<p>If we encourage to students to attend the cheaper school, we should also stop promoting prestige so they don’t feel so bad turning down the more prestigious school. What is stopping a person from attending their local university? Because they believe the other school can take them to a better place. So they choose the latter and rack up the huge amount of debt.</p>
<p>iTransfer-this girl chose the local, cheap option (an instate public, how much cheaper can you get?) and still has to rack up alot of debt. THe system needs fixed</p>
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<p>Yes it does. But most people are suggesting the same thing. Oh she made a dumb choice. Maybe she should have attended a cheaper school (like there is always a cheaper option!) No one forced her to go there. </p>
<p>None of this is solving the problem. Maybe HER problem. But the problem is still there and just being avoided.</p>
<p>mazewanderer - I like your ideas. I also think parents and high schools have to do more to help kids learn about finances, but putting monetary contraints on colleges and lenders will get their attention. I’m not sure about the extra charge for loan counseling. It should be provided because it’s the right thing to do.</p>
<p>The state of Tennessee has added new graduation requirements for the Class of 2014 & beyond (requirements were added for the class that has just finished their freshman year.) One of the new requirements is a 1/2 year Personal finance class. Not sure if they’re covering college debt, but I figure any knowledge is better than none.</p>
<p>I just read the original article. The big missing part is parental responsibility. It’s pretty simple: college education is considered a parental duty, regardless of the fact that the students are putative adults. I have no argument with that.</p>
<p>Parents are expected to either have saved, to pay out of current income, or to borrow. I have no argument with that, either.</p>
<p>Apparently the student’s parent in this scenario had not saved, could not pay out of current income, and did not qualify for sufficient loans on her (the parent’s) account. Thus leaving the student to shoulder all the loans. <em>THAT</em> is what’s irresponsible in this whole scenario. The mom is saying “You go, girl” without having done her own part of the bargain.</p>
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<p>R6L, in light of what I just wrote, what the <em>student</em> borrows, up to somewhere around $25K-$30K for four years total, is not a big deal. Yes, the student won’t be living a life the envy of Donald Trump for the first few years after graduation but the total amount and the total payments are doable.</p>
<p>I see this as a much bigger problem - this child is just a few years away from all those who took out too much debt for their houses and are now without their houses. My nephew is one of those people - if my husband didn’t bail him out, his family would be living with his mother right now. </p>
<p>My husband worked this all out with an accountant who put the whole family on a budget and made the wife go to work. Their kids are young but being a stay-at-home mom was no longer an option given their financial situation. But that budget apparently includes three or four vacations a year. This Memorial Day weekend they’re at a resort in the Poconos, they’ve taken their kids skiing, to indoor water parks, etc. I’m sorry, you’re broke, you can’t afford these activities! I keep asking my sister how they’re going to pay for college for their kids (her grandkids) when they’re flat broke and still don’t conserve money. She just gets angry and tells me they “need” family vacations. Who is this woman and what did she do with my sister? As a family we never lived above our means even if it meant we did with less. Remember hand-me downs? Driving to a relatives house for family vacations? Having a picnic to celebrate a holiday? I hate to sound like an old fart or a child of the Depression (I was not, my mother was) but you can’t keep up with the Jones’ if you’re broke!!!</p>
<p>I think this woman and her mother are just another example of privilege gone wild. People spent more on their houses than they could afford and this girl spent more on her education than she could afford and yet, no one is willing to sacrifice to get out of the debt they put themselves in. You can say “I didn’t know” or “I didn’t understand” but once you’ve dug yourself in you need to dig yourself out. It makes me nuts!!!</p>
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<p>The numbers roughly work at 8% average interest rate with a 30 yr loan repayment plan.</p>
<p>I agree with R6L that even IS public colleges are getting more and more out of reach for most students. The state I live in now is one of the cheapest I’ve seen for in-state college costs and the COA for IS students (including only tuition, fees, room, board) is $12k. Assuming you can get a part time job to pay for books and living expenses (an “if”!) and adjusting for probable tution increases, you’re still looking at maybe $55k debt after 4 years, assuming you don’t take summer classes or more than 4 years tro graduate (only around 20% graduate in fall years, though I suspect that number is somewhat driven down by a high number of non-trad students).</p>
<p>I’m really beginning think the only real ways to “survive” college costs is through a) parent contribution, b) a generous need-based award with no/very minimal loans, c) very good merit aid, or some combination of the above. Of course, I do have a friend who pretty much worked her way through college as an OOS student, but that’s really nearly impossible nowadays, and it really seemed to take a lot out of her.</p>
<p>I find some of these posts disturbing. It was not realistic thinking to borrow all that money, granted. But. This is what society is encouraging kids to do. It takes real strength of character to resist these messages or parents who have the foresight to teach that branding is a shallow value.</p>
<p>However, the profit in a Cadillac is much greater than the profit in a small Saturn; it’s not surprising that commercials tell young men they’ll get more feminine interest with the more expensive car.</p>
<p>Does that justify buying one if you can’t afford it? Absolutely not. But a capitalist economy is driven by growth which include more profit in higher end items.</p>
