<p>The loan amounts really scare me these days. In my day, the amounts borrowed would be close to what we could make in a year coming out. No more. Kids are borrowing amounts that are staggering, and then having difficulties finding a job that pays a living wage, much less enough to pay back a large loan. In addition, parents are taking out loans as well to pay these large amounts.</p>
<p>The thing is, these loans are often the only way some kids are going to get away from home. Without the availability, going away to school will become the privilege of those kids who have a lot of money or are superior scholars. There are kids who would benefit greatly from going away to school. In some environments it is really the only chance.</p>
<p>I think that before graduations, the lenders should require a meeting or series of meeting from kids who have loans. Perhaps the financial aid offices of colleges should arrange this. Too many kids who graduate from college have no idea how to organize finances, and that school loan can balloon into an enormous amount with late fees and penalties. Kids need to know exactly what they need to do to repay those loans.</p>
<p>I really think an info session BEFORE taking these loans is in order.</p>
<p>Cpt, unfortunately what you refer to is incredibly common. And it is to the enduring shame of our country that we cannot educate our people without condemning increasing numbers to indebted servitude. Often for their entire productive life. And exactly what justifies this sacrifice of individual and social potential? Nothing but a grossly elevated share price for corporations which should have never been allowed a niche into "their market".
And other countries look on an wonder and cannot conceive why the US has allowed its education to become the venue of profiteers.
And no doubt these same countries will soon overtake us because their best can apply themselves to the economy, to industry, to education. To many of our best apply themselves to the sole betterment of the SL monster.
Perhaps as a nation we deserve to fail by allowing this to have ever happened....perhaps its time to revise JFK's inaugural address to; "Don't bother asking what you can do for your country, but you'd better ask what your entire life will do for Sallie Mae..."</p>
<p>And alas Cpt, working in academia I've seen the information sessions you refer to, and most are a sham. Plus in the face of insanely escalating college costs combined with government cutbacks in educational support what choice to many students actually have? They are quite neatly trapped within a morally bankrupted system.</p>
<p>Federal regulations actually require exit counseling. In years past, many schools brought lenders in to give the exit counseling. However, now, the schools are going to be doing it themselves. Many actually hold these counseling sessions during graduation rehearsal. Schools are also required to hold entrance counseling sessions before the loans can be processed.</p>
<p>Atana,</p>
<p>You sound so bitter in your postings. I sure hope you find something positive in life to focus on instead of the negativity of financial aid offices and lenders. Schools and lenders aren't all as bad as your postings make us out to be, honestly!</p>
<p>Quite true about the exit counseling, although some of those are quite superficial. And the entrance counseling, well I've seen some cases where the schools use materials prepped for them by the SL companies. Which is the moral equivalent of sex abstinence brochures being provided by a brothel.
And NikkiL once again the ethics of your office are indicated in your postings. But alas there are school aid offices who've been so co-opted by special privileges, nee' bribes that regulations are only honored on the breeze.
I recall at one school wherein I worked that the financial aid loan admissions counseling consisted of a one page xerox stating loans had to be repaid. This same school recently allowed its initial financial aid assessment to be handled by one of the most abusive lenders in the business. At that point why bother with a FAFSA might as well send it and everything else including the student's grandmothers rings direct to the loan servicer?
But it is very unlikely the SL industry will ever permit schools to inform students about loan bundling, the enhanced fees for consolidations, hidden and exorbitantly inflated late fees, collections abuses and etc. Although as has been made very clear via investigations by both state and federal bodies these do occur with some of the larger and more abusive companies.
And for ethical FA officers such as yourself, the challenge would be to keep these kind of companies, despite their massive influence, off of school lenders lists. And the other challenge would be to truly advise students of the perils, when the pressure is so pervasive not to do so.
