<p>So we wont allow a 19 year old kid to have ONE beer, but he can sign loans for tens of thousands of dollars. Yeah makes sense to me. Sarcasm on.</p>
<p>have there been any REAL numbers published that give a view of: </p>
<ol>
<li>How many students graduate with debt</li>
<li>What the actual distribution of the debt is (how many have less than/ equal to $10,000/ $20,000/ $30,000 etc) ??</li>
<li>How many in those same distributions are in default</li>
<li>How many of those same distributions break down into student vs parent debt</li>
<li>Default on Parent Plus loan info</li>
</ol>
<p>and probably a few other things that would provide a real picture of the “student debt crisis”.</p>
<p>I have seen so many mixed things over the past few weeks about how many students are truely having difficulty, how many are in default, and what the numbers are that it is hard to really formulate an educated opinion on the whole situation. </p>
<p>It is very possible to go to college and graduate with little to no debt. But that has to be important to the student and the family. It is a family value or priority that students learn. Not judging with that statement, it is just a fact that some students grow up in families that think nothing about taking out large loans for anything they want. And many familes do fine with that lifestyle. Other families do not use credit for anything. </p>
<p>So if anyone has the real numbers broken down, I would love to see it. How many students have those huge loans? Does the default rate correspond with the amount of debt (higher debt, higher default rate)? And are parents defaulting on the parent plus loans at the same rate?</p>
<p>Vines, not every student has a parent who spends time on CC. Many kids are first generation students, immigrants etc. We have laws to protect people from being taken advantage of. The federal govt needs to do more.</p>
<p>PS I do agree we need better numbers on this problem.</p>
<p>There’s an ugly feedback loop here. More loans means higher tuition, which leads to more pressure to increase the availability of loans to people who have little hope of repaying them. The schools benefit, since it allows them to capture higher percentages of students’ future income, but the side-effects are nasty.</p>
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</p>
<p>and the schools also invest their endowments heavily into financial institutions that give student loans.</p>
<p>ta-da!</p>
<p>I crunched a whole bunch of numbers and perhaps it is just some bizarre income bubble that I’m in, but my EFC was pretty much the same no matter which school my daughter attended and a lot of my middle class friends found the same thing. The EFC was the EFC … public school that costs $18K-35K /yr or private school that costs $60K/yr- same expenses because the privates gave us more in grants. Either way, the loans were approximately the same. Since being on CC, it is clear that some states have much cheaper instate tuition, but we sure don’t in Michigan.</p>
<p>I understand that other people are impacted by students who take excessive loans, but that does not make it the responsibility of anyone else. If it affects enough people perhaps the government will get OUT of the banking business. If a person takes on excessive debt and it affects their life then it affects their life. I feel zero sympathy for them.</p>
<p>Some of us who feel that the Student Loan system needs to be reformed, nevertheless counsel our own children and others about the consequences of large debts. Lake Jr. has a fine list of very good universities to which he was admitted, but he is quite conscientious about the cost and ROI of these schools. Thank goodness. I’ll take a bit of credit for often telling him to go to the best college he could afford.</p>
<p>Private college is a privilege and not a right. If a student needs loans to pay for college, then student is ethically obligated to pay that debt. If the student (and/or his parents) feel that the debt-obligation will be too large, then there are other options, including a lower-priced public school or community college. But if the student choses to go to Yale, or some other prestigious school offering loans, takes loans, and then defaults, why is that school faulted? If you were a storekeeper offering credit to your customers, and a customer defaulted, no one would criticize you for your collection attempts. I don’t understand why some parents save for years for college (us) and our students are “full pay”, while another family lives large, takes loans, defaults on them, and then wants loan forgiveness for their college debt.</p>
