American Students Know Almost Nothing About Their College Loans
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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.
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.
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.
Here'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.
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.
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).
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.
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.
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."
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.
"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.
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.
[0] https://studentloans.gov/myDirectLoan/whatYouNeed.action?pag...
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?
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.
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".
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.
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?
Some of us were extremely knowledgable about the world at that age, but most of us had no idea how anything worked. We had no experience, and our parents didn't do us the service of teaching us. For many of us our maturity level wasn't enough that we could be taught what we were doing. At that age our biology makes us reckless.
So why should it good for society to allow this? Putting aside the ideas of free/subsidized tuition (not because they don't deserve consideration), perhaps this is too young an age for people to be choosing their life's vocation, much less signing away their financial future. More and more I think we should focus on getting young people out into the world into a variety of jobs and apprenticeships and internships and community service.
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.
Unless you're in the top 10% of wage earners, you'll need two incomes. Day care costs would eat a lot of the second income anyway. The college loans still exist as many here have masters and PHDs. Singles at 35+ live with roommates as if they were in their early 20's.
Wonder why Donald Trump has risen so high so fast?
Lots of hispanic women with 2 or 3 little kids in tow, another on the way. Guess who gets to pay for them?
Anyone who points out the actual economics of this, in a society where there are MORE people now than available jobs, is labeled xenophobic, racist, and now, it appears, 'low class'.
Inchoate political anger is a toxin on this site. If you want to make an argument, please do so substantively and neutrally.
We detached this subthread from https://news.ycombinator.com/item?id=11028726 and marked it off-topic.
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.
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.