Interesting Rolling Stone article on college debt

[Colleen27]

According to some research at least currently Federal Student Loan Rehabilitation programs use this formula:
"Under a loan rehabilitation agreement, your loan holder will determine a reasonable monthly payment amount that is equal to 15 percent of your annual discretionary income, divided by 12. Discretionary income is the amount of your adjusted gross income (from your most recent federal income tax return) that exceeds 150 percent of the poverty guideline amount for your state and family size. You must provide documentation of your income to your loan holder.

If you can’t afford the initial monthly payment amount described above, you can ask your loan holder to calculate an alternative monthly payment based on the amount of your monthly income that remains after reasonable amounts for your monthly expenses have been subtracted. You’ll need to provide documentation of your monthly income and expenses. Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered. To rehabilitate your loan, you must choose one of the two payment amounts."

I wonder if that above way of doing is is newer or older. That would only be for Federal loans though.

I do agree with multiple things in the article just not completely everything.

There are a couple of things I saw in that story that raised questions for me. First - and I'm not sure how new this is - the student loan entrance/exit counseling does caution about reading the full terms of any consolidation offer, which makes me think there was a significant issue with predatory consolidation programs that prompted that wording. So it is possible that this couple got caught up in something like that - a detail that they may not have owned up to, or which could have been left out to make a more sympathetic narrative. Second - and this one I do think is pretty common - is that people seem to confuse a payment deferral with some sort of meaningful break on their debt. I know quite a few people who basically took an "out of sight, out of mind" approach to their loans when they were approved for a deferral, not fully understanding that the interest would continue to compound and the debt would continue to grow during the time period when they had no minimum payment due. I don't think that's an unusual way of thinking, in terms of minimum monthly payments rather than of the real costs of borrowing, but it is hard to blame the lending industry for that. It is clearly laid out in the application for a deferral so ignorance really isn't a good excuse, at least not for very recent grads (I know because I graduated last year and my loans are currently in deferral, so I've been through this process recently - but because I'm aware of the difference it makes in the interest, I'm making payments even though none is required until next July when the deferral is reviewed and my updated income information is taken into account).

Now, all of this might have been different when the people in the story graduated. I've noticed that these stories do tend to use folks around my age (late 30s) to make their point, and my friends who have really struggled with their student loans are in the same age range, so it is possible that the rules when they graduated were such that more borrowers fell into predatory or untenable repayment situations.

 

[Pea-n-Me]

Yes I know the University of Michigan is like that. There are a couple of different campuses and not all of the credits transfer between them which boggles my mind. I was talking about this issue to a woman who used to be an instructor there and she said they would each decide for themselves if credits would transfer for the course the teach by going over the syllabus of the course the student was trying to transfer credits in for. The individual instructor is the one who would decide if they would accept the credits or not and it didn't matter what any transfer agreements had to say about it and there was nothing the student could do. They had the final say.

DD took a course at a college different from her own this past summer and had to get permission, in writing, in order to guarantee that the credits would be applied to her degree. Permission had to come from the department of her major, so I can see where this is how it goes today.

Re community college. Our state has a decent community college system with transfer agreements between the cc's and the state university system (as well as some private colleges, I believe). DS was looking at it as an option. The four year school he was looking at was very negative about it, though. Or, I should say, the department heads of the program he was interested in at the four year college were negative about it, probably because it was a very specific major. On paper, though, it looked like it wouldn't be a problem. They made DS promise that if he took that route, that he would meet with them beforehand to personally select the classes he needed in order to not be behind in his major once he got to the four year schoool - but added that he probably would be, regardless. Not only academically, but socially. That was sort of a disappointment, since it seemed like such a good way to go - on paper, and there was a lot of pressure not to do it that way. Maybe other, more general programs aren't like that, idk. (He wound up going elsewhere.)