And it still comes down to the question of how in perdition did student support and funding become so misguided as to need what amounts to as a warning label? Isn't that usually the norm for toxic and dangerous products?</p>
<p>And Nikkl it's not a matter of being bitter. But being an academic I, and many others can see that our system will not long survive if major reforms are not made. And if in some small way the only way to ensure reforms might happen is to raise the hue and cry then let it be done. And that is not always pleasant but to say nothing would be unethical or laced with the bitterness of cowardice. And academia, and its promise to the coming generations has to be worth the fight-even if its perceived as 'bitter'. Better that, than to do nothing.
As I've already stated I have no quarrel with ethical loan companies and school offices and have repeatedly commended your apparent decency. But abuses do occur and have done so on an heretofore unprecedented scale. And that dishonors the efforts of decent school officials such as yourself, and faculty who still teach to serve.</p>
<p>I think that the students and their families have to really consider alot of options before taking on massive debt. Students who finish school with six figure loans will be facing payments in the four digit range monthly. Few starting salaries will accomodate this (period.)</p>
<p>Those who are interested in the fields that are not high paying, or in government service must consider this strongly before taking on the debt. There are, as has been said elsewhere, merit scholarships, lower cost tuition schools, commuter schools etc. </p>
<p>MBAs may be the one area where 40 or 60 thousand in debt may have a chance to be paid off by a high salary job, but this is far from a certainty. For those aiming for highly paid medical specialties, don't forget the long residency with a low salary, and required repayment of student loans.</p>
<p>I left school 25 years ago with a five figure debt. I was fortunate enough to land a job in a nyc law firm that paid well. The starting salaries were lower then, but the tuition has outpaced the growth in salaries I think. A top corporate job might justify a low six figure loan, but many people land top law jobs from public affiliated law schools, with a lower cost.</p>
<p>Well those options have to be available and for the current generation of students and their immediate predecessors those alternatives have been greatly reduced. This has largely been due to lobbying of Congress and regulatory agencies by the SL industry. Which means that many of the options which would reduce debt loads have been hacked.
For example in the 70's Pell grants covered about 83% of college costs, by 2006-07 Pell Grants only covered 33%. Overall other non loan based student funding programs have taken similar reductions. Many programs which had provided some post graduation debt relief by service have also been hacked. To the extent that in March of 2008 the AMA begged the department of education to reinstate both deferments and loan relief by service. The AMA received no meaningful response. The same response was also given to the NEA when they have tried to broach the issue via essays in their journal and contacts in congress.
And yes tuition costs have greatly out paced salary growths. From 2001 to 2008 the costs of tuition have gone up an astonishing 61%. (USDOE/College Board) Excepting a very few industries (such as SMC's 220% rise in fee income), and a very few individuals -I don't think there's been anything close to a 61% increase in salaries or assets.
Salaries for most professions during the same period have remained flat. As Professor Warren indicated in her lectures about the decline of the American middle classes, there have actually been losses in middle class incomes compared to their predecessors. Salaries and assets for the middle classes are actually less because much of the apparent increases in incomes is being directed to the debt economy. And the student loan situation is a major aspect of the debt economy in itself being an 85+ billion a year industry.
So given all those conditions, it was an intentional act to cut the options for students and families which had in the past ensured academic debt didn't get so appalling. It has been socially incredibly destructive, but very, very profitable to a very limited group of financiers.
Many who graduated in the 70's and 80's should light a votive candle and give thanks that they were not subjected to the new conditions. Many of those who graduated in the late 90's and 00's better light a votive candle and pray for the apocalypse and second coming...that's probably the only thing which will help their situation.<br>
Unless of course the edudebt financiers have bought god also...</p>
<p>Atana, it is definitely getting more difficult. When I started college, the National Merit award pretty much paid the first year tuition for even the most expensive colleges. Now the dollar amount has stayed the same whereas tuition has gone up more than 10 fold.</p>
<p>Yes its unfortunate what has happened. And for the generation attending college in the late 90's and 00's it is a condition which has put many close to a breaking point, be that financial or otherwise. I (and no doubt many others in academia) see the effects of those pressures on students, both those currently in studies and those who have graduated. And like pressures are very observable within the teaching contingent.
