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Student Debt strangling our youth


Replies to: Student Debt strangling our youth

  • garlandgarland Registered Users Posts: 65
    edited May 2013
    Baby boomer here--I took out loans. My mom took out loans (my dad died when I was 14; we did not have it easy). We paid them back. I don't want to here about how easy I had it--it wasn't, but I did what was feasible for me, and took responsibility.
  • Lookin4wardLookin4ward Registered Users Posts: 19
    edited May 2013
    I agree with the baby boomer comment. Cost of schools have inflated WAYYY past the rate of inflation. That inflation is about 200% in the past 20 years. So you can't discount the statement. I'm Gen X, going back to school after a military stint, and can really tell the difference between college costs. Having a side job while in school paid a lot more of your tuition money just 10 years ago.

    But students have choices. For most majors it really doesn't matter what school you went to unless you are going for a job that values prestige. Going to a CC and then a state school is a good one. Even going to school part time while working, taking 6 years instead of the usual 4 is a good one. The problem is the idea that everyone needs to go to college to get a good job in this economy. That is just not true. What you have is a college educated society working in jobs that simply don't need a college degree to accomplish.

    Don't believe me look on Craigslist. I've seen jobs that are basically secretaries or file handling that pay only 11 dollars an hour and at the bottom of the add say you need a degree to apply. Total crap. It's the new normal. Companies no longer want to train people. The days of starting in the mail room of a company and working up to manager are pretty much are a lot fewer in number.
  • Ghost73Ghost73 Registered Users Posts: 8 College Search & Selection Champion
    edited May 2013
    ^Yep. The CC--->State U path can be credited, however it does not change the fact that college costs have increased much more than the rate of inflation. Even two years at a state school will set you back ~45k.

    FinAid | Saving for College | Tuition Inflation

    The whole "pull yourselves up by your bootstraps" wisdom from those who grew up with much more favorable economic conditions is irrelevant.
  • crazedcrazed Registered Users Posts: 6
    edited May 2013
    You missed my point. Not everyone will be offered merit aid, financial aid other than loans, or grants (not to be repaid). In that case, In State U's are likely cheaper than any private school. In the end, you weigh total cost which you must outlay either by loans or payment.

    When our sons applied to school, although they were both told we'd pay total cost, we stressed they look at the big picture including cost before choosing where to attend.
    Son1- Private U- full tuition merit award at school ranked in the 30's.
    Son2- State U (IS) given 1/2 tuition merit award. Our cost is about $3500/year tuition.
    Both could have chosen schools at full rate- no merit, or schools with partial merit awarded, etc. but decided on these great schools themselves. Neither felt it was worth the extra $ to attend other schools. Both graduated debt free and Son1 will graduate from grad school debt free.

    As far as baby boomers, I went to an IS and OOS undergrad and OOS grad school. Graduated with loans and paid them off. I did not have the option of higher loans from private schools nor would I want those loans. Those in my generation sending our children to college now have made a great living, seeing our salaries increase nicely. We are told our kids will never see that. With that said, those with high debt will feel it more than we did.

    By the way, sons best friend went to a very expensive private school. Likely top 15-20 or so. Has told my son that it was not a wise choice as he would likely have gotten the same merit $ as my son at his school and merit at other privates. He did not feel his education was worth the cost. (Great education, just that he knows the education would have been just as good at a 20-35 ranked school for much less cost.) By the way, that business major does not have the job he wants 2 years out.
  • HannaHanna Registered Users Posts: 20
    edited May 2013
    "Don't forget that with a student loan there's nothing to repo - unlike a loan for a house, car, TV, etc."

    It is a myth that dischargeability has anything to do with the repossession aspect of debt recovery. They are unrelated. The largest portion of debts discharged in bankruptcy in this country are medical bills. Obviously there's nothing to repo there. Credit card late fees and interest that grew out of things like utility payments make up another sizable fraction of discharged debts, and they are likewise unsecured. Conversely, in many states giving the house to the lender does NOT discharge the personal obligation to pay the mortgage, even though the house served as security for the loan. And individuals declaring bankruptcy are often permitted to keep their homes.

    You can take a $10,000 vacation, pay with your credit card, and discharge the debt in bankruptcy. But not your $10,000 student loan.
  • poetgrlpoetgrl Registered Users Posts: 194
    edited May 2013
    It's ridiculous to act as if the college cost situation is even slightly similar to what it was when we were going through, and I am in my forties. I put myself through school with my summer work and bartending a couple of nights a week. Nobody could do that now.

    My parents didn't help me at all, and it never even mattered.

    Asserting that college costs are the same today is like asserting medical costs are the same as they were back then. Preposterous.

    And, yes, banks need "skin in the game" so they will lend responsibly. It's all well and good to hold these kids responsible for staffords, but anything beyond that amount, a bank needs to evaluate the risk, take on some of the risk. It's not even like they are offering favorable rates going forward. 6.8% guaranteed profit? Who exactly is it who wants "something for nothing?"

