<p>Of course, the persons who take out such loans are ultimately responsible. But, you can't deny that colleges love to play the "smoke and mirrors" game with F/A. On all their pretty mailings, they loudly proclaim how nearly ALL of their students receive huge% of their college costs in student loans. That, unfortunately, gives comfort to the prospective student and parents who are left thinking that there will be some tuition discounts, scholarships, grants, work-study, and maybe "some" loans. For those who come from families that may not be "college f/a savvy," they are especially vulnerable.</p>
<p>The student applies, the entire family is excited, the acceptance and F/A package arrives and..... it's all or mostly all a bunch of student loans. The student and the family then remember the words on the "pretty mailers" about how everyone is using F/A, so they think, "Well, this seems to be what everyone is doing, so it must be okay." Again, those who may not be that "savvy" about the whole thing, running the F/A loan calculator, etc, are vulnerable. Those who have no other choice (those who didn't know to apply to financial safeties) feel compelled to start borrowing money.</p>
<p>The bottom line is that the colleges do not care that this happens. They got their money. They aren't hurt when students can't pay back their loans.</p>
<p>Loans are not Financial Aid in my book. I don't care how low the interest rates are! Financial aid is just that-Aid. Does aid mean that it has to be repaid? When our country gives aid to countries around the world whether it is from natural disasters or other, I don't think we expect repayment. Financial Aid does not mean loans. The sooner more people realize this, the better off new prospects for admissions/financial aid will be. Perhaps, if you cannot afford that prestigious uni, then maybe rethink applying? The whole Financial Aid process needs an overhaul at colleges and unis, in my opinion. Perhaps with the economy where it is, there will be more tune-ups to the process!</p>
<p>So you think I would have been better off going to an entirely different school than the one I chose because I got $2k a year in subsidized loans from the government?</p>
<p>And I think the fact that I managed to go to school for the same price of my brother (with roughly the same amount of loans) even though my school was private and his was an in-state public says to me that going to a cheaper school isn't necessarily the solution.</p>
<p>For the record - my kids would not be at college without their loans. They all qualify for and must take out Subsidized Stafford Loans. This is part of how they are helping to pay for their education. I struggle enough trying to come up with the rest of their tuition, room and board.
The interest is not accumulating while they are in school and other than the 1% guarantee fee it is "free" money. There are maximums on what one can borrow: $3500 freshman year, $4500 sophomore year, $5500 junior and senior year.</p>
<p>I strongly suggest that folks stay away from private loans and unsubsidised Stafford Loans (unless you can pay the interest on the unSub Staffords) - especially the first two years in college.</p>
<p>Nothing rankles me more than to see a college "award" private loans. It is voodoo financial aid.
IMO - Loans are not necessarily bad - make sure they are the "right" loans though and be careful.</p>
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Some people are so determined to go to schools they just cannot afford - including OOS public schools that work out very expensive - it makes no sense to me at all.
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<p>Ceteris paribus (same GPA, comparable courseload, comparable ECs, etc), Does a student have the same grad school/employment prospects at Alabama State University as at the University of Virginia? My answer is absolutely not. And that explains things. </p>
<p>You're assuming that Alabama State University and the University of Virginia are equal. TRUST ME, they're not. If you even implied as such I'm sure many UVa students would be totally insulted.</p>
<p>Oh, and I think the government has its head in the sand with regards to the rising cost of higher education. I got an email from the president of NYU in may-saying he's raising tuition by 6%! That's about 3 times the rate of inflation. We don't see college tuition credits being adjusted for inflation, nor do we see stafford loan limits being adjusted for inflation. Yet, at many universities the cost of tuition is rising at 3 times the rate of inflation.</p>
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This depends on what the students career and geographic goals are, as well at their own motivation.