The problem is, is the resources are there to relieve some of these pressures. But largely these resources have been redirected through the SL industry rather than through such direct aid as grants and etc. The taxpayer still foots much of the bill, either directly by the subsidizing of these companies, or indirectly because of the redirection of potential income by graduating students to loans. And obviously that could have gone into the consumer economy and so into such as sales tax and etc. But between 1993 and 2004 the average debt for students having these loans increased some 107% (Boulder Daily Camera)-which is very indicative of a massive transfer of wealth and potential.
What our society has done, and which occurred largely because of special interest lobbying, is turn the better portion of an entire generation into indebted paupers. And the public still foots the bill, be it directly via the massive subsidies, or indirectly because of the loss of potential and resources which isn't going to social betterment.</p>
<p>One other problem that I see with colleges is that there are a lot of people that take course with no chance of success. Our daughter is taking a CC course this summer and the parking lots were full at the beginning of the semester. Right now, they're half-full. It appears that classes losing 50% of their students is not unusual and I'm not sure what the number is for the remaining for passing the course. The cost of the courses is not that much compared to 4-year colleges and universities but it is still some money.</p>
<p>Perhaps better screening would help.</p>
<p>I also have a nephew that went to a high-school in a pricy suburb of San Francisco. He tried two courses at the local CC after graduating and gave up on them and is working now. I think that his parents didn't do the best of jobs in preparing him for college but working is probably the better approach for him right now. He is quite a bright kid but lacks organization. His family is definitely set on the community college to university approach - at least for his younger brother - as a way to save money. They're very frugal in most things but will spend money for education.</p>
<p>There's an interesting story floating around about student loans getting set to about 3% if loans are consolidated. Apparently the big for-profit companies (aren't they all?) aren't advertising this nor are they interested in the business. It has something to do with waiting until July 1 for the more favorable rate. I'll try to dig something up on it later.</p>
<p>Well many of the larger companies are not allowing the consolidations they have opted out of the program, and certainly seem to be blocking attempts by other companies and student borrowers to try to consolidate. In addition in their interior policies they made this decision some time ago, but did not feel it necessary to tell borrowers of that policy. So they mislead many who did try to consolidate with them. And since they lobbied the administration and congress for special privilages and got what they wanted; a borrower is not allowed to consolidate more than once so the whole concept of shopping for a favorable rate is a bit of a sham. Granted consolidation adds more bundling and processing fees but for many caught in the overtly predatory lending policies of the major companies it might be the only reasonable accomodation to make. One which has largely and effectively has been shut down by the lobby power of such as SMC, and NNC.
As far as being more selective in admissions, it is a problem that academia has done poorly in resolving. Obviously the college administrations want the numbers, and department chairs are under some pressure to provide those numbers. And open admission schools like the CC's do have to take anybody who walks in the door. The problem is too often advisors are reluctant to tell students that they may not be suited for academic studies. And our current system tends to minimize the credibility of non-collegiate vo-tech programs. So there is a tendancy to direct as many as possible into academic programs, although these may not serve some well.
To some degree the ideal function of the CC's would be to enable those who can meet the standards to succeed at university. Vo-tech should take an approach much closer to something like the German system where study is intensive within those areas which are specific to a given trade.
Problem is the collegiate system and US attitudes as a whole have driven the idea that everybody needs to go to college. Such as the 'lifelong' learner cliches within academia are evidence of that attitude. And the trades are too often viewed as a educational dead end, which is unfortunate. For example I've watched the German trained mechanics work, they are so capable that they deserve serious respect and can be put up agaisnt the best any country can offer. And they scarcely consider their trade to be something inferior. ( once I limped a Merc in from the Arizona desert with some broken parts and leaking seals and was roundly lectured by a German trained mechanic not to do that kind of thing to machinery...he was right of course...and it shows how much that they are trained to view their trade as something quite serious)</p>
<p>Perhaps we should begin to think in terms of "Predatory College Acceptances".
