<p>Palier,</p>
<p>I didn’t mean anything in an insulting way. I just want people to recognize that if they are borrowing a large sum of money, for whatever reason, that they probably won’t be buying a house right away because these loans are going to be expensive and limiting. People who do this should expect to be paying it back and not complaining about not owning a house. That’s just my opinion.</p>
<p>Sent from my DROID BIONIC using CC</p>
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<p>Community Colleges work for a lot of people but there are a lot of places that aren’t convenient to a community college. I’m not sure how they get located but I do seem to see them more in cities where they can serve a lot of people. If you have one in your city and public transportation is good (or you can walk or bicycle), then these may work out well for you. In California, tax credits and deductions can make Community College tuition, fees and books essentially free so that it may make sense for the student to get a room-share arrangement with other students near a community college. I have a nephew doing this right now. He works about 20 hours a week as a security guard and lives in an apartment with four other guys near a community college and he takes a few courses per semester. He gets a little funding from mom and dad.</p>
<p>Lima, I realize that the reality is people borrow less of money.</p>
<p>However, i don’t see how saying that people who take such big loans and expecting them to realize that they might not be able to buy a house while paying them off makes me not a realist. That’s truth.</p>
<p>Sent from my DROID BIONIC using CC</p>
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<p>The only challenge to this plan is that unless you are an independent student (over 24 y/o or you meet one of the other requirements that make you independent for financial aid purposes) is that no one is going to loan you as a student, 45k without a cosigner. Please be reminded that the max that you can borrow as a student is </p>
<p>freshman 5500
sophomore 6500
junior/senior $7500</p>
<p>As a dependent student, if your parent applies for and is denied a plus loan, then you can borrow an additional 4k/year unsubsidized</p>
<p>The most effective way to address debt burden is make schools take a bigger part of the debt risk. When you have a system where a school can raise costs without check and is still able to turn away students with money from elsewhere, this system will only expand. When schools carry the risk, there’s incentive for them to first not build up these huge debts by containing costs, and second to give the students the kind of education that will get them employed.</p>
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<p>The schools could simply argue that there are more affordable school options available.</p>
<p>People borrow money to buy a variety of things that they can’t really afford. It is generally up to the institutions that loan them the money to cut them off or not provide credit in the first place if they don’t have the ability to pay it back.</p>
<p>I made a huge mistake and took a withdrawal from a retirement fund to take care of some urgent house repairs that couldn’t wait. It falsely inflated my income for 2011 and 2012 so my EFC is much higher than I can truly afford for this year and probably for next year. I’m also paying my own tuition for grad school and, while I get some tuition reimbursement from my employer, I’m still paying quite a bit out of pocket. They don’t take parents’ tuition into consideration. </p>
<p>My ex-husband has been pretty much unemployed for 3.5 years now so I’m covering a lot of things on just my income that would have been split between us had he been working. I made a decision to take Parent Plus loans and pay them off as quickly as I can (all my bonuses plus three times the required monthly payment each month) as sort of a safety for myself. If an emergency comes up, I have the option to pay only the minimum that month. I wouldn’t have that option on a payment plan through the school. She did get a considerable grant from Barnard. My EFC is just higher than I can realistically pay. I could have taken less in loans but then would have no wiggle room in my budget for any unexpected expenses. </p>
<p>My deal with my D was that I would do this and cover the first year loan for sure, and hopefully the second year loan for her. I told her when she gets her first job, we will negotiate the loan repayment between us so she’s not stuck with an unrealistic amount of loan payments. This is divorced mom guilt at work, quite frankly. Because I chose to leave my marriage, there was not money to save for college. Once they are both in college, my living expenses are almost nothing. I have configured a budget that will allow me to live on one paycheck a month and use the other to pay off their loans/pay for their schooling. Once the loans are paid off, then I live on one paycheck and bank/invest the other into my retirement. I’m thinking I’ll end up paying all the Parent Plus loans and she will just have the Staffords to deal with. Those are pretty minimal given the school and the experiences she is getting.</p>
<p>^ Don’t the FAFSA and CSS profile take parent going to school under consideration?</p>
<p>No, they only count siblings. I’m not happy about that!</p>
<p>“i don’t see how saying that people who take such big loans and expecting them to realize that they might not be able to buy a house while paying them off makes me not a realist.”</p>
<p>It’s a question of focus. The reality pointed out in the OP is that this affects all of us, not just the people who made the bad decisions. If you’ve got a house to sell, and these folks can’t buy, well, that’s one reason prices haven’t recovered and homeowners are stuck. If you’re in the dishwasher business, you’re in trouble because these folks can’t afford your product. Criticizing short-sighted borrowers doesn’t help you sell any dishwashers.</p>
<p>If we don’t want to suffer the consequences of other people’s bad choices, it behooves us to adjust the rules so the bad choices are disincentivized. Barring the use of federally supported loans at for-profit schools that don’t meet rigorous standards would be a good start.</p>
<p>Something has to happen as far as college debt goes. The numbers are high and I read a lot of people are not paying back cause they can’t. These are loans the gvt will not forgive (like a foreclosure) and schools are sueing to be paid. </p>
