Just some thoughts about loans from the real world

Parents Forum
21

While this is true, I work with the “masses” at a statistically average public high school. For many of these kids, loans are the only way to have certain opportunities for their future. My own dh is one who benefited from 5 digit loans back in our era. We lived frugally for 5 years paying it back and have reaped the benefits ever since. Without the opportunity for the loans there’s no way he’d be where he’s at now as owner of his company.

When I see former students having troubles post high school, it’s rarely a surprise (unless they got hooked on drugs somewhere down the line). People skills are quite often the culprit TBH. Some humans seem to instinctively know how to interact with each other or are at least open to learning how to do so, then there are the others. I know some with college degrees who have problems finding or keeping jobs even in a terrific economy. It’s not a surprise at all that they end up working (if they work) at low wage places that desperately need workers - so desperate they put up with things other places won’t. If you ask them, life’s not fair! If you ask anyone around them who really knows them and how they are, “Yeah I wouldn’t hire them either.”

When it comes to debt itself, the key is understanding it and having the dedication to pay it off. It doesn’t matter if it’s school debt, credit card debt, or any other type of debt. If one prefers eating out and enjoying oodles of the niceties of life, that debt isn’t going away. If one gets into more than their paycheck can pay off, they need to change something. It’s very helpful to look at how much those payments and paychecks are going/likely to be before saying something is affordable or not. It’s helpful to compare COL in various places before settling somewhere too. Whether one can handle debt or not isn’t restricted to those with/without people skills. Some folks look at a new credit card they receive in the mail and see it as cash they can spend.

It’s very rare* that I feel sorry for any story about debt I read about in the paper. I see too much IRL experiences from “the masses” and assume it’s similar elsewhere.

*I do feel sorry when the debt is medical related. That shouldn’t happen in a first world country.

22

My other two don’t have any post college loans. All three are close in age so have similar federal loans.

That said, our family doesn’t see, “fair,” as equal dollar amounts. We see ourselves as a team and work together as such. If anyone needed something, all of us would chip in what we could. Med school is expensive. If the lad’s salary isn’t sufficient enough to have a reasonable living while paying off those loans we wouldn’t be the only ones helping him out. Sometime later he would likely be one helping out us or his brothers/nieces/nephews or whoever might be in need. To his credit, he’s also looking at options to lessen his loans (where he works later, etc).

My mom and her older sister were fortunate enough to be able to go to college. The family money for college ran out after those two and the other siblings didn’t have as lucrative opportunities. My mom/aunt graciously helped out their siblings for the rest of their lives, including my mom leaving me directions with her estate and money she left me outside of her estate.

That’s the way I was raised and how we raised our lads. We like it that way. It is important that everyone is doing what they can for themselves. There’s a family member who doesn’t. They get very little, but that’s only after a bit was spent (by many) trying to help them thinking it was only money that was needed. It wasn’t. Such is life.

23

If these kids were really as smart as their stats reflect, community college would be a very crowded place. Most of these kids at exotic big-name universities go there because mom & dad are paying or are up to their eyeballs in debt.

24

Not all states have good community colleges. Not all states have affordable in state 4 year colleges. Not all young people live in home environments where they have the option of staying at home while attending school and are forced to be self supporting at 18. I know young people who have racked up much debt just getting a 4 year degree at an instate public university. Nothing big name or exotic about it.

25

Which states and what are they lacking?

Besides PA (which voters could easily change), which other states don’t offer affordable public colleges?

26

@Creekland is spot on. I can predict which of my former students and athletes would go this route. It wasn’t always about interaction, mostly, my experience was frustrating because I saw wasted ability (whiners who wanted things handed to them and ALWAYS complained-and are still complaining!)
Re loans, I needed them to get through college, but my loans were doable. Our kids were not allowed to take out what they couldn’t work off over the summer.

I believe a number of students didn’t/don’t learn money management skills at an early age, either from their parents, or on their own. I also believe it doesn’t really have to do with level of income. (We were dirt poor, but my parents always had us put aside $.25 cents a month from our chores or gifts.)

I was shocked when our “then” freshman daughter, at her UC, told us that she had to show her friends how to interact with the “human” tellers about withdrawals/deposits etc. These were their first bank account experiences/budgeting!
(We required that each child deposit ½ of their birthday monies/ gifts in their savings accounts since the age of ~3. We were fortunate that our local bank gave out decent gifts for every 10 deposits (McD’s coupons, movie/zoo tickets), so they had no problem with making deposits.)