<p>The problem is the COST of college education, not the loans themselves.</p>
<p>I suspect that MOST students who can repay their loans are doing so. I have absolutely no sympathy for the new grad that buys a brand new car and can afford the payments and the insurance, but can’t manage to pay their loans or the new grad that buys a condo instead of living in a cheap apartment with a couple roommates, but then complains that the money just isn’t there.</p>
<p>But most of the students who are not repaying their loans simply are not able to do so because they can’t find a job in their industry that pays enough to allow them to cover minimal costs of living. Sure students don’t need to take out $40-100,000 in loans to go to a prestigious school, but this article is talking about gov’t backed loans, which are not excessive. The average student carries less than $30,000 in loans when they graduate, that’s not excessive if they are employable, which is what we as parents are sending them to school for.</p>
<p>I do indeed believe the schools hold a GREAT deal of the responsibility for this. As mentioned above these kids are 18 years old when they excitedly get accepted to school with big dreams for their future and don’t have a good understanding of the ‘real world’. Schools have some responsibility here…they know which industries have too many graduates competing for work, they know which industries are difficult to find work in, they know what majors and minor complement each other. Schools can limit the number of students in certain majors (geez, maybe they should think about reducing the number admitted to law schools?), they can restrict the minors available with certain majors, they can eliminate departments that are unnecessary. They do have some responsibility for producing employable graduates. It is not right for them to take advantage of these inexperienced students by filling them with hope that their obscure self-created major is going to make them employable, all the while happily taking the tutition checks each semester.</p>
<p>I want to see a student countersue their school for taking their money for 4 years but leaving them unemployable.</p>
<p>Higgins, that ‘privilege, not a right’ argument doesn’t work because NO ONE, no responsible person, is arguing that delinquent and irresponsible students be rewarded.</p>
<p>Jrcsmom, very good points. However I fear that those whom hold fatted calves (the colleges and some lenders) will promote the status quo to keep their ox from getting gored.</p>
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<p>completely agree. My point was that I would like the real numbers that tell us how much of a problem this is. </p>
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</p>
<p>What makes you suspect this?</p>
<p>
</p>
<p>Again, what are the numbers here? Or is it all speculation and based on what our common sense tells us SHOULD be the case? </p>
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<p>Isn’t this happnening with a few law schools that misrepresented statistics?</p>
<p>I actually do think that loan repayment should be able to be deferred/adjusted until a student is gainfully employed. That can be measured by the student making a % over poverty/ COL for their area or something else that is measurable. And with proof of looking for a job and job placement assistance for new grads, especially if they are low income and have GOV’t loans.</p>
<p>My comments were based on a very educated opinion from following stories and articles over the last 5 years, but I quickly found some sources and statistics:</p>
<p>Forbes: ([More</a> Evidence On The Student Debt Crisis: Average Grad’s Loan Jumps To $27,000 - Forbes](<a href=“http://www.forbes.com/sites/halahtouryalai/2013/01/29/more-evidence-on-the-student-debt-crisis-average-grads-loan-jumps-to-27000/]More”>More Evidence On The Student Debt Crisis: Average Grad's Loan Jumps To $27,000))</p>
<p>“By 2012 the average U.S. student loan debt climbed to $27,253” </p>