 

[Colleen27]

Re community college. Our state has a decent community college system with transfer agreements between the cc's and the state university system (as well as some private colleges, I believe). DS was looking at it as an option. The four year school he was looking at was very negative about it, though. Or, I should say, the department heads of the program he was interested in at the four year college were negative about it, probably because it was a very specific major. On paper, though, it looked like it wouldn't be a problem. They made DS promise that if he took that route, that he would meet with them beforehand to personally select the classes he needed in order to not be behind in his major once he got to the four year schoool - but added that he probably would be, regardless. Not only academically, but socially. That was sort of a disappointment, since it seemed like such a good way to go - on paper, and there was a lot of pressure not to do it that way. Maybe other, more general programs aren't like that, idk. (He wound up going elsewhere.)

I don't think that's uncommon. I started at a community college and transferred to a university with a strong transfer agreement, but that didn't change the fact that there was one pre-req for all of my courses in my major that had to be satisfied at the university, so my first semester was essentially wasted time just getting that one class out of the way. I couldn't take any other classes in my major, and I had all my gen-ed requirements satisfied. From what I came to understand, that's common enough that virtually no transfer students finish the second half of their 2+2 program in 2 years. It took me 2.5 even with taking a half-time load one summer.

 

[gillep]

DD took a course at a college different from her own this past summer and had to get permission, in writing, in order to guarantee that the credits would be applied to her degree. Permission had to come from the department of her major, so I can see where this is how it goes today.

Re community college. Our state has a decent community college system with transfer agreements between the cc's and the state university system (as well as some private colleges, I believe). DS was looking at it as an option. The four year school he was looking at was very negative about it, though. Or, I should say, the department heads of the program he was interested in at the four year college were negative about it, probably because it was a very specific major. On paper, though, it looked like it wouldn't be a problem. They made DS promise that if he took that route, that he would meet with them beforehand to personally select the classes he needed in order to not be behind in his major once he got to the four year schoool - but added that he probably would be, regardless. Not only academically, but socially. That was sort of a disappointment, since it seemed like such a good way to go - on paper, and there was a lot of pressure not to do it that way. Maybe other, more general programs aren't like that, idk. (He wound up going elsewhere.)

I went to an engineering school and there was only one community that our school would accept credits from, and even then you had to triple check to make sure that you were selecting the correct course. As this was an engineering school, we didn't have the general ed or core type courses that are more common in liberal arts colleges and Universities, so unless you already lived in that area, making taking a few lower level program specific courses at the community college a good deal, most people only used the community college if they wanted to get ahead between freshman and sophomore years, and would take a course or two at the community college during summer.

 

[Pea-n-Me]

As a whole I understood the article but I read obvious political slants in the article and thus..my thoughts are impacted. I'm referring the part where it calls a certain political party "some heartless monster" along with "current bogeyman" along with "He's the scammer-in-chief in the Great American Ripoff Age" to name some.

Once you start getting into throwing pot shots at any political party I start to read the information differently. Though I do also look up the bias check on the sources.

*My comment isn't political in nature just how the politics in the article affected my viewpoint*

In regards to the individual in the article it would be helpful to know why and how a person who jointly with his wife owed initially $50,000 after consolidation (of which $35,000 at least prior to consolidation was from the husband alone per the article) went spiralling out of control so fast. Now $18,000 per year can be very difficult to pay a large monthly payment even back when the man graduated (which was a while back since he was 37 in 2009) but how much were the loans per month combined with the interest rate makes a big difference;what was the wife's income per year?. Also is the payment being front loaded on the interest? In other words is the majority of the payments to begin with going towards interest rather than principal? Is this something that overtime changes to where more and more of your payment goes towards principal as the loan amount gets lower? Or is it where the payment is the same each and every month and the interest portion and principal portion stay the same month after month?

Also the laws have been adjusted since man in the beginning of the article went to college. For one the pressure to get students to fully understand their financial impact is greater. But for another...you can't necessarily blame the Student Loan industry if you're completely totally unaware of how interest charges work. Interest charges are not isolated to student loans. Loans in general (including car loans, mortgage loans, personal loans, etc) along with credit cards (if the payment isn't paid in full each month) carry interest charges that can be compounded.

According to some research at least currently Federal Student Loan Rehabilitation programs use this formula:
"Under a loan rehabilitation agreement, your loan holder will determine a reasonable monthly payment amount that is equal to 15 percent of your annual discretionary income, divided by 12. Discretionary income is the amount of your adjusted gross income (from your most recent federal income tax return) that exceeds 150 percent of the poverty guideline amount for your state and family size. You must provide documentation of your income to your loan holder.