-Eldest purchased her condo, 3 years out of college, in a high paying job. She lived with us to save money for the first couple of years. She bought t a new car and paid that off. She brown bags every day.
-Middle one is still in med/prof school. We pay instate rates. She pays rent with high-paying part-time job. She brown bags every day, or, better yet, attends short lunch courses (~3weeks) where the lunches are provided during the class (ex course: “Medicare Part D”).
-Youngest took a break from school and returned recently using his 529 funds. Should be out next year with great job prospects.

27

You can add Vermont and NH to the list of expensive state universities. In both states, an academic year’s worth of tuition, room & board will run over $30K for state residents.

For some community colleges, low graduation rates, relative expense, poor teaching quality are all issues. It’s not like all state have some awesome community college system like NY, FL, MN, WA to name some good ones.

28

I live in PA - the CC’s are always low ranking.
And I absolutely love when people infer that making our state colleges affordable would be easy - just vote!

29

Easy, of course not. But where there is a will there is a way, as my mom used to say.

My point is that, for whatever reason(s), PA chooses to be (one of) the worst in funding/investing in higher ed. But then I guess, in any list, someone has to be last. :smile:

30

That’s of little to no help or comfort to those students of no means living in those states, however - wait around until voters get their crap together to improve public higher education. The point being, there are legitimate reasons why some people incur student loan debt that have nothing to do with their intelligence, decision making ability, or choosing to go to some fancy, private college.

31

Huh? According to Vermont’s website, 44% of students attend tuition-free. 79% receive some sort of merit scholly. (it maybe only $2k off.)

30% of UNH entering students attend tuition-free.

32

@Creekland Really like your attitude and approach to “what’s fair”. Full disclosure I’m typically contrarian (but a friendly one) to alot of common thinking. We told our kids a long time ago that fairness in our house isn’t about equal outcomes (we paid this for D so we’ll pay the same for S) whether it be school or sports or clothing or gifts or anything. We based fairness on the needs / wants (within reason) of the kid and our ability to support it. S needed a certain bat, we got it. We didn’t take that $300 and give something of equal value to D. But when she needed certain dance shoes, she got them. They are different. When we let the kids choose things for their birthdays, D wanted a camp out in the backyard with 20 girls so we provided all the fixins. S only wanted to go to a baseball game with two buddies, so we got tix. We never even considered what one cost vs. the other to “make it right”. Of course we considered if we were able to do it at all, and soemtimes we could, others we couldn’t. They learned quickly that if we could, we would, but if we said no, we meant no.

Fast forward and they will go to very different type colleges at very different price points. S will have loans and contribute $X because of the cost of his school and assumed outcome of good paying job / career. D won’t have any debt and won’t have to pay anything because she’ll have a hard time paying it back or affording anything based on her plans (performing artist). She’d never ask why we weren’t willing to pay $X and he would never ask why his little sister didn’t have to pay $Y. They each got what they needed. It’s not a competition.

The equality part, I guess, could be measured in our willingness to do anything we could to help them.

33

I am firmly in the camp of avoiding college loan debt if you can. I get that for some people it is unavoidable, they need to take out loans to even go to college at all. Luckily, our kids were able to graduate without debt. I can’t even imagine how hard it is for kids who HAVE to take out loans…

34

Not all loan debt is necessarily bad. Our kids were not required to work during college ( although one did take an undergrad TA job he was approached about when he was a junior). They both worked all summers during college. We paid all bills, books, travel, etc. during college, full pay at their instate schools. They paid nothing as bills came in. We had them take some unsubsidized Stafford/direct loans that were offered, less than the maximum (and we paid interest while they were in school). It helped with cash flow (we are not wealthy) . No regrets about expecting them to take out some loans and contribute to their education. It is potentially problematic though when loan numbers are too high . I feel for kids that have to take out excessive loans because of lack of family or institutional support.

How to pay for college is an individual family’s decision.

35

I think our state (MN) has “good” community colleges, but they’re not cheap either. Tuition is over 6K/year for 30 credits at the one near us and the 4 year university two miles away is $7600/year for up to 36 credits. Plus MN has a State Grant program and you’re eligible for more funds attending a 4 year school than a 2 year.

