Grieving parents hit with $200,000 in student loans

Parents Forum
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<p>Only about 16 percent of undergraduates attend a private, non profit university. And only about 30% of people over 25 hold a college degree. </p>

<p>Another significant driver of increased cost is the lack of state support for public institutions. This gets passed on as increased tuition. Given that the annual incomes of 47% of the families of undergraduates is under 40,000, you can see why many students resort to loans. </p>

<p>I got the numbers from US News and World Reports, and the number of adults with a bachelors from Wikipedia.</p>

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<p>Yes, States have cut back on a percentage basis (if not an absolute basis), but they have done so because students have alternatives . . . free student loan money. Of course, much of this money will ultimately be written off by the government through IBR programs, etc.</p>

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<p>

@letsbefrank‌ do you have any study or evidence to prove this?</p>

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<p>It has more to do with anti-tax culture that is being lauded in this country right now, not states saying that students have other opportunities.</p>

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<p>Anti-tax culture? Where do you live? </p>

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<p>Tejas.</p>

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<h1>142 It’s common sense.</h1>

<p>There’s a large pool of money available through easy credit; how can colleges get the most share of it? Raise their rates. After all, there is no cost to the colleges if the loans are not repaid - they have the cash and the banks can’t get it back from them.
Prices reflect what the market will bear; subsidized markets always result in higher prices.</p>

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<p>Do I need such a source. Is it not self evident that student loan money has flooded the market and allowed Universities to charge much more than they would otherwise? Is there not something called supply and demand? The reason the Universities charge what they do is because they can. If people couldn’t afford their tuition . . . they wouldn’t. Its as simple as that.</p>

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<p>Well, anti-tax culture or not . . States are relying on the Federal and private loan spigot to make up for their shortfalls. Makes sense to me.</p>

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<p>

</p>

<p>Yes, absolutely.</p>

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<p>^^</p>

<p>I agree.</p>

<p>I think it is shameful that modest/moderate and sometimes even low income people are allowed to cosign these loans.</p>

<p>I think it is shameful that the Plus loans don’t look at income (debt ratio, etc) when qualifying people…which is how we get these NYU debt stories…low income, often immigrant, parents thinking that $200k in Plus Loans will be their family’s ticket out of poverty when Junior makes it big and can support them all. By not looking at income, they are just encouraging these “wink, wink, family loans” where the parents sign but Junior knows that he is expected to pay those loans back. </p>

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<p>Such a tragic story.</p>

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<p>Though it may seem like common sense that loans led to increased tuition, there is some disagreement when you actually look at the relationshipe empirically.</p>

<p>The ‘Bennett hypothesis’ is the idea that student aid is causing increased tuition.</p>

<p>Continuous pressures to examine the Bennett hypothesis have led to nearly 15 years of federal research. Studies conducted during three successive administrations — Bill Clinton, George W. Bush, and Barack Obama — have found no link between student aid and tuition increases. The hypothesis is nothing more than an urban legend.</p>

<p>“Regarding the relation between financial aid and tuition, the regression models found no associations between most of the aid packaging variables (federal grants, state grants, and loans) and changes in tuition in either the public or private not-for-profit sectors.” (italics added)</p>

<p>– U.S. Department of Education National Center for Education Statistics, Dec. 2001, Study of College Costs and Prices 1988-89 to 1997-98, Vol. 1</p>

<p>“The Commission finds no evidence to suggest any relationship between the availability of Federal grants and the costs or prices in these institutions,” and “has found no conclusive evidence that loans have contributed to rising costs and prices.”</p>

<p>– National Comission on the Cost of Higher Education, February 1998, Straight Talk about College Costs & Prices</p>

<p>“After the change to the Stafford loan limits beginning in AY 2007-08, the price [of college] … increased at a rate generally consistent with prior years.”</p>

<p>– Government Accountability Office, May 2011, Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase</p>

<p>“Overall, [previously conducted] analyses are descriptive and do not necessarily indicate a linkage between increases in the loan limits and changes in tuition or borrowing.”</p>

<p>– Government Accountability Office, May 2011, Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase</p>

<p>Although Bennett thinks student aid can be a “considerable factor” in tuition increases, even he notes in a March 2012 CNN.com commentary piece that “increased federal aid does not cause college price inflation.” He does not carve out an exception for any segment of nonprofit higher education. </p>

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<p>Don’t believe the studies for a second. First, they only show empirically that the link can, t be proven, but we also know beyond a doubt, for example, that at most fourth tier law schools, most students are heavily indebted when they graduate. Only loans have allowed these schools to get away with charging Harvard like tutions. Besides, the government is the cause of the problem. Not surprising it denies the same.</p>

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<p>Well, that’s one way to respond…</p>

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<p>I don’t really think it is the loaning students that are driving the high sticker prices of the top colleges. Instead it is the demand amongst the full-pay students whose parents are willing to shell out that money for their kid to go there. For every student that is mortgaging their life away to go to NYU (200k in loans instead of NYU’s average of 30k among students who borrow), there are another 20 students that are paying full CoA with another 100 behind them jumping at the chance to pay full sticker price to go to NYU. The demand is going to be satisfied at these schools whether there are loans or not because top colleges are a very scarce commodity, or are at least perceived as such.</p>

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<p>My niece will be getting her RN degree in about another year.
She earned her LPN at a community college about five years ago, and has been working full time as a nurse, while continuing to attend school.
She will get a big jump in pay when she does so, but she is doing pretty good now.
She is the same age as the woman in the story, but doesn’t have any children.
It is not required to attend your dream school, take out huge loans or live on campus to finish college.</p>

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<p>There are also many programs at our community colleges that lead to RN degrees; some start off with two years and they can work while getting their BSN, like EK’s niece. Our CC programs are very inexpensive. When D was attending, I believe we paid about $1000 or less per semester; books were maybe another $500-1000. She lived at home & commuted. It was a very reasonable 3 semesters. Perhaps some of the other programs are more expensive, but it’s still very reasonably priced, especially compared to privates or even the local in-state Us.</p>

<p>People make some choices that are more than they can afford–someone has to be realistic and realize that bills will have to be paid. If one plans to co-sign, I’d be sure that the loans I am co-signing are ones that I can afford to repay AND that any student who I am paying for and expect to have repay the loan will be ABLE to do so, and if needed have a life insurance policy in the amount of the outstanding balance. Co-signers have to be very careful about what risks they can bear and not over-extend themselves, especially as they age and have fewer opportunities to earn $$.</p>

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<p>My daughter’s freshman year, I was so excited when I found out the government was giving a tax benefit to parents with dependent college students. It wasn’t a lot (I believe it was $2500) but it was going to help. Not long after that realization, the state college she attended also raised their tuition midyear by the same amount. The government was giving money away for college tuition and the college itself wanted to be sure they were the recipient instead of us. I think this may be common. When they announced their even larger tuition raise a short time later, they proudly announced also not to worry if you were on financial aid because the college was going to cover their increase. When I read the article carefully, I realized that not only were we paying a large tuition raise for our daughter, but we were also covering the tuition raise for the other students as well. This is an example of how the tuition for college keeps creeping up. The tuition price listed is like a “manufacturer’s list price” that some (and not all) people can negotiate down.</p>

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<p>Because its all a business now. They will extract every cent from you they can get away with. That students are becoming indentured servants as a consequence is irrelevant.</p>