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<p>Let's assume everything's the same. A 4.0 at Alabama State U won't get you the same jobs as a 4.0 at UVa. Period. Case closed. Try getting an interview in management consulting or venture capital with a degree from Alabama State U. Short of your father being the CEO of the firm, nearly impossible. Easy for YOU to say it "depends" but with the abundance of people graduating from top universities, why would employers go out of their way to recruit from Podunk U?</p>
<p>If you fix EVERY OTHER FACTOR, someone graduating from the University of Virginia clearly will have better prospects than someone graduating from Alabama State University.</p>
<p>futurenystudent: You are changing the rules. </p>
<p>Not only that if you have two students - one who graduated from Alabama State and one from UVa and they both got their MBA at Wharton. The UVa grad does not have an edge.</p>
<p>Trust me - there are plenty of kids out there who graduated from big name schools who are not very "successful" and plenty of kids from no name schools who do very very well in life.</p>
<p>futurenystudent, I'm not seeing your point about grad school and employment prospects in the context of this thread. We've got a young man who racked up an enormous amount of undergrad debt so that he could attend a prestigious private school. I'd guess he did that because he felt it would be better for his employment prospects. He's now been out of school for a few years. He's working as a controller, making a respectable living but not one that would be out of line for Cal State University grads in business or accounting. And he's now contemplating bankruptcy, which probably will not discharge his student loans.</p>
<p>This fellow has no grad school prospects--he won't be able to afford it. His employment prospects, even coming from USC, don't appear to be enhanced relative to a lower-cost public university. </p>
<p>There might be a few students out there who are incredibly talented and hardworking and who will make the big gamble--take out the massive loans in hopes of a massive payout from getting a plum job--pay off. But for the vast majority of people, it's a bad bet. Especially in this economy.</p>
<p>USC ought to pay off that kid's student loans if they promised to meet every student's "need." How more obvious can it be that he needed $150,000 in order to go there.</p>
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futurenystudent: You are changing the rules.
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<p>I haven't changed the rules. Don't pretend I did just because you conveniently forgot to read the "ceteris paribus" at the beginning of my very first post on the thread. You're assuming that a BA from U.Va. (or insert top university here) and a BA from Alabama State (or insert fourth tier noname school here) are "perfect substitutes" in econ-speak: however, anyone with a pulse will tell you that they're not. On the macro level, you're much more likely to land those "plum" jobs of which you speak at a more "connected" school than at a less "connected" one. On the micro level, someone who graduated from the bottom of his class at Harvard won't be as successful as someone who graduated at the top of his class at Alabama State for example. Assuming that your kid will be at the top of his/her class for all 4 years is statistically a bad bet, given that the statistical chance of someone graduating at the top of a 5,000 person class is 1/5,000. Plus I doubt the culture at Alabama State U is conducive to studying. On the micro level, if you take an average student from both universities (Harvard and Alabama State), you'll find that the Harvard grad has both an easier time getting a job and will end up making more money.</p>
<p>Another example: I know several people at NYU Law School that aren't particularly brilliant per se who are juggling 6-7 different biglaw offers. I also know that people at fourth tier law schools have a hard time even getting past the resume review stage, even if they're at the top of their classes.</p>
<p>Bay-"need" is a relative term to most finanicial aid offices. I would suggest that the very defininition varies wildly among offices. Of course, you know it depends on the finanicial details of the parents; but "need" does have differing dimensions. Sure, one would think that if it was going to cost $150,000 to go to school there and 100% of need is met, then he would not have this debt. Again, my argument for overhauling fin aid offices at colleges and unis. I hope we see it with today's economy!</p>
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USC ought to pay off that kid's student loans if they promised to meet every student's "need." How more obvious can it be that he needed $150,000 in order to go there.
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I'm curious to know if this story is written by a UCLA grad. :D
My daughter's friend pays a lot less to go to USC than even commuting to UCI. Her parent is in one of the professional fields that pays well, some year up to $300K,has tons of equity(at least a million).</p>
<p>futurernystudent: you are assuming that everyone wants to go to Law school or be an investment banker. For someone who wants to major in social work or education and is from Alabama - there really isn't any benefit to borrowing and spending oodles of money to get the UVa degree.
Anyway - assuming that you are correct - it is quite a gamble to think one could borrow that much for Harvard even, and come out ahead. </p>
<p>Bay - I doubt all the $150,000 is borrowed. Much of that could be late fees and collection costs. Still even if he borrowed $100,000 that is waaayyyyyyy too much.
About need - notre dame AL is correct. Just because you don't "need" the money doesn't mean you have the money.</p>
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you are assuming that everyone wants to go to Law school or be an investment banker. For someone who wants to major in social work or education and is from Alabama - there really isn't any benefit to borrowing and spending oodles of money to get the UVa degree.
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<p>Yes, I'm assuming both have the same end goal. Because if they don't have the same goal you're comparing apples to oranges. Economic value comparisons are only possible if you're comparing apples to apples.</p>
<p>futurenyustudent, I was the one who mentioned "plum" jobs. </p>
<p>Again: the subject of the original article got a degree from USC, a much more "connected" school than a Cal State. I agree that he was far more likely to get a plum job at the more "connected" school. But, he didn't. He's earning $41k a year at an LA-area industrial firm. That's a job that a Cal State student could have a few years out of undergrad, without the massive student loan debt load. </p>
<p>ceteris paribus, same student at two different schools (a Cal State vs USC): same job outcome, much different debt outcome.</p>