If you can’t afford the initial monthly payment amount described above, you can ask your loan holder to calculate an alternative monthly payment based on the amount of your monthly income that remains after reasonable amounts for your monthly expenses have been subtracted. You’ll need to provide documentation of your monthly income and expenses. Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered. To rehabilitate your loan, you must choose one of the two payment amounts."

I wonder if that above way of doing is is newer or older. That would only be for Federal loans though.

I do agree with multiple things in the article just not completely everything.

You are good! I agree (with you and lifesavacation, which is why I said I read it with a healthy dose of skepticism, but I think that most people realize that the problems surrounding student debt are longstanding). I do think there were some good points in the article, though, if you stuck it out.

Anyway, I forget how the interest worked on my loans or my DH's, it was quite a while ago and things may have changed. But I think another variable in the story is that they were married, combined their debt, but also had two children on a relatively small salary(s), which had to be tough when you have to put food on the table and pay electric and heating bills and such. Colleen mentioned that interest continues to accumulate even if payments are deferred, and they mentioned that the family had filed bankruptcy, but we all know that even bankruptcy does not wipe out student loans. So my impression was that a lot of time went by while loans were going unpaid, and between the compounded interest and rehabilitation fees and fines, costs spiraled out of control. It is really sad, and I can see it happening, as I've read many other, similar stories when planning for my own childrens' college educations. (The Jenna Levine story really stuck in my mind a lot during our planning! Thanks to someone posting that here on the Dis years ago!)

But I agree with others, we worked pretty hard at planning and I think both of my kids are in a good place, thankfully.

 

[Mackenzie Click-Mickelson]

You are good! I agree (with you and lifesavacation, which is why I said I read it with a healthy dose of skepticism, but I think that most people realize that the problems surrounding student debt are longstanding). I do think there were some good points in the article, though, if you stuck it out.

Anyway, I forget how the interest worked on my loans or my DH's, it was quite a while ago and things may have changed. But I think another variable in the story is that they were married, combined their debt, but also had two children on a relatively small salary(s), which had to be tough when you have to put food on the table and pay electric and heating bills and such. Colleen mentioned that interest continues to accumulate even if payments are deferred, and they mentioned that the family had filed bankruptcy, but we all know that even bankruptcy does not wipe out student loans. So my impression was that a lot of time went by while loans were going unpaid, and between the compounded interest and rehabilitation fees and fines, costs spiraled out of control. It is really sad, and I can see it happening, as I've read many other, similar stories when planning for my own childrens' college educations. (The Jenna Levine story really stuck in my mind a lot during our planning! Thanks to someone posting that here on the Dis years ago!)

But I agree with others, we worked pretty hard at planning and I think both of my kids are in a good place, thankfully.

Yeah I read the article to the end-do totally agree with some of it for sure. I know what they are talking about. I myself am paying 3 student loans (2 private and 1 federal, I had an endownment loan that I paid off very quickly) and my husband just consolidated his though he had just 2 loans (1 federal and 1 private). I can totally see how quickly it can get out of hand I just felt that regarding what the monthly payment was and the income, etc information was pertinent to understand the whole financial situation for the couple they initially were talking about. Only way my loans go bye bye is if I die under my loan terms. I did get that impression too that the loans were unpaid for a while racking it up.

 

[LSUmiss]

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?

Think that’s part of the point of the article. Those are some really mature questions for an 18 year old to answer responsibly. Most credit card companies now will not give 18 yr olds any significant credit limits for a reason. But an 18 year old can sign up for thousands of dollars of debt to go to college?

 

[LSUmiss]

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!!!!

But that’s still $27000 just for 4 years. You can get that $7500/yr for at least a couple
years past senior yr & I’m pretty sure graduate school has higher limits. I think once you are independent tax wise you can qualify for more too. I had close to $100,000 in debt at graduation with graduate school & my parents didn’t sign for any of it. Some of the loans accrued interest while while I was in school too even if I didn’t have to pay yet. I didn’t borrow $100k, but that’s about how much I ended up owing when it was time to pay. Thankfully, I have a good job that allows me to pay the bill. But, I have been & will be paying it for years.

