat than continue to be lied to about all these "opportunities" I apparently have. I've made plans to do just that if I am going to be forced into another bullshit job where I get to make the world worse all for the "opportunity" to not be challenged or pay off my student loans. It sucks, but I see more virtue in going off and dying.
Among other things, it had five year projections for salaries and job prospects. It said "this is what these people get paid now, and this is how we think it will change". It said "this industry is in demand" or "you will have a hard time finding work doing this"
This is not hard to find. Nobody looks
It's typically all about how the forces are aligned against them, so why even try. And yeah, I know, learned helplessness is a thing. I get it, trust me, I do, but still...
Into what?
I'm from India, and I generally have to talk to my younger cousins when they think of choosing courses like Arts, History, Literature and Media studies about impossibility of making a good living with that sort of an academic background. Almost certainly these people will have to do jobs that don't remotely match their education, and are generally low paying. Career is almost non-existent, and then starts the regular whining and hating people from the STEM(and law) branches. In fact even science and technology degrees will get you nothing more then low paying jobs as teachers. Your best bet as a salaried employee is with a engineering degree, medicine and may be law.
I can only understand how much more worse it can be for people in America, with far higher student debts, high rents in cities, unfortunate health interruptions and in a largely credit driven consumerism based economy. You can pretty much spend your whole life paying loans(education, house etc).
Next time while choosing a course, at least make sure it gives you some bare minimal skills. I would even bet, some thing like carpentry, welding or plumbing would be more helpful to making a living than some thing like studying History.
There are few reasons cost of going to college is so high:
(1) More people wanna go - not just from the US, but people all over the world apply to go to US schools.
(2) Government standing behind the loans. This means that universities/banks don't have to screen applicants based on potential future earnings, but loans are given to everyone, which makes going to college much easier and fuels (1)
(3) Brainwashing since early childhood. "People with college degrees make more money" they say. That might be true, but that doesn't mean it's because they went to college and have a piece of paper. They are accepted to good schools because they are ambitious, hard-working, have wealthy parents with connections, talented, lucky etc. - those things are what makes a person financially successful later on in life. But, propaganda makes students willing to put up with high debt and go to college in the first place. It's a voluntary slavery.
I'd suggest caution before referring to anyone who is earnestly and seriously pursuing sociology and gender studies as a "dummy".
There are probably plenty people who are studying these things without enough awareness of the ROI, but there are also people who are pushing our understanding of these fields for the benefit of our society at large.
For example, if we didn't have people advancing sociology and our understanding of gender, we may not have come as far as we have in respecting people's gender identities, especially when they are non-normative.
They are completely worthless parasites who were bad at math/physics/chemistry or something like sports/art in high school. They offer no significant contribution to society and are actually a net negative. You're mentioning gender identities, but they are the ones who primarily care about that BS, so it's self-referential.
[1] http://www.bachelor-of-education.org/college-major-iq/
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Its hard to do it with a straight face, but you can kinda pretend that keeping the chemistry lab stocked and the electronics lab bench gear repaired costs $100K/yr. Maybe $10K/yr for some of the individual goof balls I went to class with, but certainly not on average. You can also pretend that paying the PHD student TA stipend costs $100K/yr/student, when the TA is getting less than minimum wage and is on food stamps. But its hard with a straight face to claim that talking about philosophy or gender magically costs $100K/yr/person.
If anything, I think it requires a re-think of whether our society undervalues their efforts, and whether the educational costs we saddle them with are hugely inflated.
That should be a valid discussion considering it is debatable how much the income and wealth disparity among professions is correlated with merit and value contributed by those professions to society.
Many, if not most, college students and parents therof seem ignorant of Ramsey's sensible recommendations. As "Lie #4 about college loans" Ramsey declares: "I can’t afford to go to college without a student loan."
from "9 Biggest Lies About College and Student Loans":
https://www.daveramsey.com/blog/9-lies-college-student-loans
Lie 1 is wrong. The uber rich (Gates and Ellison) are not a prescription for how to aim your life as a young person. Also, in the 2008 recession, people without 4-year degrees were hurt far worse and recovered slower than those with degrees.
Lie 2 is reasonable, except in particular majors. My wife was a historic preservation major in undergrad (I think there's less than a dozen in the country, and one happened to be in-state but she would have gone out of state if necessary) and her graduate program was out-of-state for Museum Studies. There are only a handful of these programs in the country, so being out-of-state was not a choice.