How about a consumer affairs requirement that each school highlight its particulars along with its admissions letter. Such as...</p>
<p>"There is a 61 % chance you will not graduate from our school within 6 years, and a 54% chance you will not finish college at all."</p>
<p>Well the problem of predatory lending is obviously reciprocal and compounded by misapplied self interest on the part of colleges. And within academia its often very difficult to comment on such institutional problems especially publically, and obviously such problems are not going to be included in the college brochure.
There are stats available on graduation rates, percentages of placements after graduation and etc but the ones which are specific to a given institution are not generally distributed.
And a provision like suggested is a possibility, however its unlikely it would ever be done. College administration would never allow it, nor would political and business leaders within the community. And in some areas, such information could be more indicative of deeper problems within the community than perhaps troubles specifically caused within a given institution. Although these obviously are interlinked in most cases.
And anyway wishing or assuming higher ethics simply because higher education is involved is often very disillusioning.</p>
<p>Regarding the consolidation issue: Even the Department of Education is having difficulties. They have currently frozen ALL payments for consolidation.</p>
<p>It would be interesting to know the rationale for the USDOE's decision. If they have done so because of issues with the direct loan program it would seem that's in trouble.
If they have done so because of insider pressure from the large lenders I'd wonder at what point that'll provoke adverse press or more investigations. Although these do seem to be buried quickly enough.
Problem is the USDOE has been so pervaded by the lobby influences and has so many appointees formerly associated with the large lenders that there has been some serious doubts and attendant inquiries about who the department is actually working to serve. That question always seems to be one of the issues brought up during press, state or congressional inquiries.
It's mutated into a situation that badly needs some balanced reforms and quick. Without more appropriate regulations to protect students and past borrowers soon there will be a point many will be unable to pay, especially considering the added pressures of current economic troubles. And if the system itself cannot be made available to, or more attractive to more lenders, there will be a shortage of student loan availability. The direct loan program isn't likely to be a factor given it's apparent lack of resources.
Quite a mire, and it will be very difficult year for the college support staff who have to work within this situation to keep it all going. Many students will probably be panicked or resentful and not comprehend that college financial aid offices were not the people who propagated the policies which caused this debacle.</p>
<p>As I understand the issue from a friend at the DOE, the issue is a lack of funding. They just don't have the money to consolidate loans right now.</p>
<p>Perhaps the more operative question will be their motivations when congress does act. Under current regulations a student borrower is allowed to consolidate within very limited parameters; in general only once. That was lobbied for, and obtained by the largest corporations in the SL industry. If congress keeps that little gem in place, its a bit pointless to worry too much about the value of consolidations or for that matter the funding. Under those rules companies such as SMC, which itself controls some 38% of the market can dictate terms, including their appalling fee add ons, and keep potential competition to a minimum. All they need do is deny the attempt to consolidate (which has happened with certain of these companies), to force a student borrower to deal with them, and them alone when consolidating. Not beneficial to student/former student borrowers and certainly not competitive.
Some correction in the student loan consolidation arena is badly needed; if we must have this situation at least reform it. First would be to open it up to more companies, and second would be to regulate it properly so we don't get that predatory lending practices so common today. And that ultimately is at the core of the problem, if student loans hadn't gotten so out of hand (due to college costs and too many sweetheart deals in congress and regulatory bodies) so many wouldn't need consolidations as a means to make it all work. </p>
<p>On the whole however the whole situation is incredibly surreal. What the SL industry has done is to compel a generation to borrow-often a great deal and at unfavorable terms, on and for the abilities of their own minds. The old mine town company store owners could only have dreamed of something like that...
And in a generation of morally insane reasoning our governmental and education systems went along with it all.</p>