<p>What is concerning is the ripple effect. What’s it gonna be like 10-20 yr from now? Many jobs are still hard to get. These students 20-30 yr olds will have so much debt that they cannot afford to buy a home or whatever, That is money not going back into the economy. Everyone will hurt!! Even those that didnt take out loans. Same thing happended with the whole housing thing. </p>
<p>And while a home mortgage is under 4 percent…that may not always be the case. Out first home (24 yrs ago) had a 30 yr mortgage rate of 11 percent! This was a VA loan. </p>
<p>But what it comes down to is a lot of people owing money when they dont have it. In a sense…they will be owned by the gvt or wherever they borrowed from… </p>
<p>I will be retired then and it is scarry. My kids opted for state schools than the elite private that they could have gone to. It was their choice for a student loan. I could only pay state. They are happy… </p>
<p>I work with some HS seniors in my job, and some are smart about choices. Others say their friend is crazy for going to a $50K college just to be a teacher. </p>
<p>I wish people knew more of the consequences and how life plays out whan you have debt and how it affects the whole economy.</p>
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<p>Very well and clearly said…</p>
<p>[Consumer</a> Debt Statistics](<a href=“http://www.money-zine.com/financial-planning/debt-consolidation/consumer-debt-statistics/]Consumer”>Unsettling Consumer Debt Statistics & Facts for 2023)
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<p>Amazes me how people think nothing of taking out a massive car loan for an asset that depreciates so quickly, while an education is an investment for a lifetime</p>
<p>The car as an asset may be a producing asset and a loan may well make sense. I got 250,000 miles or 13 years out of my last car and it was used to generate revenue and to manage required household tasks. Annual asset cost was $2,000 a year. Not really a big deal.</p>
<p>If you have a house to sell, you can always sell it by lowering the price.</p>
<p>I don’t know about dishwashers because we wash dishes by hand. You guys must be rich to afford one.</p>
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<p>A college degree may not be a tangible asset, but it also facillitates the producing of income</p>
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<li>A car can be a producing asset immediately</li>
<li>I spoke to the dad of an Ivy student (engineering, very good GPA) last week and his son doesn’t have a job offer yet and many of his friends don’t have job offers yet. They will be graduating this spring. The college degree doesn’t guarantee good employment and that employment is typically four years off into the future.</li>
<li>When you go to take out a car loan, they look at your income, assets and payment history to see whether or not you are a good risk. It looks like this step is missing for college students. That and not having collateral, means that the government has to back the loans.</li>
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<p>As a policy matter - do you bail these folks out? What about all of the folks that managed to get through college without loans or with minimal loans? Those that worked their way through college making money, going to college, making money, going to college? Those that commuted instead of living on campus. Those that worked full-time and went to school full-time?</p>
<p>I agree with you that as a matter of policy, there should be better guidance for students about the implications of taking out loans and better vetting of who is a good risk (i.e., in HS, was the applicant a B student or a D student?).</p>
<p>No, I do not think the gov’t should forgive student loans unconditionally-- that means you & I as taxpayers are picking up the entire tab. I would, however, be in favor of targeted programs to forgive loans under certain terms (e.g. agreeing to be a teacher in a poorly performing school district). </p>
<p>As someone who had to take out student loans at 12% interest way back in the Jurassic, it’s hard to be sympathetic about kids whining about the low rate loans available to them today.</p>
<p>The bigger issue is borrowing money is so much more prevalent, because the cost of college is spiraling our of control. </p>
<p>In the 70’s the cost of tuition+fees for public colleges was 10% of median household income, now it’s 25% of median household income:</p>
<p><a href=“http://2.bp.blogspot.com/-Z89zFwzjd2o/T0zkQT9u6QI/AAAAAAAAFAE/UDhMSJEWb0I/s1600/b-ratio-college-tuition-to-median-household-income-1976-2010.png[/url]”>http://2.bp.blogspot.com/-Z89zFwzjd2o/T0zkQT9u6QI/AAAAAAAAFAE/UDhMSJEWb0I/s1600/b-ratio-college-tuition-to-median-household-income-1976-2010.png</a></p>
<p>A couple of weeks ago, I stopped in to see our school’s college counselor to let her know how the visits went for my youngest son, who is a HS junior, during spring break. She told me that she was quite annoyed with many seniors at our school. Why? Well, one local business gives away $7000 in scholarships each year. No one applied for those scholarships. In fact, most of the seniors had yet to visit her office to pick up scholarship applications. Where do they think they will get money from to pay their tuition, room, board, fees, books, etc.? They will have huge loans. Some think that they will be engineers, land jobs quickly after four years and pay everything back right away. Well, what happens if engineering does not work out? What happens if they do not have jobs following graduation? This college counselor spends countless hours trying to educate kids on loans, scholarships, grants, etc. </p>
<p>We all have choices. A lot of kids make the wrong ones … and they’ve had good guidance, too. By the way, these are the same kids who ridicule my youngest son for looking for schools with good merit money. They keeps saying that his choices (which are excellent schools) will lead him no where, that he won’t get a job after college, etc. He’s just someone who does not want huge debt.</p>
![http://2.bp.blogspot.com/-Z89zFwzjd2o/T0zkQT9u6QI/AAAAAAAAFAE/UDhMSJEWb0I/s1600/b-ratio-college-tuition-to-median-household-income-1976-2010.png[/url]](http://2.bp.blogspot.com/-Z89zFwzjd2o/T0zkQT9u6QI/AAAAAAAAFAE/UDhMSJEWb0I/s1600/b-ratio-college-tuition-to-median-household-income-1976-2010.png%5B/url%5D){kind=link}
