I don’t know if O’Malley has paid them or defaulted (assume he’s in a repayment status), but why should the taxpayers take the chance? Why take the risk that it is going to turn out like the guy in Connecticut who borrowed more and more for 10+ years and then ‘realized’ he was getting old and would never be a high paid banker again so wanted to discharge his loans in bankruptcy (and DID!)? I don’t think anyone should be able to borrow that much in unsecured debt, especially without having to do much to qualify for it. Why do we limit Stafford loans to about $30k if we don’t think that’s an good number? Set the number at what is reasonably necessary to attend a college and that’s the limit. O’Malley’s kids didn’t NEED the money, they (and he) WANTED the money because they wanted to go to expensive colleges. Expensive colleges are great if you can afford them,but if you can’t, you can’t.
There is a reason why banks and even loan sharks want a little security before making loans - some people don’t pay them back! There is a risk to lending, and default is built into the business plans of lenders. If the vast majority of students can get a college education using Stafford loans, why shouldn’t that be the limit? Why have extra Perkins loans and private loans and for profit schools making money on the taxpayer’s guarantee?
I’ve worked in high risk lending. Some people don’t care how much the loan is for or that it will never be paid. They only want to know what the monthly payment is and how fast they can get the check. They want the snowmobile or cell phone or vacation, and they want it now. In student lending, the students don’t even know, or care, what the payment will be and that payment is years away from being a reality for them, so just keep borrowing.
Those with the $100k or $200k loans are outliers, but why even allow them to get to the $100k borrowing point?
Parent of a junior here - and often finding myself in conversations about college applications. For some reason, college finances seem to based on zero knowledge , and the folks I am talking with are educated professionals, not wealthy enough to be full pay for expensive privates, and make too much to get meaningful financial aid. Here’s what I hear (this is from a CPA): “She will get scholarship to {insert any expensive U with stingy fin aid}…” or “She will get financial aid”
When I ask if they have run the NPC, I get a blank look, and “we’ll just wait to see what they offer”. Plan B is just the state flagship, which kid is indifferent to. Not looking at schools offering merit awards. No idea of even a ballpark figure of their EFC, even though it is easy to calculate for two salaried professionals, married , filing a joint return.
And from another math professor with kids just starting college at expensive universities: “We’re taking out lots of loans, and my kids can pay it back…”
And many more comments along these lines. If educated parents are this clueless, how can we expect first gen students and their parents to be knowledgeable about this?
Colleges like to operate under this financial aid fog. For the majority of colleges/universities, hitting the enrollment numbers each year is the goal. They themselves are in massive debt with new construction and facilities, and keeping students educated about fin aid is not top priority. In my gen ed math classes, I spend a day’s lesson on loans and interest, and the lack of understanding of this material is profound.
Don’t blame the colleges for a (math) prof parent who signs loans for their kids. That is on THEM. Look at it another way, instead of using that example of financial aid “fog”, perhaps that math prof needs to be able to attend faculty cocktail parties and be able to say his/her kids go to a private college. (Gah! it would be embarrassing to have to settle for state flagship.) Don’t many/most colleges offer discounts/free tuition for faculty kids? Others participate in exchange programs for faculty kids.
I think the loan situation is out of hand, but cutting off all low income families from the ability to borrow because some people are irresponsible isn’t fair. Not everyone lives within commuting distance of a college. A $2k/year Perkins loan can be the difference between attending college or not for some of these kids.
If we want people to save for college, we should start by making sure companies pay a living wage, then find a way to reign in the cost of attending college. We can’t expect that 80% of the population can support families on less than ~$60k/year, save for retirement so they’re not a burden on taxpayers, and still save to send their children to college. Is an educated public important to us? Do the critical thinking skills of the people in the voting booths next to ours matter? If so, we need to make education a priority. It can’t only be for the rich, or those fortunate enough to earn so much that they can save, or those who haven’t had any medical or business misfortunes. We have to find ways to make it accessible to students of all income levels.
