@Mastadon, came with Audi 5 year warranty for big stuff (like power drive or some such thing) and he also purchased the extended warranty which covers other stuff. He spends a lot of time commuting - even though it’s only 10 miles each way the traffic around Boston is horrible - so he’s in his car up to 2 hours a day and he commutes the opposite direction of people who work in Boston.
And we are still paying his auto insurance - which went up $200/month. He could afford it but since he is our only and we can afford it we agreed to pay it for a few years.
@emilybee - Smart move on the warranty. I live in the Boston area, so I am aware of the traffic. People are migrating back into the city, so the reverse commute has gotten almost as bad as the standard commute.
My daughter graduated last spring with a manageable amount of debt and is living independently (with a roommate) in NYC. A car is not an option there. What caught us by surprise was the huge up-front payment required to secure an apartment. I think it was 5 months rent. We loaned her that and she paid us back over the first 9 months.
@Mastadon, we had that too with S in Boston. Had to pay 1st/last months rent for summer sublet before he even had a paycheck (he paid middle month.) Then almost at same time we had to pay 1st/last months rent, security deposit and 1/2 of finders fee (his company paid $1000 of that) for permanent apt. Plus, to get his old car registered in MA it needed a new catalytic converter - which was something like $1500 or $1800. We were going to ask him to pay us back but decided to forget it so he wouldn’t be playing catch-up. I think in total we laid out $8000 in a two week span. And he’s not living in luxury, either. I can’t imagine what kids whose parents can’t help with these initial up front costs do.
He lives in Brighton and commutes to Framingham. We have nice chats while he is stuck in traffic on the way home.
The fed loans may be higher because some may have taken 5-6 years to graduate and/or had parents denied for Plus, so the student was able to borrow more…or the students qualified as independents (married, vets, have a dependent, over 24, etc)
I know a younger woman (about age 28/29) who hasn’t paid a penny back for her student loans. She brought me the paperwork sent to her that gave her two IBR payment plans options (after being delinquent for a few years). She told me that she couldn’t afford either payment plan option. In fact, she told me that she couldn’t afford to send even $5 a month because she didn’t have ANY money leftover at the end of each month.
She got her degree in Child Development. Her debt was about $50k in a combo of Direct, Perkins, and add’l loans because Parent Plus was denied. Of course, there was interest added as well.
Was she living simply? Not really. She wasn’t living extravagantly, but she wasn’t being thrifty at all, so the claim that she couldn’t even pay $5 a month wasn’t true.
The feeling I got was that she didn’t really think she should have to pay the money back. Probably when she was actually taking out the loans, she imagined paying them back. But, as a modestly-paid employee, who wasn’t able to live cheaply at home and work, she couldn’t imagine being able to pay $25 a month, much less the reduced IBR amount she was being offered.
Although the U.S. Department of Education has calculated the national average for student loan debt for college grads at $29,400, a Citizens Bank survey found that average student debt for millennials is much higher — roughly $41,286.
That quote should appear in bold print at the top of the CC homepage.
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I don’t think so. If more students knew this, it might convince more naive people that borrowing a lot is ok because many do so.
^^ I know a young man like that, except his loan balance is higher. I think his mother makes a minimum payment on some loans to keep them out of default, but he’s never paid on the rest. He makes barely more than minimum wage, but lives at home and could afford to pay something. His exit strategy is the magical thinking that at some point they’ll be forgiven.
Great that I have full tuition scholarship and the cheapest off campus housing…
I have difficulty sympathizing with these “victims” because one, they are neglecting how much money they owe to school, two, they miserably fail to prioritize, and third, they must have not worked hard enough to get any kind of merit scholarship when they were in high school.
@emilybee - I think our daughter would have preferred to stay in Boston (or maybe that was wishful thinking on our part), but it was not to be. She went to school and had internships in the area and lived off campus, but it didn’t seem as bad as NYC…
For her NYC place it was first+last + security + 2 months (just because they can get away with it, I guess) + realtors fee + a co-signer + the rights to her first born child. If I remember correctly, it was around $8K total move-in cost.
She went down there for two days to look at places with her mom. When you see a place you like, you have to be prepared to put down a non-refundable deposit on the spot, or risk losing it. Very stressful.
In NYC you can save the realtor’s fee and lower the down payment by subletting, but that is tricky if you are not familiar with the city. In the entry market you tend to pay for safety as much as luxury, so the advice of a realtor can be valuable.
At the end of this lease, she will probably move (so she doesn’t have to have the first born child thing hanging over her head). With knowledge of the city as well as a years worth of job experience, I think (hope?) she should be able to handle it on her own…
@Mastadon, I had to do the exact same thing as your wife and D when looking for my first apt in NYC after college.
That was in 1978.
We actually put down several deposits in one day so I would be sure to have someplace acceptable (my parents insisted on a doorman building) to live. When I finally found the place I liked the best and was ready to go all in - the leasing agent treated my mother like she was dirt - even though she had enough money in her own right to complete the deal. So my father had to fly down the next day and she fawned over him like there was no tomorrow.
I would have lived on the upper West Side around Columbus in a walk-up for a lot less money (my rent was $1000/ month for a large studio) but my parents wouldn’t allow it. Tbh, NYC was pretty bad in the late 70’s-mid 80’s)
We had to co-sign for son’s place in Boston. It’s $2000 a month but a two bedroom. It’s pretty dumpy though.
