“I’m gonna have debt anyways, so the amount doesn’t matter.....” Ack!

Paying for College
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“I’m gonna have debt anyways, so the amount doesn’t matter…” :eek:

We’re hearing this more and more from both parents and students.

I recently heard from a parent who once thought this way, but now is very frustrated that her student is finishing sophomore year and already has $80k of debt. By the time student graduates, the debt with be over $160k…for undergrad.

Why aren’t people able to realize that graduating with $30k of debt is much much different than graduating with $150k?

I realize that all the financial numbers begin to sound like Monopoly money, so that’s part of the problem.

Are you hearing this as well? Or…Do you feel this way too?

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I have heard this, in my case from young people discussing grad school debt. Some of them have undergrad debt too. I can’t figure out whether it’s a Monopoly-money syndrome – or a kind of resigned acceptance that they won’t be ever be able to buy a home anyway, so instead of a mortgage they will be paying off school…

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This seems to be rampant on CC right now. Wish I could reach through the screen and shake some folks. There is an enormous difference between $40K of debt and $160K!

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Oy. How quickly everyone forgets. Did we or did we not struggle through a financial crash over the course of the past 12 years?

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What I’m noticing a lot of lately are threads by kids who only want to debate the merits of various colleges. They don’t want to discuss finances. In most of those cases, there’s no money. The degree would require substantial debt.

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I think on CC, there is so much talk and so little follow up. Safe to assume that the vast majority of posters talking about selling the literal farm, just don’t follow through…

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I see an uptick in magical thinking. Lots of “I’ll make it work” or “I know it will work out” rather than “This is how I’m going to make the finances work.”

I’m in a Parents of the Class of 2023 group for the school Kiddo #2 decided on. One parent posted that they only had enough money for 2 years and weren’t qualifying for loans and needed help finding alternate sources of loans/money; so that their daughter could go to school there. I responded that they should take a second look at whether they could afford the school if they knew going in that they could only pay for 2 years; that I’ve seen a student have to drop out because of finances and it’s terrible to watch that. The person responded with “We’ll find a way so that she doesn’t have to drop out” and a couple people jumped on me for being so rude because “See, they’re going to find a way to make it work and you should be supportive.” You can’t just will the money into existence because you really want it to be there.

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As I have posted here before 15 years from now these students will be interviewed on local and national TV news complaining about how they were forced to take on all this crippling debt in order to get a decent education.

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Agree with @tomofboston #7. These kids/adults will be all over the internet upset that they can’t write off these loans in bankruptcy when they’re 5 years out of school and unable to support themselves.

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My Ss19 know a number of top kids who applied and got into far flung top schools but now are going to local competitive in-state U (some commuting from home) now that the costs of those other schools have gotten a closer look. They must not be on CC !

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Graduating UNT with $30K debt and Psychology degree is more expensive than graduating from Princeton with $130k debt and finance degree. You can’t compare apples and oranges.

All on free low rank school pre-Med bandwagon ending up with no medical school acceptance and a biology degree also could’ve been better off with an engineering degree and $100k debt from MIT.

I’m against debt. PERIOD. If you have to then be smart about it.

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D19’s school last night had a dinner for the top students. When the kids were announced they also said where the kids were going. Being in tune with what possible scholarships are available at many of these schools I was shaking my head to a degree. Some families either have a ton of money saved up or there would be plenty of loans in the future. Most likely some sort of combination.

Our D19 should be able to get through undergrad with little to no debt. She was deciding on a peer school that would be ~$8K more a year. In the end she went to the cheaper school. Not the cheapest from her choices, but one that met all the needs.

My wife and I had significant debt back 25 years ago from school. I really didn’t want to have that burden on my D19.

It seems like when we bought our long-term house 17 years ago the goal ever since was knock all debt down. We have never had consumer debt just mortgage and auto loans. Eventually when I am debt-free it would be a great day. Being debt free is having freedom.

