Are high loans really so terrible?

Paying for College
21

<p>I’ve seen loans like this work out when the parents are responsible people already, and have their financial situation in order and truly can pay them. If they are counting on their 18 year old to pay assume those payments 4-5 years later, that is a problem. They are not thinking straight. Unreasonable. Unrealistic. </p>

<p>We took out too much in loans, deliberately and with purpose. We started paying them as soon as we took them and now nearly 11 years later, the one loan will be paid off. Next year the second one will be. That’s how long it takes and how long the monkey is on the back and we started payments on them as soon as the money was released, and got all the brownie points for starting early repayment, direct bank withdrawal, not missing payment, etc, etc. And we were also in a good situation by all accounts to make this loan. It still was and is an issue and is a reason why my other kids are limited in college choices by cost. If I took the same loan out for my youngest…and the loan for my oldest won’t still be totally paid by then, but almost–I have 15 years between them, I’ll be frigging 75 before I’m student loan free. Scary prospect.</p>

22

<p>cptofthehouse, </p>

<p>Typical situation of people who don’t listen. Could have commuted for free. If I got free tuition I would be running to that school and not even worry about my other options.</p>

23

<p>Brendank21, the thing that was a killer was that the school in the situation was a flagship one. The GCs at the kid’s school did not even know about the award which was OOS, as this was a private elite school, and they KNEW the family was hurting–the kid was on full scholarship and financial aid AND the staff were helping out. Free applicatoin, fee waivers, and they encouraged her, and then her sister into unaffordable situations. I actually called them up and blasted them. </p>

<p>I don’t see any resolution to their situation. They could have a mansion in that part of the country for what they owe and for interest rates less than a third of what they owe on the mess. </p>

<p>I am paying on student loans and our family income is in the upper echelons. We qualify for zip in aid for even the most expensive colleges. And it HURTS to pay that loan amount month in and month out. It’s not a pimple on ones back side but a big sore. So I know how it feels. And my kids, for all the job hunt, not getting the pay they want, not able to afford the life they had expected, at least they don’t owe student loans. They are loan free which is a big thing</p>

<p>I don’t say, no loans under any circumstances. But if the OP knows that his/her parents are not in good financial shape and are not savvy when it comes to making financial decisions. OP should know. Are bills not being paid on time, are things being put off, is money a tense issue in the household, are bill collectors calling? If your parents are in financial trouble already, don’t add to it. All of us, parents including have our fallacies and our kids are truly a weak spot for us and we will do stupid thing to get you what you want because we love you so. But we are not always strong and make the right choices. Don’t put them in that position.</p>

<p>If they are indeed in good position to take out some loans, then they can do better than go to those sharks out there that are hamstringing both you AND them. If they don’t qualify for the PLUS, that is truly a flag that something is wrong.</p>

<p>I fully advocate taking loans, once a student has done due diligence and gotten through two years of college with full junior standing rising, and now wants to transfer into some programs that will cost. Or going from comm coll to a university. These kids have proven their mettle. They have two years, hopefully before they are done. But to put that kind of money down when you don’t even have it on an 18 year old, year in and out, looking at 5-6 before MAYBE IF he gets through the program, IF the job in questions stays as vaulted as it is, If the kid is even still alive, is crazy.</p>

24

<p>Going directly into a Master’s program can also be a mistake. I personally know people with Masters degrees who have been passed over for jobs in favor of Bach Degree holders with experience. Frankly paying an entire mortgage value in student loans (that’s what that amount equates to) would scare me.</p>

25

<p>Erin’s Dad, </p>

<p>Also the problem with master’s degree is the limited aid available usually just loans. So where you qualified for all this aid to get your bachelor’s, you may get zip for your master’s.</p>

<p>Also a lot of companies have a tuition reimbursement program so you could potentially get your master’s covered that way.</p>

26

<p>My kid, the solid one who tends to know what he wants to do has changed his major for the third time in two years. Of the others, only one stuck with his original major. Look at the stats. If you really expect an 18 year old kid to make a lifetime decision on a career, you are smokin’ some bad stuff, especially laying that kind of money on it.</p>

27

<p>*If you are comfortable with the idea of a high possibility of living in your parents basement into your 30’s, then go for it. *</p>

<p>lol…yes, but the student has NO IDEA if the job she gets will be anywhere close to her parents’ home.</p>

<p>Also, I wonder if the scholarship is ONLY for four years? If so, the 5th year of borrowing will be higher. </p>

<p>And, if there is a Pell Grant in the aid pkg, once the student is considered a “grad student,” she won’t be eligible for that. So, more debt.</p>

<p>It sounds like the parents aren’t contributing much/anything towards college costs. That can be very telling. That often means that either the parents don’t have much of an income OR they are spending all of their good income on housing, their own debts, etc. Either situation does NOT bode well for qualifying for these large loans…year after year. </p>

