<p>I haven’t yet seen the stories, but I can SO understand how it happens. </p>
<p>No longer does a banker want you to have a loan that you can manage (used to be, the banker had a vested interest in you not getting in over your head because it was his money you were burning). </p>
<p>We went to get a pre-approval for a mortgage some years ago. The banker was happy to fill in some huge numbers. Fortunately, we had kicked around in the world awhile and knew that if we accepted a huge loan for a house, that all we would have was house – there would be no room in the budget for, oh, say, groceries or gas or electric or furniture or phone service or, well, anything. </p>
<p>That’s the problem here. Students and their families TRUST the banksters that these loans make sense. And they don’t.</p>
<p>Yea, we once had a real estate agent that said don’t worry about how much you have to borrow, just find the home you want. We got rid of him in a short time, after begging our credit union to find we didn’t qualify for the loan the realtor thought we should take on. We really had too much negative cash flow to handle it and were quite concerned about the cavalier attitude.</p>
<p>No matter what anyone tells the student, the lender is NOT their friend and loans are serious business with long term repercussions. Unfortunately, this message is NOT getting out to the students or their families. There is a huge disconnect and I have even overheard med students talk about how they will discharge their ed loans in bankruptcy! I have visions of a lot of hugely shocked students down the road when they find out what their future economic life looks like!</p>
<p>There is lots of blame to go around and I really think there does need to be some standards before students were allowed to borrow whatever amount they can find any private lender to loan them, especially if it’s guaranteed by us taxpayers. Reform is urgently needed but I don’t have enough info or skills to help with that huge mess.</p>
<p>Ed expenses DO include living expenses while students attend school, whether part time or full time. Costs to attend community colleges & state schools/Us can vary widely.</p>
<p>I and others have warned folks about incurring substantial undergrduate debt for their dream school for years, to little avail. Here is an older thread that was one of the featured threads on CC. It really does focus on the problem well. If you are thinking of incurring any substantial debt or even paying high tuition rates without incurring debt, read over this thread.</p>
<p>Many times I have been asked, “who is at fault?” Is it A) the stupid kid that incurrs this? Is it B) the fault of guidence counselors for not warning parents about this? Is it C) the fault of parents for not recognizing the reality of the consequences of incurring high debt? Is it D) the fault of the system for eoncouraging high debt for education and not providing enough subsidies to keep college costs within reason? Perhaps it is choice E) the colleges, who not only encourage high college debt but eoncourage applicants to apply in the mistaken belief that all financial need will automatically be met I think the answer is all of the above. We really do need some form of educational reform or at least a lot of financial training for high school students. Even one mandatory financial course in high school would make a huge difference.</p>
<p>Qwerty, the $26K CC debtor explains her situation is not related to her COA:</p>
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<p>What I don’t understand is, if she’s working 2 jobs and her husband is also working, how can they have to borrow $10K for pre-school?! I assume they’re paying at least some of the day care expense out of pocket…</p>
<p>sax - I found the for profit college article pretty amazing. I had no idea. There really is a lot of deception out there from the banks and schools, but there are also a lot of foolish people knocking on their doors. </p>
<p>We had the same trouble with our real estate person when we first moved to NC. We had already decided what we could afford and told her our top price. She started out showing us houses way over our budget. We didn’t give in, but she tried really hard.</p>
<p>"Community college followed by a third or fourth tier state university does not lead to the kind of debt these people have accrued; hubris and a sense of entitlement does. "</p>
<p>While several of those are indeed outrageous, some of them aren’t that far off the mark. Going to community college and mytier 3 or 4s adds up to $40k in debt, assuming you got out of community college debt free, graduate in four years, and don’t run into any additional expenses-- which some do not manage, transferring from a CC makes graduating in four years particularly difficult. And that’s if there even is a CC in your area, believe it or not that is not always the case.</p>
<p>While entitlement is a serious issue that is likely the bulk of the problem, it is sad for the people whose choices were 40-50k in debt or no degree-- and as someone that had that choice, it is hard to hear all the outraged cries about what a spoiled brat I am. Nobody ever, under any circumstances, tells an 18 year old, “maybe you shouldn’t go to college right now,” or even “well, you could just get an associates degree.” And in that situation, that is probably exactly the thing to do. I just didn’t know any better at the time. I take full responsibility for it now and will be paying the debt by myself, but at the same time it’s not as if anyone ever discouraged me, and I was 17 when I made that choice. I was really not capable of being as mature as I needed to be then to make the right choice and defy my parents demands that I go to school. Even without parental demands, even just societies, that is a lot of pressure for a 17 year old that doesn’t know anything about money or the cost of living yet.</p>
