<p>While understanding that many families/students took loans to pay for their private eductaion, I must say I am surprised to see how much loan students took to attend a public university. </p>
<p>The local newspaper has an insert about this today. They listed that 56% of the State U students have an average loan amount ~18K. </p>
<p>There have been too many threads debating about money and dream schools. This is not intended for any thing like that. The numbers just show that we could not assume going to a State U is a sure financial safety.</p>
<p>The overall average is $20K so one could assume that State U students would be quite a bit under $20K for loans. But that's apparently not the case.</p>
<p>I ran into a Community College financial aid guy and he said that one student had $20K in loans. I wondered how that's possible as CC costs are tiny and my assumption is that someone rolled living costs into the loan.</p>
<p>Dad II...is that $18K the amount of loans for the full four years? I'm guessing it is. If so, that is about the amount that a student could take in their name in Stafford loans. We required our kids to take those loans each year...it's how THEY were invested in their college costs (in addition to the work they did during vacations and summers). </p>
<p>Sorry, but I don't happen to see that this is a huge amount of loans over a four year period.</p>
<p>BCEagle, Our State U runs at least 20k, but then at some of them nearly 90% of students have cars. This adds on car payments unless they inherited an older car from grandma/grandpa. Most have newish expensive cars and I assume car payments and high priced auto insurance (in our area) come with that. Now college is 25-28k, depending upon the car payment amount (perhaps 380-420/mos. to buy a small car over 4 years + auto insurance payments. Higher payments of course, for a higher end car). These costs are for instate. Out of state public Us can run 10-12k more per year. These run away costs.</p>
<p>I think the OP is correct. I believe for most public U's, the bar is pretty high (read, low) for significant, or even any, financial aid. Most middle class families will pay substantially for a public U (in fact, will come out ahead even for need aid at a private u). With housing inflation (up until about '05-06), it has been quite difficult for most families to save aggressively enough (have enough disposable income) in the previous 18 years, to where significant loans would not be necessary. Unless one starts out with a very comfortable income at the birth of the first child -- and most people don't -- the costs of raising a child, which often include some aspect of private education or private supplementation of that education, make significant college savings prohibitive.</p>
<p>Suppose the annual state school costs are less than $20,000- that loan total means the family/student came up with at least 3/4ths of the cost of the education. It would not be surprising that families didn't have $40,000 - $60,000 saved for each child, especially since they started any savings program in anticipation of much lower college costs as existed when they started their savings plans. Being middle class doesn't mean being able to pay for even the least expensive 4 year college education, most would assume their child will be able to pay off loans with the post college job.</p>
<p>Like another poster, my kids will be taking Staffords as part of having a stake in their education. Doesn't matter what we have in the bank. The only exception would be if they attended a school that gave them a true full ride. At that point, they could work for spending $$ or take out a Stafford. </p>
<p>They have known since middle school that a car does not come with our family's FA package. They've also known sine then they would be taking out Staffords/working to help with expenses. The tradeoff for them is that we will help them attend the school of their choice, wherever it may be. </p>
<p>Neither one has any hard feelings about it, esp S1, who leaves for school this week. He knows we could have pressured him on the better merit ride option, and appreciates that we let him choose based on his own criteria. (He took the #2 merit offer, which was his first choice school anyway. Nevertheless, that still leaves us with a hefty bill.) </p>
<p>I'm sure that at many state schools, if one doesn't qualify for grants or W/S, the "FA" they offer is a Stafford. $16K in loans from a flagship does not surprise me at all.</p>
<p>Actually although the amount borrowed may be lower for the state U's. proportionally the debt load bears more heavily upon the general population attending these schools. Until recently most who attended these schools tended to come from working and lower middle class backgrounds and as such had much less in assets to counterbalance debt. Indicative of this problem is the situation further down the ranks. The loan providers are moving out of loans for the CC population because they can no longer pay the tolls given the incomes they can make with their degrees.
And since many go to state 4 year and grad schools to attain degrees for intermediate professions-increasingly they're being caught in a terrible dilemma. Increased student loan debt simply does not balance to the now reduced incomes in these fields. (or even in what had been supposedly 'safe' professions) As an example in my field (academe) an increasing number of profs are adjuncts. A arena where even the costs of a safety school do not come even close to the long term pay.
And when the stats are considered even the lesser debt loads from state schools have increased disproportionally to any other economic measure. An example from the Boulder Daily Camera "Between 1993 and 2004, the average debt for graduating college seniors with loans increased by 107 percent to $19,200, the study says. At the same time, in the Denver-Boulder area, the cost of living increased by 38 percent."
Essentially what has happened is a increased emphasis on loans rather than grant based aid (recent increases in grant amounts were nominal and at best a attempt to backpedal to counteract increased criticism of high education costs compared to nominal support-especially when compared to the preceding generation).
What our policy makers have done is to privatize what had been a working system. But they kept the socialized aspects in place to protect the privatized companies when they stand to take losses. What we have is a bastardized monstrosity. And under that paradigm there is no way a more equitable system could be preserved. And lobby pressure by that same privatized/socialized contingent has been quite successful in undermining proposals to move back to a model more closely aligned with grants and non-loan aid.
And the unfortunate situation is that high educational costs have co-aligned very closely to the rise of the loan model. At times this has co-opted collegiate ethics because the money flow is under corporate (financial conglomerates) influence and the implied agendas. This is very evident from the recent outright scandals. But this occurs in more subtle manners including having the loan industry having the ability to pressure academia because they do effectively hold the financial bit and halter.