 

[wenrob]

Think that’s part of the point of the article. Those are some really mature questions for an 18 year old to answer responsibly. Most credit card companies now will not give 18 yr olds any significant credit limits for a reason. But an 18 year old can sign up for thousands of dollars of debt to go to college?

And as someone up thread mentioned these kids are really pressured by the schools (both high school and college) to take on that debt. My DD’s high school paid for her to fly down and spend three days at this school where they woo’d her nonstop. She had so many stars in her eyes when she got home it was ridiculous. The pressure from both schools to just do it and take care of the loans later was continued right up until graduation.

 

[LSUmiss]

As a whole I understood the article but I read obvious political slants in the article and thus..my thoughts are impacted. I'm referring the part where it calls a certain political party "some heartless monster" along with "current bogeyman" along with "He's the scammer-in-chief in the Great American Ripoff Age" to name some.

Once you start getting into throwing pot shots at any political party I start to read the information differently. Though I do also look up the bias check on the sources.

*My comment isn't political in nature just how the politics in the article affected my viewpoint*

In regards to the individual in the article it would be helpful to know why and how a person who jointly with his wife owed initially $50,000 after consolidation (of which $35,000 at least prior to consolidation was from the husband alone per the article) went spiralling out of control so fast. Now $18,000 per year can be very difficult to pay a large monthly payment even back when the man graduated (which was a while back since he was 37 in 2009) but how much were the loans per month combined with the interest rate makes a big difference;what was the wife's income per year?. Also is the payment being front loaded on the interest? In other words is the majority of the payments to begin with going towards interest rather than principal? Is this something that overtime changes to where more and more of your payment goes towards principal as the loan amount gets lower? Or is it where the payment is the same each and every month and the interest portion and principal portion stay the same month after month?

Also the laws have been adjusted since man in the beginning of the article went to college. For one the pressure to get students to fully understand their financial impact is greater. But for another...you can't necessarily blame the Student Loan industry if you're completely totally unaware of how interest charges work. Interest charges are not isolated to student loans. Loans in general (including car loans, mortgage loans, personal loans, etc) along with credit cards (if the payment isn't paid in full each month) carry interest charges that can be compounded.

According to some research at least currently Federal Student Loan Rehabilitation programs use this formula:
"Under a loan rehabilitation agreement, your loan holder will determine a reasonable monthly payment amount that is equal to 15 percent of your annual discretionary income, divided by 12. Discretionary income is the amount of your adjusted gross income (from your most recent federal income tax return) that exceeds 150 percent of the poverty guideline amount for your state and family size. You must provide documentation of your income to your loan holder.

If you can’t afford the initial monthly payment amount described above, you can ask your loan holder to calculate an alternative monthly payment based on the amount of your monthly income that remains after reasonable amounts for your monthly expenses have been subtracted. You’ll need to provide documentation of your monthly income and expenses. Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered. To rehabilitate your loan, you must choose one of the two payment amounts."

I wonder if that above way of doing is is newer or older. That would only be for Federal loans though.

I do agree with multiple things in the article just not completely everything.

You mentioned that it’s not the industry’s fault if ppl don’t understand how interest works. However, I think what makes it predatory is that it’s aimed at basically kids. A person that age would likely never qualify for a loan of this kind of magnitude in any other situation.

 

[Gumbo4x4]

I very nearly got into an argument with my mother the other day about teachers. Retired teachers in my state, Michigan, who have put x number of years in teaching, make very good money. My mother does tax prep and does the taxes for a couple who are both retired teachers. They each bring in approximately $65,000/year so that is around $130,000 total plus their healthcare coverage, etc. The problem is, you have to work quite awhile to get there.

