<p>THere’s a bigger problem here: Kids are being ENCOURAGED to take out these kinds of loans.
I have a friend attending University of Pittsburgh instate for engineering. Her family is middle class and recieved no finaid other than a unsub Stafford Loan. After loans, she is left with a balance of over 16k/year to fund her education. Her parents don’t have any money saved for her(Her college fund went towards paying for her sister’s rehab-long story), and no one is telling her taking out over 20k a YEAR in debt is a bad idea. Teachers, GCs, and her parents all go “well you’ll be an engineer, you’ll be able to pay it off”…
This is the problem. My friend has no idea that 80k is pretty unmanageable, even as an engineer. The people she has gone to to guide her have lured her into a false sense of security. It’s not her fault, she really doesn’t know any better. When everyone’s telling you it’s okay, why should you believe differently?</p>
<p>*I don’t understand why you put 10 years for the loan term. Is that standard? I thought you could really stretch these things out if you wanted. *</p>
<p>Yes, that is standard. But, of course, if you want to make your ENTIRE adult life miserable, then go ahead and stretch it out. LOL</p>
<p>^^That’s not nearly as dumb though. She can intern summers to pay a chunk of that off. I’m told rising juniors and seniors in most engineering fields can expect $20-25/hr. The exceptions are probably CivE, BME, Naval Architecture, maybe a few more, though it may be a little less than that right now. And then as well, what other option does she have that’s better? She’s going to an instate public school to major in something that’s relatively high paying.</p>
<p>but still, 80k is a huge amount of money. The numbers are so big that kids like us really can’t even fathom them(my house is only a little more than 80k). No one sits down and says, “Yes, you can take out these loans, but they will cost you X dollars a month to pay back”. She’s going to get out of school and be blindsided</p>
<p>^So her better option would be…?</p>
<p>Maybe a community college for a year, but after than that…</p>
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That may be pretty common. Also with crdit cards. And if you only have $700 amonth to pay, you really have little choice, unless you can get some more income.</p>
<p>rocket6louise - That is large debt for undergrad, but if she’s intelligent enough to be an engineer, then she’s intelligent enough to know it’s a large debt that will need to be payed back. You figured it out. A lot of people figure it out. I agree it would be helpful if the school and adults in her life could give her good advice, but she needs to have a plan.</p>
<p>*^So her better option would be…? *</p>
<p>Her better option would have been to go to a less expensive school.</p>
<p>(Hi, Rocket! Long time no talk to! Have you graduated?)</p>
<p>Yes, R6L, I agree-- I don’t see anyone arguing that “we” ought to bail out this young woman and thousands like her. But how about college financial aid offices being honest and helpful to those who trust them? Banks ARE supposed to be sure the people they give loans to will be able to pay them back.</p>
<p>“Her better option would have been to go to a less expensive school.”</p>
<p>With the exception of a community college for a year, what is going to be cheaper for her? She’s going to an instate public school. If there’s nothing close enough for her to commute to, there’s not going to be something substantially cheaper.</p>
<p>I find it difficult to blame the student for initially getting herself into this situation. </p>
<p>When you are 17 you don’t know anything about loans, finaid, etc. The people who DID know - the banks, the school - did little to guide her. Good on Sallie Mae, besides.</p>
<p>I find it disgusting that the school would say it’s “not the place of the finaid office” to tell students when they are taking out too many loans, etc. The finaid office needs to work to ADVISE students. Telling a humanities major to take out more than 40K in loans was extremely irresponsible on the part of the finaid office. They took advantage of her, and took her money, plain and simple.</p>
<p>Now,though, this girl should be MUCH more savvy. I hope she has ran the numbers and is taking night school classes so that she can be an engineer or computer tech…something with a high salary so she can start paying off her loans ASAP. To continue to defer responsibility at this point would be her fault, indeed.</p>
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<p>I agree Gwen. I’m not asking for a bailout, just more honest talks from adults. My high school financial aid night was basically “FIle your FASFA and don’t be scared of loans. You’ll be able to pay them back no problem”</p>
<p>How stressful could a photographer assistant be? She should get another job to pay her loans back. My daughter does tutoring around NYC area and she gets $50/hr. I am sure in SF area she could get just as much for tutoring, especially with a NYU degree. If not, wait tables or bartend. Her mother could also help her with payments too.</p>