It does get easier once they know the city. My sister’s step daughter shared a very expensive closet (studio) were they had to put a sheet down the middle to make separate sleeping areas. It was in the building my sister has lived in at the same time I was in NY. They moved last year to a much bigger and less expensive one bedroom.
@paul2752 , merit scholarships are pretty hard to get at the top rated schools even for high performing kids who are not social activists or national award winners. If you drop down one tier they are a lot easier. Private school costs have become pretty crazy even for upper middle class families. , I am happy that there are state flagships and high merit award schools still available.
My son commented (who is vehemently anti-debt) that taking on loans is just crazy with the economic malaise facing young people outside of STEM and business areas. Many of his friends are still working in restaurants with bachelor’s and even masters degrees.
That is a scary reality @TooOld4School but I remember hearing something similar from my manager that when he used to be a KFC GM he would have at least 4-5 college graduates apply to work there…it’s really sad.
I think a huge problem are students struggle to face the reality of adult finances because either 1) their families enable them by paying for their lifestyle or 2) they choose to ignore struggles and rather focus on the moment with spending. It does not help when not only do college graduates are coming out with big student loan balances but also is the astonishing rise of credit card debt on top of that…I cannot even imagine how someone at 23 with $30,000 in student loans and $5,000 in credit cards can continue with a luxurious lifestyle…
It’s a breath of fresh air to live on a budget without unnecessary debt!
@TooOld4School I should have been specific; I was talking about studetns who applied to colleges that could have awarded them nice free money had they had better academic credentials,.
@atomicPACMAN07 , I just don’t see that much of it. Sure, some of the kids 23yr olds are still dependent on their parents. It isn’t hard to see why. $35K entry level salary = $28K in take home - $8K for rent, $5K for car, $5K for food, $5K for clothing, internet, phone. If they have to pay for health care that exhausts all of their income.
The sad part is that instead of incurring debt they should be investing for their retirement when it matters most. $100K put away in their 20s would fund their entire retirement, a much better use than the ‘dream’ school.
Very true and thanks for clarifying @TooOld4School in fact with the extra money I earned in my gap year working full-time I am rolling over some extra funds into a real estate venture. This investment can get me some extra money by the time I graduate to start building a retirement nest egg. Since I expect SS to cut my “entitled” benefits in the future there is simply no time to waste in building up retirement when you’re young! Unfortunately for many young people like you said they either have no ability to put money aside for retirement or they simply wait too long to do so…I am fortunate with my circumstances and thankful for it.
None of this is really very surprising. The standard repayment plan is 10 years, and people who have a lot of debt from graduate school or professional school might stretch repayment over 20-30 years under a graduated or extended plan. Many millennials don’t want to put our lives on hold for 10-20 years while we repay student loan debt. And with low interest rates sometimes it doesn’t make sense to pay the student loan debt off faster. My debt is a little less than the average and my monthly payment is less than 10% of my net income, yet I’d much rather sock additional money away in my 401(k) because that’s where it’s likely to have the most impact. Even in the shorter term, it makes more sense to me spread the payments over the 10 years I have and put extra money into investment accounts or savings for a down payment for a house than it does for me to try to rapidly pay down my debt in half the time but start my down payment from scratch at age 35.
And after a full 10 years of delaying gratification for college, grad school and postdoc, I sure as heck am not delaying it another 10 over some student loan debt.
The other thing is - and this may make parents shudder - student loan debt has become a thing like mortgages or auto loans for my generation. It’s just a thing we all have. In fact, while most of my friends don’t have mortgages or auto loans, almost all of us have some student loan debt. I don’t know a single one of my college-educated friends who doesn’t owe at least a little.
I had a full merit scholarship for undergrad and full funding for my PhD program for all 6 years I was there. Unfortunately, merit scholarships don’t always cover 100% of your needs, even when they are supposedly “full.” I had very little family support so I borrowed a very small amount of money in undergrad to cover books, travel, and miscellaneous expenses (I also worked). In graduate school, I borrowed a small amount to cover moving costs (including those expensive NYC deposits we discussed!), gaps between academic year and summer funding, and other miscellaneous expenses. And I lived frugally: I cooked at home, lived with roommates until I got married, didn’t travel much - my husband and I have never taken a vacation together, just the two of us, in our almost 4 years of marriage - etc.
I am good friends with the lady who is our college and career counselor at our high school. She always tells stories about student debt, hoping someone will finally listen. She has had numerous parents call saying that they and their student borrowed the first three years, but now the banks will not give additional funding for the final year. The reason? They have made no effort to repay some of the loans. They ask for assistance, but she cannot offer any. This happens every year, she told me.
The problem is that many people do not understand what is means to cut back because they never have had to do that. There is nothing wrong with packing one’s lunch nightly.
I wonder if there has ever been a study to determine if there is a correlation between students having student loan debt and jobs after graduation in their degrees. I postulate that students who look after themselves financially will ultimately have a higher likelihood of gaining employment in their chosen fields. I think that students who have less debt would also be the same students who are serious about their education, have a stronger direction going into college and are less likely to use college as a time to “party”. These students I suppose would also be more likely to have gotten scholarships reducing both their debt and making themselves more attractive to potential employers. Just a thought.
And THIS is the very reason why we had our kids fully involved in things like doing the FAFSA and Profile, and understanding our family finances. We didn’t want them to grow up thinking there was some sort of money tree in our basement.
