<p>People put themselves into this situation. It is mainly due to not being informed and lack of planning. </p>
<p>I know I will be able to pay for my car out of college, my apartment, and why? Because I won’t have any student debt! It’s a no brainer! You can’t buy a house and cars when you have over $100,000 in debt. </p>
<p>
This parenting approach definitely develops some independence, responsibility and the like. Another approach that works is helping the kid out by paying for his or her large expenses (insurance, phone, car payment…) while he or she is in high school and college. It makes things a lot easier and the child still develops above qualities. Give them a leg up of anything. (Although some would consider this “spoiling” the child.)</p>
<p>Mom reads… Your son doesn’t want to graduate with high debt because YOU don’t want him to graduate with high debt. You have probably given him a " lifetime" of good modeling of the decision making process. This is so much more than any counselor can deliver… A lifetime versus a 1 hour speech given to a group of kids.</p>
<p>It is a very rare 17 year old that thinks logically ( especially boys…remember they sign up for the military without thinking they could actually be killed). This leads me to believe that they would not be able to logically understand the financial choices they are making and how that will affect their future. 5 years ago they were 12, yet they are expected to understand what their life will actually be like 10 years from now?</p>
<p>My point is that for the most part…student loans a re a PARENT decision. Parents are the ones that teach their children about finances. It is obvious from the info BCE posted…those trying to obtain the lowest levels of education ( for profit CC) are the ones most likely straddled with unreasonable student debt…I imagine they are also the ones with less educated parents.</p>
<p>I think a lot of people made very good points if we can assume that the students all came from similar backgrounds. I think many parents, however, do not see the entire spectrum. We tend to view the world based on our own experiences and are quick to criticize those that don’t see it the same way.</p>
<p>I like the idea of qualifying for a student loan…it shouldn’t be automatic. Students should have to demonstrate academic ability ( high school grades) and there should be some type of index for the major. This should be reevaluated yearly. So if you want to be a theater major and you were a C student, you might only qualify for minimal student loans. If you’re an engineering student with a 2.0, you might not qualify for as much as a 3.7 student.</p>
<p>I know there are LOTS of problems with this idea…but maybe it is a way to impose " reality" on those who were not properly guided in the first place. The sad truth is that a college education is not guaranteed and isn’t free. The student loan process IMO, obscures that reality ( as well as unscrupulous financial aid offices that “KNOW” they are setting the kid up).</p>
<p>limabeans01: You are right to suggest that student loans should not be automatic. I have some former students, nice kids, too, but they took four years to do two at the community college. They got loans, and hopefully, they will repay those loans, but they also failed classes or had to take remediation classes before they could enroll in those that give one credit. </p>
<p>And I am not sure if I did model good decision making, but my son is quite the observer. He has heard the stories of his friends who are currently seniors who will have those big loans. He knows there are kids who are $70K in debt after just two years of college. That is scary. He tells me he wants to drive a nice car, go out to dinner regularly and take a vacation once or twice a year. He cannot have any of those things if he has $100K in student debt.</p>
<p>More parents should watch Suzie Orman with their kids. The guests on her show provide a great example of the scenarios which the child could be in if they do the things that the guests did. </p>
<p>I love watching Suzie Orman with my mom! :D</p>
<p>“If you have a house to sell, you can always sell it by lowering the price.”</p>
<p>No, you can’t always sell it by lowering the price – not unless you own it outright. Even if you had 1/3 equity, if its value falls by half, you may be stuck. And if you need to move to get a job, or a better job, maybe you can’t because you can’t afford mortgage plus rent. So your prospective employer in the new city loses, too. There are all kinds of inefficiencies being forced on everyone by the personal debt crisis.</p>
<p>At any rate, even if you are able to sell, taking a bath on a house sale hurts you, the responsible homeowner. It would be much better for the whole economy if the indebted folks had been pushed to make better choices. It’s not about them, it’s about us.</p>
<p>When I was a high school kid, I understood that I would have to pay back my student loans and that they would generate interest, which I would also pay back. I knew the amounts of the loans.</p>
<p>But I didn’t really conceptualize how much money it takes to just live. What I mean by that is . . . I didn’t understand how many dollars are actually left of a $40k or $50k or $100k income after paying rent or mortgage and utilities and car payments and car insurance and all the other month-to-month bills. I don’t think it is truly possible to understand the cost of living until you are living on your own and paying for everything yourself. So I think that is the reason some students take on too much student loan debt. I feel sorry for them, especially the ones whose parents don’t guide them (or whose parents have even more unrealistic expectations).</p>