<p>I don’t think this student (or her parents) realize how hard it will be for most families to even qualify each year for these loans. Each year, the parents’ credit takes a big hit. First borrowing $30k, then $30k the next year (now with $60k of debt on credit record), and so forth. Unless the parents have a very high income, the banks are going to say “no” somewhere around the 3rd year when the parents have $60k-90k in debt (plus their own personal debt).</p>

28

<p>Someone once said that one should borrow only as much as one can pay from savings for college, and that is not a bad idea. College costs are meant to be met by past, current and future income. If your parents haven’t saved anything and can’t pay for anything now, what the heck does that say for the future? It only gets more difficult as we get older and job opportunities start thinning out and medical issues crop up.</p>

29

<p>[We</a> Cosigned Our Unemployed Son’s Student Loans. Now We’re Screwed ? Consumerist](<a href=“http://consumerist.com/2012/08/24/we-cosigned-our-sons-student-loans-now-we-face-retirement-in-bankruptcy/]We”>We Cosigned Our Unemployed Son's Student Loans. Now We're Screwed – Consumerist)</p>

30

<p>Wow, Iron Maiden, and that loan was only $28K.</p>

31

<p>That’s the thing, people keep talking about larger numbers so $26k doesn’t sound like a lot, but in reality when people are making payment on that size of student loans the payment is similar to an extra car payment for 10 long years. Most people can’t afford to make an extra car payment each month along with their own bills, but less 3-4 extra car payments that huge loans would entail.</p>

32

<p>oops…meant to type:</p>

<p>Most people can’t afford to make an extra car payment each month along with their own bills, much less 3-4 extra car payments that huge loans would entail.</p>

33

<p>In the linked article it said the student was paying $1200 a month on his Sallie Mae Loan. That’s over $14,000 a year. That seems like way too much for debt service on a $26,000 loan, unless there’s a bunch of capitalized interest or deferred payments that are now due or something. I’m just glad my D hasn’t needed to borrow for school.</p>

34

<p>It all depends on what the rates are, whether he incurred fees and whether the info is even correct. My friends DD’s $90K in loans has ballooned to $200K. Interest is deadly.</p>

35

<p>In the linked article it said the student was paying $1200 a month on his Sallie Mae Loan. That’s over $14,000 a year. T</p>

<p>The debt ballooned because the son wasn’t paying and there were penalties, etc, added in.</p>

36

<p>

Yes, high student loans are terrible. See [The</a> Parent Loan Trap - Students - The Chronicle of Higher Education](<a href=“http://chronicle.com/article/The-Parent-Plus-Trap/134844]The”>http://chronicle.com/article/The-Parent-Plus-Trap/134844)

</p>

37

<p>Our kid was on track to only need to borrow the fed maximum of $7500 in junior and senior years. We were on track to be able to help her pay those loans off within three years of graduation. However on 2/27/2013, the breadwinner was laid off along with an entire corporate division. Kid may need to pick up more debt to get through the senior year. Depending on where the parents land, it may or may not be possible for us to help the kid with the student loans in the future.</p>

<p>Anything can happen. Keep your debt as low as you possibly can.</p>

38

<p>Yes, $150,000 student debt is an absolutely terrible idea. Unless, as someone said, you are planning to live in your parents basement after you graduate. Even then you would probably have difficulty making the payments. And remember, if you are borrowing $150,000 ($30k a year) and not paying the interest while you are in school, the interest will be added to the loan and by the time you graduate your debt will actually be in the $180,000-$190,000+ range depending on your interest rate.</p>

<p>Think of it this way. My son has just been preapproved for his first mortgage. He makes good money, @ $85k last year, has a good credit score and a small amount of other debt (<$10,000 student loans, and a car loan). With that income and that small debt, he was approved for $180,000. Being a mortgage, which has a longer payment period than your student loans will have (plus the interest rate he has been approved for is probably half or less than what you will get for an unsecured student loan), he is looking at payments of around $900 a month (he is hoping to buy for a little lower than that but lives in a fairly expensive area). </p>

<p>You are looking at being that much in debt on day one of your working life, but with monthly payments that will probably be double or more what he is looking at for his mortgage. It is unlikely you will be making $85k at that stage. Even if you were, such a debt will be a HUGE burden and will make it hard for you to do anything except pay your loan every month, if you can eve manage to do that.</p>

39

<p>Only medical students should have $150,000 student debt.</p>

40

<p>* And it HURTS to pay that loan amount month in and month out. It’s not a pimple on ones back side but a big sore. So I know how it feels*</p>

<p>That’s what those who are thinking about big loans need to consider. When in high school and all excited about the upcoming college years, the excitement can be so strong, that the student thinks that no debt is too big. But rarely EVER is big debt needed to have a satisfactory college experience. </p>

<p>The truth is that most people quickly regret huge loans. They quickly tire of the monthly big payments. Their imaginations run wild thinking of all the things those big payments could be going towards instead…the purchase of a home, a car, a savings acct, a trip to Europe, whatever. </p>

<p>It’s especially frustrating when one’s colleagues don’t have similar levels of debt and you’re seeing them moving on with their lives while you’re tied to the ball and chain of big debt.</p>