^ Yes it is a personal choice for those who can make it work, even if they are a bit clueless…
But for those students who have no other options than to take loans, and who are first generation college students, there is not much transparency in the process from the universities. That was more my point.
I agree we need to make education a priority. But that starts before college. Right now from what I see, youth sports are too much a priority for too many kids/parents. Go to a state/national level science/math tournament. You will likely find asian kids over-represented and non-asian kids under-represented. Go to a state sports tournament and you likely will find asian kids under-represented. Education is more likely to be a priority for asian kids. Sports for other kids.
I see a whole bunch of kids getting mediocre educations at best a what are very good public/private high schools. Why is that when other kids are getting very good educations? Some no doubt because of ability. But for far too many its because education just isn’t a focus.
We have a lot of issues to address in terms of education. How do you get people to make education to be a focus? You would think it would be the importance of it on job prospects over the past generation or so. Though I think our “everyone to college” mantra is misguided and in the long run harmful. Having people that do not belong in college devalues a college degree. We will make an undergrad degree the equivalent of a high school degree 40-50 years ago. University presidents are no doubt thrilled with the everyone to college mantra and reality that more and more kids need grad school to separate themselves from the pack.
For some reason, we seem to act surprised when we subsidize something and the price goes up. But basic econ 101 says that is exactly what will happen (plus you get more of it). Same is true of healthcare (though that is another story). In the face of rising prices, we typically hear calls for more subsidies. Wash. Rinse. Repeat.
How about mandatory 2-year national service for all teens after a 3-year stint in HS? That might help the college problem (costs, alternatives to college).
I thought the article was disingenuous, alarmist, under-researched. Disappointing. I did appreciate the mention of the advent and methods of Sallie Mae and bankruptcy regulation changes. But, still not enough.
I would love a referral to the best articles or books out there on the multi-faceted topic. It seems that everything that attempts to address college debt/costs/ROI that I read has huge flaws. Like, not dividing for-profit subsectors (which has its own subsectors) from non-research unis from research unis. Etc.
New York Fed found precisely that: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf.
National Bureau of Economic Research other papers as well (http://www.nber.org/papers/w17827.pdf is one that’s openly available and specific to for-profit institutions; there’s another more general one behind a paywall as well). I was going to read the one from the New York Fed but a quick look at it disabused me of that notion so I’ll quote a synopsis from an article about it instead:
“The report’s findings show that of all three programs the Federal Direct Subsidized Loans generated a 65 cent-on-the-dollar increase on college tuition, while Pell Grants generated a 50 cent-on-the-dollar increase on college tuition. The Federal Direct Unsubsidized Loans had little to no effect on the price.”
Looks like the “Bennett hypothesis” is largely correct.
One odd thing from the Consumer Reports article–the numbers in the article and the infographic are different. The infographic shows average student debt just north of $37k while numbers in the article ($1.3T and 42M; some other articles use 43M which further supports my confusion about the discrepancy) turn into ~$31k or almost 20% smaller than the eye-catching infographic. Finally, one thing I find annoying about these articles is their use of average numbers instead of the median. If you look at something like the following, https://trends.collegeboard.org/student-aid/figures-tables/distribution-outstanding-education-debt-average-balance-2014
you’ll see that the average is severely inflated by the top 14% of borrowers with the top 4% of borrowers really crushing it with, presumedly, med or law school loans. Macalester (endowment $762M) has a helpful distribution as well: http://www.macalester.edu/financialaid/loans/studentloansatmac/distributionofdebt.html. Looking at the Macalester graph, it’s clear the long tail that starts at $50k should’ve gone someplace they could afford. Should public policy change on their account?
This may also sound harsh, but the stories of adults having 50k plus in loans is the exception not the norm.
The average kid can get 27k, no questions asked. If for some reason your parent gets denied for the plus loan, you can get an addl 4-5k, so lets say that lands you at 47k. Yes, there may be some kids with perkins tossed in there, but most kids are within the 27k limit. So these authors find these outliers, and put them forward as the norm.