<p>In my building where I work, there is a for profit technical school. They are known to recruit minority students with promise of good jobs upon graduation, and encourage those kids to take out maximum government subsidized loans to pay for their tuition. Needless to say that graduation rate is quite low and forget about jobs.</p>
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<p>I agree with you. We encourage students to take out loans for their education. We tell them hey its okay you will pay it off cause you went to college. We should stop this. We should stop promoting that college = great investment for money. College is a great experience but not always the best investment financially. If we tell them that college doesn’t ALWAYS pay out then I think less people would be going into serious debt. The reason why they take it out in the first place has to be because they believe they can pay it off… Why do they think they can pay it off though? Cause they were brainwashed just like many other students. College = GUARANTEED financial investment? NO. It should be treated like any other business investment. College should be well thought out before pursuing not just something that people blindly dive into which many high school grads do.</p>
<p>My daughter turned down Cornell for a generous merit scholarship from a third tier public university. She’s doing just fine and will graduate with 5k in student loan debt – it would have easily been 100k+ at Cornell. She has no regrets.</p>
<p>This article estimates the present value of a college degree. For a 5% discount rate, a BS in engineering has an estimated worth of $500K. If the Pittsburgh engineering student graduates with debt of $80K and “an asset” of $500k, then she is clearly ahead. The students who lose out are the ones who don’t graduate, don’t major in a marketable major, or for whatever reason fail to find a job in their field.</p>
<p>Source: [Is</a> your degree worth $1 million – or worthless? - MSN Money](<a href=“http://articles.moneycentral.msn.com/CollegeAndFamily/SavingForCollege/IsYourDegreeWorth1million.aspx?page=2]Is”>http://articles.moneycentral.msn.com/CollegeAndFamily/SavingForCollege/IsYourDegreeWorth1million.aspx?page=2)</p>
<p>^I’m throwing a +1 at that… It’s wrong to advise someone (who you think likely to graduate) to not go to an instate public school to get a degree in Engineering in favor of calling it quits after high school, which is the only other option I see, though no one answered what option she had that was better.</p>
<p>I’m not saying she shouldn’t go QwertyKey. I just wish someone would have a convo with her of what that debt means. Not to talk her out of it, but just so she understands what it means, and what effect it will have on her life. That way she’s prepared</p>
<p>^Fair enough, but if it’s not going to change her decision, it doesn’t seem to be especially important. Either way, if she’s in engineering she’ll deal with numbers all day. She’ll think about it one day and figure it out on her own.</p>
<p>People can walk away from houses and in the present climate negotiate a short sale, where the lender agrees to take a lower amount. However one cannot walk away from a student loan and it cannot be discharged. Unfortunately colleges keep raising prices, talking about the value of a high priced education while they have no responsibility to ensure students have minimum debt.</p>
<p>The solution in my opinion: allow bankruptcy courts to discharge (some not all) student debts, if it is found that the lender or the school did not exercise due diligence in giving the loan. Not a blanket check for people to walk away, but a threat that would make lenders and colleges wary of saddling students with loans that cannot be paid back. It cannot be with retrospective effect, so should be only for new loans after a given date. Colleges for example should have forced financial counseling for students who are likely to have more than say $25000 in student loans over 4 years. They could charge students a fee for the counseling so that students pay for it. They are more likely to take advice they pay for seriously. If the student gets independently counseling and they understand the implications of taking so much in loans, then their loan cannot be discharged by bankruptcy.</p>
<p>I know people are going to flame this idea, but the idea is force colleges to stop continually raising prices and saddling students with loans, and students to be realistic. If students cannot afford that college, look at the other ones. Lenders should not be lending money based on unrealistic expectations and if they do, the bank pays the consequences. Yes in the short term some students may not be able to go to the college of their choice, but at there will be an equilibrium in the long term. Colleges will bring down the cost of education and students will take on debt responsibly.</p>