Student loan debt is the next bubble that will burst in this country. It is already having effects on our economy. Houses aren’t being bought. Durable goods aren’t being bought. Marriages aren’t happening. Kids aren’t being born. This delay that the recent grads are doing is going to have a long-term effect on everything.

Also with student debt the graduates aren’t as economically upward mobile as in the past.

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@My3Kiddos I 100% agree with your post about magical thinking. I am in Facebook groups for parents of the schools my kids attend. In both groups I have seen parents post about whether they or their student should take on significant debt to make it work because the student REEEAAAALLLLYYYY wants to attend that school. And I’m surprised at how many other parents comment and say things exactly along the lines of what you wrote.

In one case I commented asking whether they had run a loan payment calculator to see what the student’s actual loan burden would be upon graduation. A month later the parent came back asking about how to best negotiate an exit of her student from that college (after the semester had already started so of course money would be be lost) because someone finally sat them down and showed then in black and white what that loan burden would be

In another case I think the parent was actually looking for some validation that it was okay to say no to her kid because they really couldn’t afford to send them to their “dream” school. Many parents offered that validation but many others shared their own stories about how they were “making it work” in a way that just sounded crazy to me based upon the amount of debt they or their student was incurring.

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I agree that there’s too much magical thinking about how things can work out with debt. But its also not helped by the many people on CC who say “if your parents can afford to pay, then turn down the full ride at X and go to Stanford because it’s Stanford and the prestige is worth the $300K difference”. Or that “there’s nothing more important to spend my money on than education”. Or that “private schools provide a much better education, while UCLA is too cutthroat and you won’t be able to get the classes you want and graduate in four years”. It leads those with less resources to try and keep up with the Jones’s and to feel that they have to go into debt so their kid can go to the prestige private college. Just like people take out a loan to buy a luxury car or remodel their kitchen because the neighbors have a new car or new kitchen, so its “expected” that people “like us” should be able to do that.

The dichotomy between (sometime the same) people saying to others “don’t go into debt” and “I pay $70K per year for my kid to go to an Ivy/LAC and it’s worth it” seems pretty elitist and counterproductive to me.

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I don’t think is’t elitist, counterproductive or even contradictory to recommend that no one should go into debt (solid financial advice) to attend college while paying for a student to attend a college at $70k per year (a financial capability that some have). Both achieve the same end - no college debt.

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I don’t think it’s elitist OR counterproductive. But people read and absorb what they want to read/hear/absorb sometimes.

I’ve asked people who post here with a financial dilemma “let’s first talk about your overall situation- how old are the breadwinners/how close to retirement, do you have life insurance, do you have a 401K or an IRA” and I’ve been shot down with “that’s none of your business”. Well- what worked for ME in terms of financing college had EVERYTHING to do with my age, health, retirement plan, etc. There are risks that a 50 year old parent can take that a 62 year old parent cannot; there are assets that a 48 year old, married parent can liquidate for college that a 60 year old single mom cannot.

I’m not being judgey- just realistic.

Yes- I was full pay, and yes, it was “worth it”. Primarily because I had kids young, had a solid career (had to forgo the lengthy maternity leaves, years of dialing it back professionally, turning down jobs which involved travel, which many of my friends and colleagues took advantage of) and was married to the other parent of my kids- who felt the same way I did about college and funding. So the “risks” I took financially were all lifestyle risks- living frugally, but never going without life insurance, health insurance. Cutting vacations? We didn’t mind. Cutting our own lawn? No problem. Cutting back on contributions to retirement? Yes, modestly, for some years- but not raiding the principal.

People here rant and rave that only the rich and the poor can go to XYZ colleges and that’s not true in my experience- if you are very, very lucky health and career-wise, and don’t have five kids, it’s possible to make it work without being rich. (I know, that makes me an elitist). If folks here feel that I’m being a hypocrite by telling some kids and parents not to go into debt- then stop reading. I’ve posted that both my spouse and I had our own educational debt which was a great thing for us (I tripled my salary the day I graduated with an MBA). Didn’t work for everyone- I’ve got contemporaries whose debt was crippling, because it prepared them for careers they discovered they hated, so taking a much lower paying job WITH the high end loans was a terrible combination.

