Interesting Rolling Stone article on college debt

[Pea-n-Me]

Thoughts?

http://www.rollingstone.com/politics/features/taibbi-the-great-college-loan-swindle-w510880

 

[dclpluto]

Thoughts?

http://www.rollingstone.com/politics/features/taibbi-the-great-college-loan-swindle-w510880

It’s sad. We were talking here about teachers not making a lot than they have college debt. A lot of people who graduate college make $$$$$$ a year so they can pay it off easier of course than a teacher. Teachers can get more pay by summer school, tutoring students. Whatever it takes but suicide is never the answer.

 

[Christine]

Unfortunately, this article lays it out so well and it's SO sad. I'm just not even sure what to say. College educations used to be only for the rich. Between grants and loans, the middle class and poor were able to access college in hopes of making a better life. Sad to say, taking out student loans has become nothing more than going to a loan shark. People need to be VERY careful financing education. If so, carefully pick a major. Some of these jobs (such as teaching) don't ever give the student the ability to pay the loan back AND live.

 

[Gumbo4x4]

A lot of truth here. The system of education in this country often functions more as a scheme to make sure the haves remain the haves, and the have nots remain the have nots than anything else.

 

[EMom]

But so much in that article is suspect. Saying that tuition at a "halfway decent" university costs upwards of $50,000 per year? Add room, board and fees to that, and you have a total college bill of $60,000-$80,000 per year. I know costs vary by state, but that's what the very best private universities here charge. All in, our state universities run $24.000-$27,000 per year. Neighboring states will give us their in state tuition rate with a respectable ACT or SAT score and those run $25,000-$30,000 all in. And that is going to a 4 year university. There is always the cheaper option of a 2 year community college, followed by a university.

Right now, DD's classmates are getting their acceptance letters and scholarship offers. I'm astounded by the number considering private universities which cost $60,000-65,000 total per year, all because they are dazzled by a $60,000 scholarship offer. So what? You'll still owe close to $200,000 for the remainder. Go to a state university which costs $100,000 for all four years and if you get just a $15,000 scholarship, you will only owe $85,000. The math is pretty simple. Unless the more expensive university is going to net you an ENORMOUSLY larger paycheck, it makes more sense to go to the more affordable university.

Something else I've seen is students taking out loans for living expenses....and I'm not talking room and board. Going out to eat with friends gets financed, entertainment, etc. IMHO, loans should be for the bare basics, because who wants to pay off a Saturday night outing five years from now?

The bottom line is, do the math. What will your payments be? Can you afford to pay them off in a timely fashion with the salary you will get? Do you have the discipline to go without luxuries to pay off your loan sooner? Would a community college be a better option for someone with your finances? Is that pricey school really worth it?

 

[maxaroni]

It is very sad indeed. One needs to carefully choose a major, especially if there are student loans involved. A co-workers daughter has $99,000.00 in student loans, she’s a teacher. She will never get them paid off.

 

[IAHFTPT]

I thought there were loan forgiveness programs for people who teach in certain locations?

 

[Capang]

I thought there were loan forgiveness programs for people who teach in certain locations?

True. However these are becoming increasingly difficult to get. Several years ago many of my coworkers got theirs forgiven. The younger set coming up has not been so lucky in loan forgiveness.

 

[Mrs. Ciz]

Where are the parents in all this? Kids can only get so much loan money on their own. To get any more than the limits below, parents have to sign the loans too.

• $5,500 for freshmen
• $6,500 for sophomores
• $7,500 per year for juniors, seniors, and any additional undergraduate years of study

DH and I had the serious money/debt, private vs public, money making major choices conversations with both our kids during their high school years. They knew exactly what we could afford to put toward their college educations, and they looked for schools and programs that fit those parameters. When they were little, DH and I decided to set up our state's 529 pre paid college tuition plan for each child. We skrimped and saved to fund those accounts over the last 15 years (made bigger payments with our tax refund money, as well as monthly payments). Some of our friends thought we were limiting our kids to our state schools by doing this. We didn't agree - our state schools are very good, and they are way more affordable than private or out of state universities. There were some obvious financial trade offs to accomplish this - I still drive a 2002 car. DH's is slightly newer (2010). But it was worth it to us to keep our kids out of crippling student loan debt. In anticipation of college room & board costs, I trained for and got a much better paying job a few years ago. We use that extra money to pay the college costs the 529 does not cover.