My parents have friends whose daughter recently graduated and is a first year teacher this year. Her parents were lamenting the fact that she is only being paid $35,000 a year and how little that was. My mother decides that is an appropriate venue to get on her soapbox about the obscene amounts of money teachers are paid and how she thinks that's really good the first year out of college and how my dad hasn't made that much in several years and she gets paid that much for only working 9 months a year and blah blah blah. I tried to explain to my mother that sure, she is being paid $35,000 a year but after taxes it is probably closer to $27,000 a year so $2,250 per month give or take. She had student loans so she is probably cutting down on $400 per month on loan payments. After that all of her classroom supplies, classroom decorations, supplies for projects, books for the class library, etc. all of that comes out of her pocket. The school doesn't pay for any of that. Then you add in the fact that at least for the first few years she is NOT only working 9 months a year. She has to make lesson plans, learn new curricula, and work on refining her methods for the next year. I have known teachers with decades of experience who were hit with a new curriculum for the coming year and spent 4 hours a day all summer long learning the curriculum and deciding how to implement it in their lesson plans. Not to mention that during the school year they aren't simply working from 8 to 3 every day. After all that $35,000 doesn't sound so good.

Sure, the retirement package around here is great. But there is a reason new teachers work an average of 3 years before leaving the field and it isn't because the hours are low and the pay is high.

ETA: Not to mention a certain number of years after getting their teaching licence they have to get a masters degree. I believe that is state wide but I could be wrong about that. But all teachers required to have an MA and pay for it how? On the $30,000 a year take home on top of loans they already have? Forget having kids. Who can afford that?

It’s been a rule in Missouri for at least 25 years that teachers must obtain their masters within 5 years IIRC.

 

[Mackenzie Click-Mickelson]

There are a couple of things I saw in that story that raised questions for me. First - and I'm not sure how new this is - the student loan entrance/exit counseling does caution about reading the full terms of any consolidation offer, which makes me think there was a significant issue with predatory consolidation programs that prompted that wording. So it is possible that this couple got caught up in something like that - a detail that they may not have owned up to, or which could have been left out to make a more sympathetic narrative. Second - and this one I do think is pretty common - is that people seem to confuse a payment deferral with some sort of meaningful break on their debt. I know quite a few people who basically took an "out of sight, out of mind" approach to their loans when they were approved for a deferral, not fully understanding that the interest would continue to compound and the debt would continue to grow during the time period when they had no minimum payment due. I don't think that's an unusual way of thinking, in terms of minimum monthly payments rather than of the real costs of borrowing, but it is hard to blame the lending industry for that. It is clearly laid out in the application for a deferral so ignorance really isn't a good excuse, at least not for very recent grads (I know because I graduated last year and my loans are currently in deferral, so I've been through this process recently - but because I'm aware of the difference it makes in the interest, I'm making payments even though none is required until next July when the deferral is reviewed and my updated income information is taken into account).

Now, all of this might have been different when the people in the story graduated. I've noticed that these stories do tend to use folks around my age (late 30s) to make their point, and my friends who have really struggled with their student loans are in the same age range, so it is possible that the rules when they graduated were such that more borrowers fell into predatory or untenable repayment situations.

Yes see that's some information you would need to know too. Heck I graduated college in 2010..things have changed since then with student loans anyways. I can't imagine what it was like when the 37 year old in 2009 was when he first entered college but it could have been poor terms or the couple fell behind for other reasons they may not want to disclose. I still wanted to know what the wife earned and what her loans were prior to the consolidation. They were candid with the husband and that he only made $18,000 as a teacher when he got a job after he graduated. I'm just being nosy I suppose just feel like more details are needed if a reader is to fully understand. Wouldn't it be great advice if someone said "watch your monthly expenses so you don't overspend", "try to work with your lender regarding payment plans" etc. and could use the couple as an example of when it goes wrong rather than just say basically a reform of the Student Loan industry is needed.

I do know that as a whole we've tried to educate students more recently.

I do remember back in 2006 credit card offers for example on campus were an issue. Sign up for a credit card and get a free pizza....yeahhhhh that sounds like a great way to potentially screw over an 18 year old all because hey a free pizza sounds great right? But they made them do the credit card offers off campus either that year or the year after that so at least it was less of a in your face manner.

I do think there was likely a more predatory way of going about student loans. That's a good way of describing it. I can't blame just the person taking out the loan but nor am I going to blame just the Student Loan industry.