<p>“The problem sometimes is that students entering college take on huge amounts of debt to fund increasingly expensive college tuition costs with the expectation that their salaries after graduation will be able to cover the loan payments. The ugly surprise after graduation day is that entry-level salaries are often no match for massive monthly student loan payments, or worse, theres no job available by the time the first payment comes due.”</p>
<p>CBS Money Watch: ([Student</a> loan defaults rising despite a way out - CBS News](<a href=“http://www.cbsnews.com/8301-505123_162-57585366/student-loan-defaults-rising-despite-a-way-out]Student”>http://www.cbsnews.com/8301-505123_162-57585366/student-loan-defaults-rising-despite-a-way-out))</p>
<p>"So why are defaults increasing?</p>
<p>“‘Most of my clients are in default and most of them should never have been in default,’ Cohen said. ‘I don’t think the loan servicers are doing their job and letting people know there are affordable payment plans out there. Because of that, people continue to bury their head in the sand thinking it’s not affordable. Then they end up in default and dealing with debt collectors who are not even telling all of the truth or even half the truth. So people think they’re stuck in default when they’re really not.’”</p>
<p>Debt.org ([Student</a> Loan Debt Up 58%; Delinquency & Defaults Exceed Credit Cards](<a href=“http://www.debt.org/2013/03/29/student-loan-debt-default/]Student”>Student Loan Debt Up 58%; Delinquency & Defaults Exceed Credit Cards))</p>
<p>“Analysts say much of the problem is that recent graduates are either under-employed or unemployed. There also was a surge of workers who went back to college during the Great Recession hoping to improve their job skills. They emerged with debt, and if they got a job, it often paid less than they made at the time they were laid off.”</p>
<p>[url=<a href=“http://www.asa.org/policy/resources/stats/]Student”>http://www.asa.org/policy/resources/stats/]Student</a> Loan Debt Statistics - American Student Assistance<a href=“Lots%20of%20statistics,%20some%20slightly%20dated”>/url</a>:</p>
<p>As of Quarter 1 in 2012, the average student loan balance for all age groups is $24,301. About one-quarter of borrowers owe more than $28,000; 10% of borrowers owe more than $54,000; 3% owe more than $100,000; and less than 1%, or 167,000 people, owe more than $200,000.</p>
<p>Among all bachelor’s degree recipients, median debt was about $7,960 at public four-year institutions, $17,040 at private not-for-profit four-year institutions, and $31,190 at for-profit institutions.</p>
<p>Students who drop out of college before earning a degree often struggle most with student loans:
From 2004 to 2009, 33% of undergraduate federal student loan borrowers who left without a credential became delinquent without defaulting and 26 percent defaulted, vs. 21% with a credential who became delinquent without defaulting and 16% who defaulted.(Source: IHEP). </p>
<p>And the number of drop-outs is on the rise:
Nearly 30 percent of college students who took out loans dropped out of school, up from fewer than a quarter of students a decade ago. (Source: Education Sector)
More than half of students who take out loans to enroll in two-year for-profit colleges never finish. At traditional nonprofit and public schools, the percentage of students with loans who started college in 2003 and dropped out within six years is about 20 percent. (Source: Education Trust)</p>
<p>Type of institution attended can also make a difference:
From 2004-09, a third or less of federal student loan borrowers at four-year, public or private nonprofit institutions became delinquent or defaulted on their loans, while nearly half or more (45 percent and 53 percent, respectively) of their borrowers were making timely payments on their loans.
One-quarter to one-third of borrowers at for-profit and public two-year institutions were making timely payments on their loans, and more than half of all borrowers in these sectors were delinquent or had already defaulted.
(Source: IHEP)</p>
<p>Why do they struggle?</p>
<p> 48% of 25-34 year-olds say theyre unemployed or under-employed.
52% describe their financial situation as just fair.
70% say it has become harder to make ends meet over the past four years.
42% of those under 35 have more than $5000 in personal debt that does not include a mortgage.</p>
<p>How well do students and alumni understand their options to minimize borrowing and manage the debt once they have it?
