On one hand, I hear that private student undergraduate debt is skyrocketing and kids can’t pay it back.
On the other hand, I also hear that kids can’t take loans on their own to pay for their undergraduate degrees.
How do I reconcile the two? Peronally, this doesn’t impact me as I will pay for college and grad school 100%, but I was just curious.
Students can borrow however much a private lender is willing to lend them if they have a qualified co-signer. So yes, they can end up drowning in debt if they have co-signers who help them take on that debt.
Students can take federal loans of $5500, $6500, $7500, $7500 for the four years on their own. If the parents apply for and are denied a Parent Plus loan, the student can take an additional $4k each year. For private loans the parents must be cosigning because lenders don’t lend to people with little income or assets.
A student can borrow between $23,000 - $31,000 in Stafford loans as an undergrad, depending on which ones they qualify for, parents can borrow quite a bit more on ParentPlus loans, and/or co-sign for the student to borrow more via private student loans if the credit history is acceptable to the lender. Sometimes the ParentPlus loans are taken with an intent for the student to pay the parent back for all or part of the loan.
Put it all together and quite a lot of money can be borrowed just to finance an undergrad degree, while many fields now really require some sort of professional or graduate degree to move very far up the ladder. So add on top of that all of the loans that become available to a grad/professional degree student and the numbers can start getting huge.
That, and also if you read the details behind a lot of those news articles the students in these situations usually aren’t graduating in four years from affordable schools. They’re usually either at extremely expensive private schools or for-profit colleges, or changing their majors multiple times, failing and repeating course, taking remedial courses, and other situations that prolong the amount of time that the student is in college. Even after the student has graduated, difficulty finding work and relying on loan forbearance programs can cause debt to balloon over time. A lot of the people you see with the hundreds of thousands of dollars in debts either went into undergraduate programs or had some or all of those other issues after they left their undergraduate institute.
Got it. College costs about $70k/year at the high end these days and I thought that kids were borrowing $300k to fund their undergrads. Thanks for the explanations.
MODERATOR’S NOTE:
As OP seems happy with the answer, I am closing the thread.