Last year during DD's senior year of HS, she told me all about her best friend's college search. The girl was a good student and got in to the 3 schools she applied to - 1 out of state (in Colorado, her first choice), 1 local state uni, 1 other state uni where she'd need room & board. DD said her parents didn't have any college savings for her; the girl was on her own for college. I said she'd obviously choose the local university and live at home. DD said no, she was going to the other state uni and paying room & board. With what money? I showed DD the cost of tuition, room & board, then showed her the loan amounts the girl could get and asked how she'd make up the difference. DD didn't know, her friend didn't know either! The week before move in, the girl was begging her parents to sign loan papers for the cost difference (they refused) and borrowing money from her grandma. She actually moved in with her bedding off her bed from home and her clothes. She lasted all of a week before the finances collapsed on her. She is back at home, working to save for next year. She got into another state university for next year that is below her academically and got some merit money towards tuition. She'll still need to come up with room & board. She will NOT consider living at home and going to the local state uni, which would probably give her merit money as well and would be the most cost effective option. I just don't get it! I wanted to sit this girl down and explain it all to her in dollars and cents, have her write everything down and look at it all rationally (money coming in, money going out, loan repayment schedules, etc), but DD said no.

All that said, something is SERIOUSLY wrong with the system if like the article states, someone can end up paying $63000 on an $8000 loan and still not have paid down the principal!!!!

 

[wenrob]

But so much in that article is suspect. Saying that tuition at a "halfway decent" university costs upwards of $50,000 per year? Add room, board and fees to that, and you have a total college bill of $60,000-$80,000 per year. I know costs vary by state, but that's what the very best private universities here charge. All in, our state universities run $24.000-$27,000 per year. Neighboring states will give us their in state tuition rate with a respectable ACT or SAT score and those run $25,000-$30,000 all in. And that is going to a 4 year university. There is always the cheaper option of a 2 year community college, followed by a university.

Right now, DD's classmates are getting their acceptance letters and scholarship offers. I'm astounded by the number considering private universities which cost $60,000-65,000 total per year, all because they are dazzled by a $60,000 scholarship offer. So what? You'll still owe close to $200,000 for the remainder. Go to a state university which costs $100,000 for all four years and if you get just a $15,000 scholarship, you will only owe $85,000. The math is pretty simple. Unless the more expensive university is going to net you an ENORMOUSLY larger paycheck, it makes more sense to go to the more affordable university.

Something else I've seen is students taking out loans for living expenses....and I'm not talking room and board. Going out to eat with friends gets financed, entertainment, etc. IMHO, loans should be for the bare basics, because who wants to pay off a Saturday night outing five years from now?

The bottom line is, do the math. What will your payments be? Can you afford to pay them off in a timely fashion with the salary you will get? Do you have the discipline to go without luxuries to pay off your loan sooner? Would a community college be a better option for someone with your finances? Is that pricey school really worth it?

Yep, this.

When my DD was looking at schools the one she had her heart set on came out to something like $58,000 a year not counting the mandatory room and board. She managed to come up with $27,000 in grants and scholarships but even with our help it just wasn’t near enough. She was going to go to this school come hell or high water. It was THE BEST. She wouldn’t get that kind of education anywhere else! She would take out loans! She HAD to go! At the time my DH’s boss had just finished paying off his student loans at the age of 54 and he makes excellent money. I pointed this out to DD. With her chosen field she’d never make that kind of money. Then I sat her down, did the math and showed her that she’d be graduating with the equivalent of a mortgage in loans and there would really be no way I could help her. I wasn’t going into debt when I could easily pay for the schools right here that have an arguably better education in her field. I left it up to her and in the end she chose to stay here and she is debt free. She has friends drowning in debt already, two of which went to that fancy school and are doing absolutely zero with their degree.

 

[Capang]

Community colleges people. They are a great place to start to get the basics out of the way for cheap.

 

[mom2rtk]

I do feel like the dream of a Liberal Arts education is dying for many, as they feel forced to choose a major with the best earning potential to pay off loans.

And I feel the ability to choose a school a school away from home is dying for many kids who can't afford the room and board.

But there are still many solid options. Unfortunately it means that cost is as big a factor as anything else for many kids. But it's still possible for most kids to get a college degree if they are realistic about their approach.

Yep, this.