<p>I haven’t had any loans since the late 1990s so my perspective may be different from those with loans but can’t you just negotiate a short-sale? If the bank won’t take the deal, then send them the jingle mail.</p>
<br>
<br>
<p>Who’s fault is this?</p>
<br>
<br>
<p>Well, we can’t change the past.</p>
<p>I have a trading mentality. When I make a mistake, I admit it and take a loss and then move on. The same would apply to real estate. I know that a lot of people psychologically have a hard time taking a loss but maybe that’s part of the problem. Admitting that you made a mistake and taking the consequences for it.</p>
<p>When we put our house under contract last fall (downsizing on the lot size as new empty nesters), we found a house we liked and wanted to buy, but it was overpriced. The owner bought at the peak of the market and was trying to get that back. No siree, Bob. In reality, he was upside down. We offered him a more realistic price with some terms which only made sense if he closed before December 31. He turned us down flat, so we rented a house and continued on with the search.</p>
<p>At the end of December, he told his realtor to call us. We made the deal we wanted, and he had to bring a check to closing-December 29. I know that was really hard for him to do, but that’s the way it goes sometimes in real estate.</p>
<p>So I wonder with student loan debt, is it the students taking the loan in their name or is it the parents taking the loan?</p>
<p>A family member is in a lot of debt, yet decided to send their kid to school out of state. Found out that he could not even qualify for student loans for his kid so had my retired parents co-sign! My parents thought it was stupid to go out of state when in state was so much cheaper or even start at cmmty college. I think school had already started or near starting for the loan or my brother just couldnt say no. Somehow the parents got
wrapped into this mess. And my parents wouldn’t pay half my college. I dont mind that cause it made me a wiser, stronger person, but the fact that this is a bad decision and debt for someone. Debt on top of debt. I have no idea on the interest rate. its crazy</p>
<p>I told them the loan needs to be in students name as responsible party. I think the student of any loan needs to own that. This is gonna hurt someone in the end.</p>
<p>If the amount is reasonably high, then someone will have to cosign.</p>
<p>I recall the arguments that one sister had with my mother over college finances. This was screaming and yelling stuff. My mother gave me $1K for college total. I made do with that. Unfortunately, college tuition and fees really skyrocketed when my sister was going to college. My mother stood her ground and my sister took out loans. She married into some money which was fortunate for all of us.</p>
<p>Are your parents able to manage the debt? Are they going to pay it off? Will you wind up on the hook for the debt?</p>
<p>“can’t you just negotiate a short-sale? If the bank won’t take the deal, then send them the jingle mail.”</p>
<p>No, you often can’t. Jingle mail makes all the sense in the world, but it is illegal in many states – that is, you’re personally liable for everything you borrowed even if you give the house to the bank. (Which is nuts and goes against the way other secured debts work, but those are the facts.)</p>
<p>Not all of the student loan debt is due to the costs of attending college. </p>
<p>Some portions of the private ‘student loans’ apparently are sometimes used by some people to fund things like car purchases, vacations, big screen TVs, and a lot of other non-essentials having nothing at all to do with being a student.</p>
<p>Some number of the students apparently think the obligation to start paying back the loan is somehow optional and when they fail to make the payments they incur penalties and interest charges compounding and really dig a deep hole.</p>
<p>I agree - some people get themselves into trouble by being short-sighted, ignorant of what it means to have a certain level of debt, and irresponsible in using that money for things other than school, and irresponsible in not paying the loans back on schedule. </p>
<p>They also sometimes fail to consider reasonable alternatives like CC-> 4 year, attending a local state U and commuting from home vs. a private and staying on-campus, and many other variations. Regardless of whether you ‘want’ the Mercedes or not, if you can only afford the Toyota, a perfectly practical automobile, then a sensible person will go for the Toyota.</p>
<p>Agree with the above post. Our niece says some of her classmates that are “richest” are those who take out the max student loans and then travel on FABULOUS vacations, buy new car, etc., while they’re still grad/pro students. She’s tried to remind them that loans NEED to be repaid, but they ignore her. It will come home to roost, especially if they can’t get residency and job in their field.</p>
<p>interesting–so kids are getting school loans for cars and vacations. Maybe if they work in the summer, they would have money to put toward a car (interest rates are very low vs a student loan) or take a vacation. </p>
<p>Or more, maybe work the summer to pay for some college…</p>
<p>Last year, the schools here implemented a requirement for all kids to take finance/and-or economics before graduating. Hope it is valuable…</p>
<p>In our kids’ HS, they had to pick a career, salary, and make a budget, with regular costs including car, gas, housing, and food factored in. They had to consult classified ads to make numbers realistic. I think this was health and guidance in 9th grade. The kids saw that a minimum wage job in HI would not meet expenses. </p>
<p>In BScouts, S also had to do this for one of his badges for Eagle Scout. He also had to make and follow a family budget for a month, I think.</p>