So in all it's not quite unexpected that the costs at state schools have escalating beyond reason. A perhaps disturbing long term trend will be that those who once attended elites will have to attend the State U's because the high costs of the elites can now not be borne even by the affluent. Indirectly because the loan companies will view these new students as an 'enhanced asset' and that will raise the prices for those who had been the primary populations of these schools. What then for those who needed these schools as primary and not 'safety schools".</p>
<p>We had a different deal with our daughter: Do well academically, and we will take care of the rest.</p>
<p>She was way over the top on her part, so it made our part (which was quite painful) a bit easier. She even won a merit scholarship worth $15,000 for her 3rd and 4th years.</p>
<p>I certainly understand the idea that the student should have a "stake" in the cost. In looking back though, I realize that most of our kids are clueless regarding what these $$ mean. I also recall how I personally struggled with student loan debt for years (for both spouse and me) and wonder if we really should inflict those struggles on our kids if we can avoid it?</p>
<p>"I ran into a Community College financial aid guy and he said that one student had $20K in loans. I wondered how that's possible as CC costs are tiny and my assumption is that someone rolled living costs into the loan."</p>
<p>BC Eagle the CC officer was likely telling it accurately. Several conditions contribute to this problem. First is that many CC students simply do not have the resources to go to school and support themselves whilst doing so. The low paying jobs they tend to have can barely pay living expenses even without the added problems of school costs. So yes the CC costs are tiny, but not compared to the asset base of many who attend these schools. And as a result many do borrow for living costs whilst attending school.
Another factor is that these populations are not fully aware of the marketing schemes of the loan industry and so are quite vulnerable. For example I've talked to CC students who were unaware that Sallie Mae is a private company and not a governmental body. And information from their schools doesn't exactly correct for this kind of misinformation. For example at my school they have brochures from a supposed non profit advising students about the pitfalls of student debt. Problem is these are produced by a shell entity of one of the large loan providers, and so give quite misleading information about the problems and risks involved with SL's. Of course the school aid officers don't tell this to students, and some even seem to be unaware of the source from which these brochures originate.
The other factor is this population is much more vulnerable to economic and personal setbacks and so often have to drop out and return several times before being able to attain their degrees. Each time they do their nominal pell grant amounts dissipate and eventually loans are the only option left.<br>
And finally at some CC's financial aid officers do push the loans even when these are not to the students advantage.</p>
<p>And all that's not even considering the enhanced fees (220% increases since 2001) late fees, and etc applied to these loans after the students graduate. And upon graduation they find that the income of an LPN, mechanic etc can keep up with the enhancements applied to their initially nominal education debts.</p>
<p>"I also recall how I personally struggled with student loan debt for years (for both spouse and me) and wonder if we really should inflict those struggles on our kids if we can avoid it?"</p>
<p>NewMassDad you refer to quite an ethical dilemma. As a academic there are times I come close to telling students not to attend college or extend their education too far...</p>
<p>I am with Thumper and CountingDown; our kids are required to borrow the unsubsidized Staffords in their name to get our contribution.
Beyond that we put no limits on where they could apply/attend. It is our gift to them, with one string attached: Failure to make continuing progress toward your degree and you get to repay us all that we have invested thus far!</p>
<p>Dad II...could you provide the information about the article you are discussing...or the link to it...so that the rest of us will know exactly what that $18K in loans means? Does it mean annually or does it mean over 4 years? I would like to read the article. We have had similar ones in the papers here saying that undergrad debt for FOUR YEARS averages $18K at our state u. I'd be interested in seeing what your article says.</p>
<p>DH and I both know what it's like to pay back student loans. We both put ourselves through UG (borrowed about $7k each) and then DH went back to grad school. That, plus UG, cost us $700/mo. for ten years. Paid it off when our kids were in elementary school and didn't buy a house after that. (Loan payments were cheaper than day care. Now THERE'S a real-life expense an 18 yo is clueless about!!)</p>
<p>The guys' investment via Staffords will be ~$200/mo. Enough to feel a little pain; not enough to force them to move back home. ;)</p>
<p>I was appalled at how much some kids have borrowed even when going to a state school, working part time, getting parental help, commuting. Some kids borrow to pay for cars, cost of entertainment, cost of living better, not cost of attendance at school.</p>
<p>I continue to wonder why a class cannot be taught at EVERY high school in basic personal money management. Learn to balance a checkbook, how to fill out a job application, the difference between a debit card and a credit card, how insurance works, how mortgages work, how buy a new car differs from a used car, etc.</p>
<p>Seems to me that it could be a part of the senior year and would really help more of these kids avoid getting into trouble right after high school.</p>
<p>I suppose that schools could offer courses on personal money management and I'm sure that many do. But I would hope that parents would show their kids how to do this stuff as teenagers.</p>
<p>I know that we certainly did teach our kids on this stuff as they grew up... but obviously not everyone does given the number of kids that get into trouble. If civics is a required class (which it should be) - seems like this is also part of learning how to be a productive member of society.</p>
<p>I don't think it is only the kids who are clueless. Having taught introductory finance courses to adults, I can tell you that many adults are clueless regarding finance, except for perhaps the most elementary basics, like the difference between a debt and an asset.</p>
<p>Take the time value of money. How many here understand what "Present Value" or "Net Present Value" means? How many know how many ways there are to calculate interest charges on credit cards? How APR is calculated for a home loan, and why it is so different from the note rate? How mutual funds can help and hurt your investment goals? These are just examples.</p>
<p>Truth is, the situation is much broader than just balancing a checkbook, which has become rather outdated anyway, with online account balances (quick show of hands: how many balance their checkbook? How often? I do, once a month...same with my other accounts. Quaint habit.)</p>