3 is also incorrect in my experience. While the employers may not care a lot what's on your diploma, they also don't recruit evenly across universities. Wasn't everyone complaining a while ago that Google was basically where people went after graduating from Stanford?
4. When I was looking at school, the scholarships on those "find scholarships for you" sites were all under $1000. While that's not insignificant, you can't count on getting every one you apply for, and it's not reliable for paying for more than books. Community colleges and living with parents are underutilized, but you eventually have to attend at least 2 years in a 4-year institution if you want the 4-year degree.
5. I wish this had been drilled into me
6. Reasonable, but I don't think it is widely talked about
7. This is complicated. I was in school during the 2008 recession, so there was really no way to know before going in what was going to happen after graduation. Students do need to know it isn't necessarily a given, and this was a big pitfall for me. Unfortunately, our parents' generation didn't know about this because it is different from their experience with college.
8. I've never heard anyone say this, but attendance levels are up in bad years
9. Nobody thinks they're going to need bankruptcy when they start their college education; they're still young and bushy-tailed.
But we aren't doing poor kids any favor putting them tens or hundreds of thousands of dollars of debt for college.
Also, we have community colleges and public colleges. Tuition in my state for community college and a public school is under 30k for a full degree if you mix community and public 4 year. Motivated students could do part time school over 6-7 years while working full time.
This is the pointlessness of the article. Like asking what percentage of heart attack victims know how much their bill will add up to. Oh you say without that treatment I'll die, well then I guess I like that treatment. How much does it cost, well, lets start with how much do you have?
And when students graduate with loans, they have to pay for themselves as well as the other students who got free money (via taxes).
That's why so many people in humanities departments are liberals/communists. How else is a sociology student going to get a smartphone? They have to tax producers, take their money by getting a fake job in some non-profit/government agency/college and receive a salary there[taken from tax dollars].
The word 'student' makes it seem like we're all in this together, but we aren't. Parasites are eating us alive.
- Kill the parasites.
Producers are taxed at nearly 50% rate[income + sales tax + property + wage + others] on what they make. If we kill off the parasites, then we would have to work almost 50% less to have the same standard of living as we have now. Imagine: 20 hours/week. You could work 2-3 days and then enjoy the rest. Or 1 person could work and the other one would stay at home and take care of their children.
It makes sense to reward people you love and who are productive. But, these are parasites and the correct course of action is to, not reward them with cash and goods we producers make, but to kill them and enjoy our lives.
Don't you agree?
The bigger problem is in not wanting to be a producer. Producers aren't just Engineers/Surgeons. Plumber, Welders, Carpenters, Drivers etc these guys are producers too.
Producers are people who are exchanging real effort for money. Jobs created(which don't even have to exist), just to provide people a salary are what I would call consumers.
1) We aren't required to know shit. Pretty much anyone can get a loan for any amount, depending on what school they're going to. I for one borrowed about $26,000 to go to a local technical college, and that included about 2 semesters of classes in a major I ended up dropping. I was never once questioned about how much was borrowed, or asked to demonstrate any knowledge, just sign on this line and you get free money. How many 19 year olds wouldn't jump at that? I'm not saying that's right, I'm pointing out the fact that if I were going to a bank to buy a house or a car, they would demand a LOT more (proof of income, talk me through the terms, interest, etc.) than a school does.
2) It's basically required. At this point a high school diploma isn't getting you shit if you aren't some startup funded golden child. Someone going out into the market for white collar work pretty much MUST have at least a 2 year degree, and most businesses prefer 4 year degrees. It seems wrong to me that we're billing people for what is more or less an essential part of their resume if they want to do something other than trade skills and that sort of thing, and doubling down on that, it seems insane than the debt incurred is not dischargeable in bankruptcy and can be payed back via seizure of tax refunds and other assets.
3) Entrance counseling is a joke. Yeah I know how loans work, I get this money now, I pay it back later. That does not cover nearly enough, and not to mention you can breeze through it in about a half an hour and fail the tests as many times as you want, as long as you check all the right boxes you can get past it, get your loan and never think about any of that shit again.
I'm not in trouble personally, I make my payments and I'm up to date. It just drives me crazy when boomers are out there saying "we started out with nothing" and my reply to that is "I started 25k in the hole, I would've LOVED to have started with nothing."