The bottom line- it depends. But people don’t want to hear that- they love unicorns and rainbows and the financial aid fairy to show up and make their problems go away.

I’m enough of an elitist to think that attending Binghamton with the federal student loan is a better deal in most cases than the free ride to the third tier college that no employer in NY has ever heard of. That doesn’t mean I’d tell parents to take out a HELOC for Binghamton, or tell a kid that their life is over if they have to take the free ride.

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As sad as that is, at least the exit is happening before a ridiculous amount of debt is incurred.

At least they didn’t have the attitude that the amount of debt won’t matter.

I see the same in parent groups. And you’re right…some post hoping for validation about saying “no,” but too many chime in with, “yes, our child will have $XXXXXX debt, but he (she) is so happy, that we support his(her) decision.” Some will say that they (the parents) will be paying back the debt, and that’s super if they have a high income to support that debt…some do…but many do not.

Of course there’s also the parents who joke about all the debt by saying, “I’m never gonna get to retire.” But really, who knows if an illness will force retirement or if they’ll be laid off because the company would prefer less expensive employees. No one can be certain that they’ll be able to work into their 70s.

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That’s fair, @blossom.

IMO, there’s a bigger gap in opportunities between a good public/good honors program and the very worst schools than there is between the very top schools and a good public/good honors program.

That seems to be something that many on CC gloss over or don’t seem to realize.

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I know several people who are convinced that the massive student loan debt will be so big, that the government will do a bail-out like they did for underwater mortgages 10 years ago. So they are not being careful with the amount of debt they are incurring because they don’t think they will have to repay it.

If this happens, I wonder whether the government will go after student loan companies or colleges the way they went after mortgage lenders for predatory lending practices. I just saw an article in the past couple of days about how someone proposed legislation to make college financial aid award letters uniform, since some of them were so obscure that it was hard for a student to understand what they were getting into. And in that article it suggested that some colleges intentionally made it obscure so that they would appear more financially competitive than they were.

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Once again, the best advice I’ve seen over and over again on this site is to have the money discussions BEFORE a single application is submitted. This not only forces the parents to really assess what they can afford, but it sets the child’s expectations as to the money available. The college list should absolutely be formulated with the COA as the #1 factor, #2 should be that all schools on the list are ones that the child is willing to attend (with the capriciousness of the college application process, that’s called hedging your bets). Be very clear that any school that your child gets into that is not on the list that or does not pass the sniff test for what your family can afford will not be a school that your child will attend. This is not being mean or cruel to your children - it is being pragmatic, and it is giving them the gift of NOT being saddled with enormous post-graduation debt.

As to the other idea of “we’ll find the money in the jelly bean fields” or wherever fantasy money lives, I think a few things may be contributing to that:

  • overwhelming use of credit cards/online purchasing: studies have shown that it's a whole lot easier for people to overspend when you're aren't using cold, hard cash. I have a friend that makes smaller purchases with cash whenever she can - makes her really think about it as the money slips out of her wallet. While carrying/using cash may be less convenient, we have traded convenience for complete awareness about our spending.
  • consumer debt is so normalized that no one blinks when it comes to taking out loans for all kinds of stuff. We have house payments, car payments, credit cards payments - what's one more payment?
  • there are HS seniors who have never worked a day in their lives, so they really have no sense as to how hard/long a person has to work to make a certain amount. When my D sees a dollar figure on something she wants to buy, she thinks about how many hours she had to work to net that $$ - it's a sobering thing and results in more thoughtful expenditures.

Our society does not need anymore highly educated, underemployed graduates carrying 6-figure debt. That inability to move forward affects that graduate’s ability to contribute fully to society.