Then you have to weigh the freshman scholarship opportunities, they’re often much more substantial than transfer student ones. Entering as a freshman DS has 48K in scholarships coming from one school that would probably (going by the max auto scholarships) only award him 7K for his final 2 years as a transfer student, so he could save 28K staying home the first 2 years, but transfering in would end up paying 27K/year instead of 14K.

36

My only thought was maybe they couldn’t afford to work at your company.

My kids were full pay for undergrad. D1 could have paid back all costs in less than 5 years if I didn’t pay for her college and it was due to the job she got after graduation. D2 also took a more expensive option for grad school and she should be able pay back her loans in less than 3 years.

I don’t think the cheaper option is always the way to go.

37

I think a big problem with the student loans is the priorities these students set, based on the things they learned at home - the examples their parents set for them, and the priorities those parents set. CT recently got a federal grant for a program to assist lower income students attending community colleges and then 4-year colleges. Much of the chatter I’ve seen online is middle class families asking “what about us?” They think that college is too expensive, that UConn is out of reach for average middle class families, let alone more competitive colleges, that these families are living paycheck to paycheck. I was called delusional and out of touch for saying there is no reason most middle class families cannot afford college, that for most living paycheck to paycheck is a result of the priorities they set and followed since before their children were born. How many middle school students walk around with the latest IPhones? How many families are paying $200 a month for Cable TV? $200-$300 a month for cell service? New car leases every 4 or 5 years?

Oldest daughter graduated 2017 with about $10,000 in loans (her choice, based on little summer income - her skin in the game) and 2 years later that is half paid off, plus she has a car loan with roughly an 8,000 balance. Other HS classmates owe upwards of $50,000 just in student loans (between self and parents).

Youngest daughter has an EFC double hers (approaching full pay), because of a recent inheritance - we can afford to pay it, but she’s applying to schools with significant aid, so we will pay a similar amount. Why can we afford this which others can’t? Because of decisions we made 20 years ago, so save money, rather than insisting on “keeping up with the Joneses.” Oldest was in HS when we got our first 42" television, we never had more than basic cable, I pay $50 a month for cell service for 4 phones, have cheaper models of phones, and bought a house where we could pay the mortgage off before college tuition would be due. Keep in mind, that by saving, our EFC was HIGHER than other families with similar income as a result.

These students with high loan loads made what I consider several mistakes, following in the footsteps of their parents who made their own mistakes. They parents made is a priority to live in the moment, so don’t have savings to help their kids. Then the kids (with parental approval, maybe even encouragement) chose schools they couldn’t afford because they prioritized that experience over affordability. and now they see (but don’t necessarily recognize) the price of those choices. Different choices would have resulted in lower loans, and a more comfortable lifestyle now. My children don’t see is making “sacrifices” to pay for college, because we made smaller sacrifices all along - and the current sacrifices don’t feel like sacrifices because we never got used to the “luxuries” their friend expect, and didn’t have to change our lifestyle at all.

What we need is a change in mindset, so the same doesn’t happen to the next generation (though it likely will because the new generation of parents isn’t saving either, because they’re paying off those staggering student loans, and might still be paying them when their own children enter college.

38

Pell grants would cover all of the former, and most of the latter. So, how are they not affordable?

39

Tuition isn’t the only cost to attend college and low income families are often already struggling.

“I think people have the impression that Pell grants are taking care of low-income students’ needs, and nothing could be further from the truth,” says Maggie Cahalan, director of the Pell Institute and an author on their Indicators report."

"About three-quarters of Pell students come from families with incomes below $40,000, so often researchers (and journalists) will use this group of students to represent low-income students.

The average award is about $3,700, and the most a student can receive per year is now $6,095 (raised for the 2018-2019 award year)."

“In the 1980s, a student awarded the maximum Pell Grant was able to pay for about two-thirds of average college costs. In 2016-17, the maximum Pell Grant covered 25 percent of average college costs.”

https://www.npr.org/sections/ed/2018/06/03/610399546/we-now-know-a-lot-more-about-students-who-receive-federal-college-grants

40

My point is you’re not saving a lot going the CC route here if you’re within commuting distance of a 4 year school.