I don't think it's uncommon either for people to forget that deferring a loan will still accrue interest but I do agree with you in that it comes with the terms of a loan. The article says: "A lot of kids don't even understand the concept of interest or amortization tables – they think if they're borrowing $8,000, they're paying back $8,000." I find that quite a problem--but it's not the fault of the Student Loan industry. You take out a personal loan for $8,000 you're going to pay more than $8,000 in the end. You get a mortgage for $100,000 you're going to pay more than $100,000 at the end of your loan term, you take out a car loan for $20,000 you're going to pay more than $20,000 in the end. That's a pretty basic thing you need to understand. And if no one has taught you that period at all in no way shape or form...

Now I know we've had issues with mortgages so I am glad that the terms are more clearly spelled out but that would be quite naive of someone to think they wouldn't be paying a penny more than what they took out. A loan is a loan. Sometimes you get interest free loans though usually that's only good for x amount of time (like a credit card offer that carries 12 months interest free).

 

[LSUmiss]

I lost interest and didn’t finish the article due to the obvious political bias. We do have a student loan problem and it didn’t begin when the current administration took office.

People need to be responsible for their choices. Don’t take out loans if you can’t pay for them. Don’t choose a major that only pays x amount if you need y amount to live. I’m not sure how I feel about loan forgiveness. At the very least, there needs to be an interest cap or a way to negotiate down interest owed.

It’s just not that simple when it’s aimed at kids who are barely 18 years old. Not everyone has guidance to make good choices.

 

[Pea-n-Me]

And as someone up thread mentioned these kids are really pressured by the schools (both high school and college) to take on that debt. My DD’s high school paid for her to fly down and spend three days at this school where they woo’d her nonstop. She had so many stars in her eyes when she got home it was ridiculous. The pressure from both schools to just do it and take care of the loans later was continued right up until graduation.

I agree. And at the same time, I noted during all the college information sessions at the high school, nobody was touting community colleges - at all. If we wanted information on them, it was on our own. I found that kind of sad since there were many kids for whom community college would've been a great choice. I got a hint of what was going on during one of the Open Houses at school senior year from one of the teachers. She said the school was very cconcerned about their statistics on who went where after high school. They had a great rate of sending kids to four year colleges. But then she added that people should check the statistics two years down the road to see how many kids were still at those colleges. In that light, it didn't seem to me that they were really looking out for the kids' best interest - that falls to parents and kids themselves.

In addition to all that, I read a great book called "Debt Free U" (also something someone posted here), in which the author explained that there are many people along the way who also don't have a student's best interests in mind, one being the college admissions official. He explained that they have incentives, too, for getting people in the door. (In some cases, golf trips and such.) That person's not worried about how you're going to pay for it, their job is just to get you in. Things like that that are pretty eye-opening.

 

[Mackenzie Click-Mickelson]

You mentioned that it’s not the industry’s fault if ppl don’t understand how interest works. However, I think what makes it predatory is that it’s aimed at basically kids.

It’s just not that simple when it’s aimed at kids who are barely 18 years old. Not everyone has guidance to make good choices.

______________________
Well seeing as I was the one who did my own paperwork for my loans I'd disagree on parts of your comments-I turned 18 2 weeks before graduation and filled out FAFSA all by myself lord knows my mom had zero clue on what to do. And when I was hit with a family contribution amount for my freshman year of over $6,000 I looked for other ways of getting money and did the research all by myself....on dial up I might add lol

I do agree that not everyone has good guidance but that can only be someone's fallback for so long in life. I think it is good though that we've gotten better at giving education so hopefully that does help future students.

Think that’s part of the point of the article. Those are some really mature questions for an 18 year old to answer responsibly. Most credit card companies now will not give 18 yr olds any significant credit limits for a reason. But an 18 year old can sign up for thousands of dollars of debt to go to college?

The credit card thing as a whole is different. Yes there were predatory practices for sure for both but going to higher education is different. I don't doubt that some colleges are going on strong for freebies like the free pizza for a credit card but the majority aren't like that for college admittance. Most look at your test scores, their admittance rates for x,y,z, and your financials and there ya go.

But when do you want individuals to be considered old enough to be grown up enough to understand and handle student loan debt? Should they delay college admittance til they are in their early 20s? Their late 20s? Their 30s?