When my DD was looking at schools the one she had her heart set on came out to something like $58,000 a year not counting the mandatory room and board. She managed to come up with $27,000 in grants and scholarships but even with our help it just wasn’t near enough. She was going to go to this school come hell or high water. It was THE BEST. She wouldn’t get that kind of education anywhere else! She would take out loans! She HAD to go! At the time my DH’s boss had just finished paying off his student loans at the age of 54 and he makes excellent money. I pointed this out to DD. With her chosen field she’d never make that kind of money. Then I sat her down, did the math and showed her that she’d be graduating with the equivalent of a mortgage in loans and there would really be no way I could help her. I wasn’t going into debt when I could easily pay for the schools right here that have an arguably better education in her field. I left it up to her and in the end she chose to stay here and she is debt free. She has friends drowning in debt already, two of which went to that fancy school and are doing absolutely zero with their degree.

Good mom! This is where parents really have to guide their kids on their decisions. We've told ours that we won't sign for college loans. So that limits things from the get go. But the stakes are just too high (in terms of potential debt) to let kids choose blindly these days. It's definitely a delicate balance of cost vs. benefits.

 

[Gumbo4x4]

Community colleges people. They are a great place to start to get the basics out of the way for cheap.

Our local CC has an exceptional relationship with the best engineering school in the state. The program is a tremendous bargain!

 

[Capang]

Our local CC has an exceptional relationship with the best engineering school in the state. The program is a tremendous bargain!

The one in my county is partnered with many of our public and private state universities. It’s just an awesome place to get a degree for far cheaper than going on campus. Can’t beat it.

 

[monsterkitty]

Before I student taught, I was offered a job in Vail, CO. I would student teach while actually teaching and being supervised by which ever teacher was off that class period. My mom sat me down before I signed the contract and had me look at everything from rent, to a car that would handle the winter conditions, students loans, and oh yeah, I had to eat as well. Need less to say I turned the job down!

A week before my student teaching semester ended, I was offered a long-term sub position for another teacher going on maternity leave. It was 3 days before winter break, I wouldn't have benefits, but I would at least have a job. At the end of the school year the teacher I was subbing for decided to resign so I got the position. I signed the contract and realized I would have to keep my summer job for a few years, haha.

When I graduated, the company I had my loans with divided the loans and sold them to several different companies. I only had 6,000 in loans, but they were sold to so many companies, I was paying the base of $50/month to each company for a total of $400/month. My take home pay was only $825/month! The cheapest apartment in the area was $400/month so needless to say I lived at home for the first year after graduating.

The summer job I had at a local waterpark helped me pay off my loans in about 2 years. I actually kept that job, as I went into management upon graduation. I would teach during the day and starting in February I would work weekends and a few hours a night hiring and training guards. When I quit that job I was actually making more money at the waterpark than I made teaching. I was just so tired of the sun I couldn't do it anymore!

When I began teaching so many years ago, my school was not eligible for the loan forgiveness program. Now, however, we are (29 years later I'm still at the same school). There are so many great teachers out there and it's so sad that many leave the profession not because of the what education has become, but because they can't afford to teach.

 

[Mrs. Ciz]

The summer job I had at a local waterpark helped me pay off my loans in about 2 years. I actually kept that job, as I went into management upon graduation. I would teach during the day and starting in February I would work weekends and a few hours a night hiring and training guards. When I quit that job I was actually making more money at the waterpark than I made teaching. I was just so tired of the sun I couldn't do it anymore!

When I began teaching so many years ago, my school was not eligible for the loan forgiveness program. Now, however, we are (29 years later I'm still at the same school). There are so many great teachers out there and it's so sad that many leave the profession not because of the what education has become, but because they can't afford to teach.

This is so sad! I'm a teacher too, so I totally understand what you are saying.

 

[tvguy]

But so much in that article is suspect.

Well put. VERY suspect. As Judge Judy would say, get another part time job, pick up cans, tutor, coach a sport for the stipend, officiate school sports for $35 a game, wait tables, find a way to make more money, or move somewhere where you can get a full time job with better pay.

 

[sk!mom]

Where are the parents in all this? Kids can only get so much loan money on their own. To get any more than the limits below, parents have to sign the loans too.