<p>I really don’t think student loans should be available at all in the students name in excess of 10k a year until a certain age significantly higher than 18, as much as that would hurt some people. I really don’t think 17-18 year olds can make these kind of judgments properly without significant parental involvement, which simply isn’t there for many families.</p>
<p>Probably not, but that eliminates most kids in college whose parents aren’t helping them make their choices. When you’ve never laid eyes on a bill in your life it’s hard to wrap your head around just how much it costs to live or how long it will take to pay it back.</p>
<p>Right now, lenders position themselves as “friends” of the very students they want to have paying them for years and years and years. The students do NOT have the objectivity and really no idea of the cost or value of money. It is just so wrong how all these loans are being offered left and right to parents and students. There are many parents who do not have the finances or experience to deal with all the financial aspects of their children’s choices once they get out of HS.</p>
<p>It’s posted often in these forums about how kids should “pursue their dream” without regard to cost and its effect on parents or students.</p>
<p>There are a significant number of jobs that can be obtained training from CC; many of the respiratory therapists I know have college degrees but went back to CC to get a two-year degree in respiratory therapy so they could get a job that paid decently. Many jobs with college degrees (especially bachelor’s) do NOT pay very well or have much security.</p>
<p>You’re saying a 17 or 18 year old kid does not have the idea of the cost or value of money? Maybe I knew more than most kids, but I knew the cost and value of money before high school. Maybe it was because things weren’t handed to me and I had to work for my money. If I didn’t have the money, I didn’t get the item that I wanted.</p>
<p>Why is it wrong that these loans are being offered? If somebody doesn’t want to sign for a loan, all somebody has to say is no.</p>
<p>I guess I resent that we taxpayers are guaranteeing these loans that are being offered to people who may not ever be in a position to repay these loans and honestly I don’t believe many of the kids or their families fully realize what the effect of these loans may have on them down the road. They believe that attending college is a magic ticket to a better life, whatever the cost.</p>
<p>Yes, some people (you, me, and perhaps many) DO know the cost and value of money but there are many others at age 17 or 18 who really don’t and some who have never held a job and have no idea what their prospects and likely salary may be for getting a job once they complete their education (if they ever do).</p>
<p>So many people drink the koolaid. My S would have signed onto those loans in a heartbeat. I had to sit him down and show him what the repayment terms would have been, and how it was a very bad idea.</p>
<p>Going into this, before i educated myself, I had a vague notion that kids just took on a lot of debt to make college happen these days. Looking into the specifics, it was only then that it became apparent that it was a monumentally stupid idea.</p>
<p>And the colleges, at least the ones we looked at, were definitely enablers in this whole thing. ‘Don’t worry, we’ll help you make it happen!’ The guidance counselor, when I asked for help in finding financial safety schools, steered us to expensive OOS private schools.</p>
<p>If the government doesn’t want to end up holding the bag for this whole mess, there needs to be better regulatory oversight, much like the mortgage industry. And there should be some financial counseling before these kinds of debts can be taken on. Yes, people should watch out for themselves and be responsible. But we see how well that works sometimes. Get into the mess first, then expect to be bailed out later because ‘they didn’t know better’</p>
<p>For those that think that high school students should understand finance: look at the mortgage bubble mess that we’re in. Or any of the other financial messes that we are in. Most do not have an innate sense for the time value of money. I do not expect high school students to have this knowledge.</p>
<p>The housing bubble and the student loan situation are analogous to one another. Just like easy mortgage money drove up the price of housing to levels than eventually far exceed their true value, so too did easy access to student loans drive up the cost of higher education. Students mortgaged their futures allowing colleges to charge prices that eventually had no correlation to the value students received. And just like the home owner, the students now find themselves owing more for their education than their education is worth, (in terms of ROI). </p>
<p>Predatory lending practices and the blind following of outdated ideas as to a degrees worth, combined with no small amount of institutional hubris led to this crisis. Being upside-down on your educational investment has become the norm.</p>
<p>So next comes the bailout. Again those who stayed within their means (even though they wanted that darn dream college education) and didn’t buy more than they could afford will be shelling out more in taxes when the gov’t rushes in to “pardon” all that student debt. </p>