Education cost money and the current system we have that's the truth. You either have enough money to cover the college you are attending or you get loans to cover it. Now how much education costs is quite a different debate IMO as I do agree some things are just crazy. Seriously like textbooks for example..yes please let me spend $200 on a book that I will get $25 back on if that. Or $75 on a book that I will get $5 back on. Or better yet let me pay for the edition the professor wrote and then the book just happens to be worthless when the next semester he/she writes another edition.

 

[LSUmiss]

______________________
Well seeing as I was the one who did my own paperwork for my loans I'd disagree on parts of your comments-I turned 18 2 weeks before graduation and filled out FAFSA all by myself lord knows my mom had zero clue on what to do. And when I was hit with a family contribution amount for my freshman year of over $6,000 I looked for other ways of getting money and did the research all by myself....on dial up I might add lol

I do agree that not everyone has good guidance but that can only be someone's fallback for so long in life. I think it is good though that we've gotten better at giving education so hopefully that does help future students.



The credit card thing as a whole is different. Yes there were predatory practices for sure for both but going to higher education is different. I don't doubt that some colleges are going on strong for freebies like the free pizza for a credit card but the majority aren't like that for college admittance. Most look at your test scores, their admittance rates for x,y,z, and your financials and there ya go.

But when do you want individuals to be considered old enough to be grown up enough to understand and handle student loan debt? Should they delay college admittance til they are in their early 20s? Their late 20s? Their 30s?

Education cost money and the current system we have that's the truth. You either have enough money to cover the college you are attending or you get loans to cover it. Now how much education costs is quite a different debate IMO as I do agree some things are just crazy. Seriously like textbooks for example..yes please let me spend $200 on a book that I will get $25 back on if that. Or $75 on a book that I will get $5 back on. Or better yet let me pay for the edition the professor wrote and then the book just happens to be worthless when the next semester he/she writes another edition.

I also filled out my FAFSA by myself & was pretty well-informed compared to many my age at the time. However, I STILL didn’t fully understand exactly how the interest would accrue & what that would mean debt wise for me as an adult like I do now. So, I feel like if I did my research & had a pretty good grasp & was still somewhat blind-sided then many many others well be in a lot worse predicament. For many reasons (some mentioned in the article), the current college & loan system is not working for many kids. I’m not 100% sure what the solution should be, but I do believe that it borders on predatory at this time. Much like the housing crisis, it’s lending ppl money who probably have no real capability of paying it back. It’s like a lot of things...a few ppl get in trouble it’s likeky those ppl’s poor choices, most or many many ppl get in trouble, it’s time to look at the system.

 

[NHdisneylover]

Do many teachers here agree that if a student wants to go into teaching, that they pretty much stick with a low cost college program? Asking because a friend's child now is looking at schools and planning to go the private route for teaching. (Obviously, a lot of factors involved for each individual student, but asking your thoughts on it generally.)

we strongly advised pur children to consider cost as a major factor in choosing a university.

Our oldest is studying to be a special education teacher. oOing into teaching, having minimal debt is evern more crucial than it would be in many other fields and had they not been pretty reasonable about it on their own, we would have pushed for a low cost school; even more so beucase many of the best teaching programs are at lower cost state schools. Between scholarships (need based and merit baed) plus working for housing to pay room and board there is not a ton left to pay or take as loans. For now, oldest is taking just enough in loans to total the amount that could be forgiven if they end up working 5 years in a high needs school (with special ed there are still many options there)--and if that doesn't happen we will help pay them off so they are not saddled with even that.

 

[indimom]

Things have changed significantly in the last 20 years or so, and there are some definite traps along the way that the unsuspecting fall into... but there are also people who just refuse to THINK it through... or who are willing to live a little leaner.

I'm currently 44. I went to college straight out of highschool, and then went back to school in my late 30s. The experiences were very different. Back in the 90s, you got NO financial details/information that wasn't buried in legalese. Credit Card companies had booths in the bookstore and they were giving them away like candy (with free tshirts and Frisbees, and whatever else).
No so in 2012. Young people are much more limited on credit card debt than we were in the 90s. And that's a good thing. And, as for college loans, the online loan counseling is VERY CLEAR about what your debts will mean. I suppose if parents are doing it for their kids, the kid could go into their loans blind, and that's a shame. The parents are not helping their teen, they are hurting them, if that's what they are doing. But, the system itself... it's designed to be CRYSTAL CLEAR in regard to your repayment obligations, in my opinion. I actually got tired of clicking through all the warnings and hazard signs along the way...