As of 2012, only 700,000 borrowers had enrolled in Income-Based Repayment (Source: Project on Student Debt), but the Obama Administration estimates that IBR could reduce monthly payments for more than 1.6 million student borrowers. (Source: White House Fact Sheet)
About 65 percent of high-debt student loan borrowers misunderstood or were surprised by aspects of their student loans or the student loan process. (Source: Young Invincibles)
Approximately one-third of recent grads, if they could do it all again, would have pursued more scholarships or financial aid options, pursued a major that would have led to a higher paying job, or gotten a job while in college and started saving earlier. (Source: Accounting Principals)</p>
<p>Help me understand because I am not very well versed about loans and such…</p>
<p>These naive children/super young adults who are taking out loans without fully understanding the implications… mustn’t they be cosigned by a parent or other adult? Shouldn’t someone whose name is on the loan be considered responsible enough?</p>
<p>And this unemployable situation… how many of these grads majored in something that could have been predicted to have employment concerns?</p>
<p>We were at our son’s college orientation last week. One of the presenters said, “It’s okay if after three years your child hasn’t settled on a major. This is a time for him to explore his interests and see what major matches those interests.”.</p>
<p>I muttered to my husband, “After three years how about this: Here’s your major, get interested in it!”.</p>
<p>Students don’t need a co-signer for gov’t backed loans - the gov’t is, in essence, the co-signer, securing the loans.</p>
<p>Gov’t backed loans do have limits on how much students can borrow each academic year. If students seek private loans for larger amounts, then a co-signer is required unless the student has established a positive credit history (perhaps has their own car loan) and has assets or income showing their ability to repay.</p>
<p>The college said it was OK, not to have a major ‘after’ 3 years??? So until senior year??? They apparently want students to be on the 5, 6, or 7 year plan. Students generally don’t need to select a major freshman year as most will take general requirements unless they are going into a very specialized field. Sometimes students are OK if they are undecided sophomore year, especially if they’re going into a liberal arts field. But by junior year all students should be taking upper division courses in their major. If they don’t have a major before their junior year it is HIGHLY unlikely they’ll be able to graduate within 4 years.</p>
<p>Thanks for the clarification, Jrcsmom. Now I recall more about the government bank loans not needing a cosigner. The tricky part is that they are not enough to cover many tuitions and room/board, right?</p>
<p>It’s crazy about the choose a major thing, isn’t it? This was at the U. of Mich. and the presentation came complete with a cartoon slide show that explained why it was okay to remain undecided after three years.</p>
<p>For many students that would be $150,000 for those three years. I thought, “This is one of two things. Either this is an example of those in academia being out of touch with reality or it’s a diabolical attempt to keep students from graduating in four years, thus bringing in more tuition.”.</p>
<p>Asking the obvious question: are those who are opposed to discharging student loans in bankruptcy opposed to bankruptcy in general? You’ve yet to advance a single argument for allowing credit cards, bad business decisions, mortgages, and car loans to be discharged in bankruptcy, but not student loans.</p>
<p>As a society, we’ve decided that we will allow people who are really in over their heads to wipe the slate clean. It’s a tough road: you either have to liquidate everything, or spend three to seven years (IIRC) living not much above the poverty level, with every additional cent going towards your creditors. In fact, it’s so hard that most Chapter 13s fail - few people can manage to go for years on such little money. </p>
<p>So if I put $100,000 on a credit card, travelled the world, bought awesome clothes, and dined at the fanciest restaurants, I could get rid of that in bankruptcy. But a kid who tries to better himself can’t - why? Unpaid student loans can be repaid through garnishment of a social security check. These 18-year-olds could be living in poverty at age 70 because of their bad decisions now. In what world does that make sense? In what world is the slate never wiped clean?</p>
<p>(In my ideal world, student loans would have their own provision in the BK code -perhaps ten years of the vast majority of disposable income. As it remains, however, it is the only bad decision that we do not allow to be cleaned up, EVER.)</p>
<p>I will also point out that Income-Based Repayment is probably far more generous than bankruptcy would be, both in terms of how little money needs to be repaid, and how it looks on a credit report or background check. But I don’t see many parents wailing away about IBR - even though their tax dollars are picking up the tab.</p>
<p>Aries - I think those who borrow for whatever reason should repay. I am not a big fan of bankruptcy for credit cards, mortgages, whatever. At least I am consistent! I think college is too expensive and I think the availability of loans is driving costs up. Many threads on that topic. That being said, I have little sympathy for those who borrow a ton of money for a fancy private education when they could have had a great education for a lot less. I would love to drive a BMW, but I drive a little Nissan. Going to a state U or even a CC for a couple of years is a good option for many. Instead of calling it “settling,” we should reframe it as being “responsible.”</p>
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<p>My understanding is that these loans used to be dischargeable, and a significant percentage of students did in fact, default on/discharge them. As a result, the banks stopped lending because the loans were too risky. Then everyone complained that this was unfair to the poor, because without loans they could not go to college. So the loans were made non-dischargeable so that the banks would lend freely and give everyone a chance to go to college. Which leads us to where we are today.</p>