• $5,500 for freshmen
• $6,500 for sophomores
• $7,500 per year for juniors, seniors, and any additional undergraduate years of study

DH and I had the serious money/debt, private vs public, money making major choices conversations with both our kids during their high school years. They knew exactly what we could afford to put toward their college educations, and they looked for schools and programs that fit those parameters. When they were little, DH and I decided to set up our state's 529 pre paid college tuition plan for each child. We skrimped and saved to fund those accounts over the last 15 years (made bigger payments with our tax refund money, as well as monthly payments). Some of our friends thought we were limiting our kids to our state schools by doing this. We didn't agree - our state schools are very good, and they are way more affordable than private or out of state universities. There were some obvious financial trade offs to accomplish this - I still drive a 2002 car. DH's is slightly newer (2010). But it was worth it to us to keep our kids out of crippling student loan debt. In anticipation of college room & board costs, I trained for and got a much better paying job a few years ago. We use that extra money to pay the college costs the 529 does not cover.

Same. We are in Texas. Texas has MANY excellent state Unis. Students who graduate in the top 10% are guaranteed admittance to any state Uni (top 7% for UT.) My DD was not limited. She could choose ANY state uni. Staying in state meant that she could study anything that she wanted as DH and I had saved and were prepared to pay 80K for her college education. She earned enough scholarship money to graduate debt free next May.

My nephew started college this Fall. His dad had the Hazelwood so my sis only allowed him to visit state unis. But again Texas is a big state with many excellent schools. Why pay for private or out of state when he had all tuition paid at a state school? He is very happily at the University of Texas,

 

[mnrose]

I just went through the whole college process with my senior year twins. As of Friday, November 24, both had been accepted to their first choice colleges. Both "in state" in Minnesota. Both with tuition which is affordable. Both which are good schools for their intended majors. I seriously DO NOT GET the stress about getting into college. My son is an excellent student with excellent grades and test scores. His sister is an "ok, but not outstanding student." They researched where to go, made sure they were above the "average" admittance standards for their chosen school, and applied to ONE school and were admitted. Shrug.

I've lectured them since day one of high school about the budget their Dad and I considered appropriate for US to pay, and warned them against the pitfalls of "falling in love" with an unaffordable college. (and before anyone lectures me on "but with aid, private schools can be affordable....", we qualify for ZERO needs based aid. NONE). Therefore, they trashed every bit of literature from schools which were clearly outside the range of affordability for our family. I don't care if private college costing 70K per year offers my kid a 40K merit scholarship. It's still MORE than the U of Minnesota, which has a highly rated program for the area my son wants to study (and for which he got direct admission). Fortunately, my kids were both smart enough to listen, and therefore, will not have to take on massive debt to go to college. We will make both of them take the federally guaranteed loans so they have "skin in the game" but the rest we will pay.

The bottom line is that there are more than 3000 colleges in the US. 2/3rds of them are UNDER ENROLLED. There is a school for everyone. And, there is a way to make college at least *somewhat" affordable. The tragedy happens when people get starry eyed about schools/degrees/programs which are not affordable or worth what you pay. Educate yourself and your children in advance.

 

[Pea-n-Me]

I agree with taking what's said in the article with a healthy dose of skepticism. I don't know for a fact that everything said is true. That said:

I thought there were loan forgiveness programs for people who teach in certain locations?

True. However these are becoming increasingly difficult to get. Several years ago many of my coworkers got theirs forgiven. The younger set coming up has not been so lucky in loan forgiveness.

From the article:

"October 2017 was supposed to represent the first glimmer of light at the end of this tunnel. This month marks the 10th anniversary of the Public Service Loan Forgiveness program, one of the few avenues for wiping out student debt. The idea, launched by George W. Bush, was pretty simple: Students could pledge to work 10 years for the government or a nonprofit and have their debt forgiven. In order to qualify, borrowers had to make payments for 10 years using a complex formula. This month, then, was to start the first mass wipeouts of debt in the history of American student lending. But more than half of the 700,000 enrollees have already been expunged from the program for, among other things, failing to certify their incomes on time, one of many bureaucratic tricks employed to limit forgiveness eligibility. To date, fewer than 500 participants are scheduled to receive loan forgiveness in this first round.

Moreover, Trump has called for the program's elimination by 2018, meaning that any relief that begins this month is likely only temporary. The only thing that is guaranteed to remain real for the immediate future are the massive profits being generated on the backs of young people, who before long become old people who, all too often, remain ensnared until their last days in one of the country's most brilliant and devious moneymaking schemes.