While I was going to school in this century (lol), I was watching young 18-20yos at the community college bookstore buying VB backpacks for their books and VB clutches for their sister/cousin/whoever, overpriced notebooks and pens, whatever their heart desired because "they had extra money" (in LOANS)... If I knew them, I tried to explain that it wasn't FREE. They would be paying for that bag, cute pen, $4.50 energy drink and $2.50 bag of nuts WITH INTEREST in a few years when school was done...but they just didn't seem to hear it... it was mind-blowing to me. Honestly, buying anything at the bookstore beyond the books you couldn't get on amazon/etc, was crazy to me. They were WAY more expensive, but students were doing it every day, because it was easy and "they had the money." (OY, no you don't, you have loans!!!) These kids had NO idea what they were doing, loans were available, they were taking the full amount whether they needed it or not, and they were spending, spending, spending on those loans, with no idea that they were going to make their first job a treadmill trying to just pay off their college life.

My daughter is now in college. When a friend wanted her to move into "the nice, new apartment-style dorm" (i.e. the pricey dorm) with her, my daughter explained that she didn't have extra money for that. And her friends response was "just take a bigger loan." Ugh. Needless to say, DD is living in the "cheap dorm."

And this is NOT exclusive to college. People don't seem to understand money at all. Both DH and my employers offer a "perk" where you can swipe your badge at the cafeteria/break room for meals. How convenient... lol We chose not to activate them because we do not need access to unlimited sodas, crap vending machine food, or overpriced hospital salads when we can eat from home much cheaper. But, our co-workers blow through those places, getting $2 drinks every four hours, buying full meals they don't have the time to finish, getting coffee, nuts, crackers, whatever to snack on at their desk.... then wondering why their paycheck is slim... It's mindblowing. At least those don't come with interest attached, lol.

In a lot of cases, people just do not want to think for themselves. NO one is giving you a favor or a break. If it feels too good to be true, it probably is... Credit Card bonus points are GREAT, until the month you can't pay off your spending... and there are a lot of people living that way.

This is not a college problem, this is a budgeting problem.

 

[tzolkin]

So, a question about community college and then transfer— what about scholarships?

My oldest is in her second year of college and has been indecisive about what she wants to do. I honestly had never thought of community college as an option for her. I was from the “if you’re smart you must go to a prestigious school” mindset, so having her go to a state school with a full tuition scholarship was our idea of being practical.

But with my younger two in middle school we have been thinking hard about their options. I think CC for a specific degree or trade is a good option and would be my preference for them. (DH’s nursing degree has been infinitely more valuable than my prestigious liberal arts education.)

However, if they do want to do something that requires a bachelors, I’m not sure that it would be cheaper to do two years and then transfer if they won’t qualify for scholarships. Wouldn’t that wind up costing more for the four years?

Ah, ok. Thanks for pointing that out. Still, crazy that there are so many beauracratic problems with the program!

Yes, I have friends who have been enrolled in a loan forgiveness program for almost 5 years and were just notified that there was something wrong with the amount calculated for the one spouse (so they would have to start over) and that the other one didn’t actually qualify.

Similar situation with my BIL who has been out of school for 14 years but is somehow only two years into a 10 year loan forgiveness program.

 

[Hikergirl]

People need to use good old common sense. You need to go to a college you can afford and get a major that you can actually support yourself with later in life.

It just befuddles me all these kids going to expensive, out of state schools and then getting women’s studies degrees or Gender studies degrees. This is fine if you can afford the tuition and have wads of money stashed to support yourself with later in life. If not, go to an affordable college and get a degree that pays a living wage.

My boys both wanted to go out of state. We said no. We made them go instate where tuition is free. And get a degree that will support them plus a family later in life.

I totally agree. This needs to be part of the conversation that parents have with their kids regarding college.
Around here though what matters is that you go to a prestigious school, and who cares if you can really afford it or if your major will leave you working at Starbuck's after graduation.