It also comes down to parents learning how to say “no, you dont get to attend your dream school”. I imagine some of those with high loan balances also have placed a forbearance and/or deferment on their loans, which drives up the balances real quick. Its darn near impossible for an undergrad to take out that much in loans. There may be a few kids who got private loans with a cosignor, which I blame the student and cosigner for taking out too much in loans. Some kids just wont face the reality that they dont get to stay on campus, maybe they should commute, or maybe they go to community college for two years then transfer, maybe they dont get to live in a sexy city, maybe wait on a new car, etc.
I confess-- I get Consumer Reports and despite the HUGE cover headline, I read the kitchen makeover article first. The kitchen makeover costs were not cheap, but for the mostpart were less than the student loan debt amounts of the students in the vignettes.
It’s absolutely not a myth - there’s still a lot of economic analysis out there supporting the assertion that college graduates on average make more money than high school graduates. They also have other non-tangible benefits, like better health and more overall satisfaction with their careers and lives. There are a lot of articles that try to assert the opposite, but it’s not true. The May 2016 unemployment rate for those with a college degree or higher was 2.4%; for those with just a high school diploma, it was 5.1%. (Those with some college or an associate’s degree had a rate of 3.9%; all statistics from the BLS).
Well, of course not, but this is not really a relevant question because not everyone will go to college and get a medical degree. There are hundreds, perhaps thousands, of careers out there that require or would benefit from a college degree or higher.
@dyiu13 I wish I had some! But everything I have read on this topic has been sensationalist and light on facts. Most of them seem to focus on the very small minority of students who have $75K in debt or more, or they focus on the small minority of college students who are unemployed or underemployed long after college (> 6 months after graduation). I’ve yet to read anything that has a really sober analysis of the problems with the aid system, with rising tuition, with a generation of college students in debt, while still being realistic and level-headed. I’ll post if I find anything, though!
I read the article in the paper version. Am I wrong in thinking that it never mentioned the difference between subsidized and unsubsidized federal loans? It seems like the entire focus was on private loans. I would have liked for it to address when a family can expect to be offered subsidized loans and what the issues are with unsubsidized ones. It seems like the rule of thumb (don’t borrow more than you expect to earn in a year when you graduate) would depend on subsidized vs. unsubsidized. I guess sticking to the federal loans doesn’t make for a good story.
Kid goes to college (any college). Graduates with a degree in urban planning. Gets a job with his/her state’s economic development department working to attract new industry to the region. Starts at 30K and after two years is making 35K. Gets hired away by a big real estate developer and is now making 60K. Kid is now 24 years old with a Bachelor’s degree from a college nobody on CC has ever heard of.
Kid has 20K in student loans… and every month diligently pays his loans. No- he’s not vacationing in Cancun or driving a Ferrari but he’s not on food stamps, wears a suit to work (except on casual Fridays) and looks like a young professional, and can even afford to attend a pro ball game or a concert when he wants to. Has a roommate and lives in a safe, decent apartment.
These numbers are real btw. But not newsworthy. It is much more interesting to write about the hapless and the clueless.
The last urban planning major I know was working in a copy room making copies for a professional firm. That was with a masters degree. When asked why he wasn’t working for a municipality, he replied that the last government planning job he applied to had 300+ applicants.
Urban planning is a hot discipline but a new grad can’t limit his/herself to municipalities. And a kid with an urban planning degree who has taken even one course on sustainability is going to be a hot commodity.
Anything infrastructure related is going to need urban planning majors but most kids don’t even think about the entire “food chain” of infrastructure. The rumors? advent? of the driverless car is creating a LOT of opportunities for urban planning majors- less so on the public sector side, but huge opportunities for private industry.
There’s your copy room friend’s mistake.
Zinhead- I love how you know so many underemployed folks with a Master’s degree.
But that “land of free” is why it’ll never happen. Americans don’t seem supportive of such measures, no matter how helpful to the nation and its people.