    ETA: and you know what? schools need skin in the game, too. They need to be held responsible too. pointing out places kids can borrow more and more money to give to them isn't a benevolent act of financial "aid" for the kids.
  • Gator88NEGator88NE Registered Users Posts: 17 College Search & Selection Champion
    edited May 2013
    No one is saying college cost are the same as when "we went to school". Folks are making two points.

    1. Students shouldn't take on more debt than they can manage.

    2. We also took on student loans, back in the day, it's a valid strategy, but loans where capped at a much lower amount than today (as tuition was also lower), so the debt was manageable.

    I agree with poetgrl than banks and schools need more skin in the game. That would help drive down tuition and loan amounts. As it is now, we're in a cycle of increasing loans leading to increasing tuition, leading to increasing loans.....something has to break the cycle.
  • gladiatorbirdgladiatorbird Registered Users Posts: 10
    edited May 2013
    ^What poetgrl said.

    I put myself through a UC in the 80's with no help from parents--on an 18 hour a week waitressing job. Like poetgrl, I didn't *need* any help. I paid rent, tuition, books, living expenses and still had money for vintage dresses and backpacking around the world in summers. Try that now--at $31k COA. Not gonna happen. I then did a masters and Ph.D in NYC--again, by waitressing three long shifts per week. That was in the early 90's.
    *Total* debt at the end of my schooling all the way to the Ph.D. was $10k.

    The world has changed. Maybe people aren't saying the costs now are the same, but there still seems to be some "I pulled myself up by my bootstraps so these young people can do it" going on. And yes, skin in the game, there's got to be skin in the game for our financial systems to work as they should.
  • garlandgarland Registered Users Posts: 65
    edited May 2013
    First of all, I'm not making up how difficult for me to get through college as far as paying and taking out loans, 30+ years ago. And then graduating into 10+ % unemployment. Getting through college as far as paying was an enormous, draining stress for me. I'm a little tired of generational stereotyping, in either direction.

    But more to the point, the basic point is that those huge loans that articles like this publicize are far from the norm. Making people think these are typical, when they're not, doesn't help anyone.
  • DesignDadDesignDad Registered Users Posts: 2 Harvard Champion
    edited May 2013
    Here's an article that brings up a few more rational points about this issue:

    Mike English: Digging Deeper Into Student Loan Debt
  • BCEagle91BCEagle91 Registered Users Posts: 154
    edited May 2013
    "Although the average student loan is approximately $26,000, the median loan is about $13,000. There is a substantial difference between the mean and the median because some borrowers amassed student loan bills, skewing the student loan mean to twice the median. $13,000 is certainly nothing to sneeze at, but for individuals that pay their loans back over ten years, the monthly loan payment is lower than the typical car payment. "

    Thanks for the article. I'm still reading it but I think that having the median number to go along with the mean is important.
  • DesignDadDesignDad Registered Users Posts: 2 Harvard Champion
    edited May 2013
    Regarding Garland's point about the people in these articles (the one in the OP, not the one I posted) being atypical. That's a really good point. I know this is going to sound insensitive, but in reality, articles like that are NOT about a "student loan crisis". Articles like that are actually about somebody that did something stupid and doesn't want to take responsibility for their own actions. "I didn't understand what I was getting into" doesn't fly. As an adult, you are responsible to FULLY understand the ramifications of anything before you sign on the dotted line. The internet makes it MUCH easier these days to learn about basic finance and what appropriate debt load means.
  • barrk123barrk123 Registered Users Posts: 48
    edited May 2013
    It doesn't help that sites like Yahoo are running stories of people who took out 200k loans to get art degrees and now want their loans discharged almost 24/7.
  • ConsolationConsolation Registered Users Posts: 75
    edited May 2013
    The Education Department has generated nearly $120 billion in profit off student borrowers over the last five fiscal years, budget documents show, thanks to record relative interest rates on loans as well as the agency's aggressive efforts to collect defaulted debt. Representatives of the Education Department and Congressional Budget Office could not be reached for comment after normal business hours.

    From this article:

    Obama Student Loan Policy Reaping $51 Billion Profit

    I think the current loan rates are usurious, as I have said before, and the argument that they are "unsecured" doesn't wash, since they are not dischargable.

    I think that our nation should invest in higher education. If we are going to do it via student loans--and it looks like that is the only nationwide method that will work, given our political and economic structure--we should look to break even at best.

    The current situation is unconscionable.
  • gladiatorbirdgladiatorbird Registered Users Posts: 10
    edited May 2013

    It's true that cases presented in these articles are extreme outliers and debt levels as described were excessive and unnecessary. It's also true that there's not a lot to be gained by generational stereotyping in either direction.

    But for the majority of fiscally-responsible, sensible, and debt-averse students today, at least here in CA, the landscape (even for public education) has changed--there is just no arguing that. The 'cheap' CSUs now cost more than the UCs did not long ago. And the UCs cost what an expensive private did not long ago.

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