<p>When people stopped being impressed when others drop the names of their brand name colleges, these situations will stop.</p>
<p>I attended a state school and do feel I missed an experience. I turned down Columbia for a state school for grad school (PhD) for the same reason; the masters year cost $35,000 which seemed a lot of money to me then. The PhD years were fully funded, but since I already had a masters I couldn’t face laying that money out.</p>
<p>Without a brand name school I was definitely hampered in my employment opportunities, though I am fully employed.</p>
<p>Another distasteful slant here is ridicule of the young woman’s majors. Many businesses <em>do</em> hire humanities majors and find them better bets than business majors. Some businesses feel the opposite way. However, entry level positions are often awarded to humanities majors without a vocational education.</p>
<p>mythmom, I find these loan threads very frustrating to read. You are right, sometimes the loans are worth it. Students need to know when they’re worth it and how they might need to sacrifice for a while to make them worth it. My husband had large medical school loans. For us it was a career worth the loans. We made many modificaitons to our lives to pay back the loans and we always had a plan. </p>
<p>We have talked to our kids about student loan debt. They get it. My 17 year old picked our state school so he could save money for grad school. My parents were not college educated and they managed to teach me to not spend more than my paycheck can accomodate. It seems that now not only the students need to be educated, but the parents as well. I agree that advertising and the American Dream set us up to want more than perhaps we can afford, but these smart parents and kids should know better. Why don’t they?</p>
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This is what makes the calculus not so cut and dried, trying to evaluate what you get for the cost differential and not being swayed by either advertising, mindless prestige whoring, or gauzy visions of hope.</p>
<p>You take your best shot and then cross your fingers.</p>
<p>There has been a lot of bashing of lenders, in particular Citibank. Banks should lend money, up to the full cost of attendance, to students, without assets, income, or a cosigner, solely on the basis of their future earning potential with a college degree. In my view, there is far too little credit to students without cosigners. Banks should estimate the present value of a college degree from college C in major M at the time of graduation. They should also estimate the expected total loans required for the student to complete the degree. If the present value of the degree is less than the loans, then the student should not be loaned any money.</p>
<p>mythmom, you say it so well. This is such a complicated story, full of so many wrong turns, on everyone’s part-- I suppose its not surprising that people just want to slam the door on it by sneering at this girl. It’s a story that strikes some deep nerves here on CC, where we all wrestle with questions of prestige and what it may or may not mean to our kids through their lives. NYU traded on its reputation when it encouraged this family to borrow beyond their means. Oh-- there’s a book in this, if anyone wants to write it.</p>
<p>At least in engineering, I think it makes financial sense to borrow up to the full COA if it allows you to attend a top 20 engineering school.</p>
<p>I know 2 different young women who are pursuing their undergrad degrees without parental help and without incurring debt. One graduated from HS in 2008; she immediately changed her part-time status at Walmart to full time. Her Walmart job gives her health insurance and full benefits. She also works part-time as a waitress and accepts any other job that she can fit into her busy schedule. She will baby-sit, does yard work, chauffer, housesit or anything that pays (preferably cash). She lives at home and drives her grandparents old Chevy pick-up. She will start school this fall attending a state U, while she continues to live at home and work enough hours at Walmart to keep her health insurance.</p>
<p>The other young woman attended a local CC after HS, earned an AA degree and has been working 30 hours/week for her in-state flag ship U. She is considered full time receiving health insurance and pays only $5/credit for all undergrad classes.</p>
<p>It will take both of these young women longer than 4 years to get their undergrad degrees but they wont be spending 10+ years in debt paying off college loans.</p>
<p>Well, I’ll disagree with mythmom. Failing to look ahead to potential career prospects and likely income can lead students greatly astray. A drama student who enrolled at NYU/Tisch and graduated with $100K in debt would also be in a world of hurt. An engineering graduate with $100K in debt would still be hurting – big time – but could feasibly pay off the debt in ten years given some sacrifice and general engineering salaries and raises. There are few practical ways for this graduate to get a job that is likely to pay more than $60K a year, at least for years. She was foolish – and her mom was more so. I’m not arguing that she should have become and engineer, or that she shouldn’t have chosen women’s studies as a major – just that if she wanted to major in something with poorly defined job prospects, she should have done it at a much, much less expensive college, and then gotten jobs along the way to pare down the debt. </p>
<p>Either that or been a whole lot smarter in terms of making connections and using them to leverage internships and summer jobs into reasonable employment after college.</p>
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<p>No, absolutely not. COA is around $52000, or say $215,000 over 4 years minimum (assuming a cost increases) plus interest.</p>
<p>No undergraduate degree is worth $200,000 plus in loans, not from Harvard, not from MIT or Caltech or UPenn etc</p>
<p>^^ that really is a value set by the student and his/her family. There may be some who are averse to having a debt of a thousand bucks, and some who feel that a degree from MIT is worth a hundred grand especially if they line up high paying summer internships and an almost guaranteed top notch job.</p>
<p>My S knows a senior (at his school, a tier below MIT) who landed a six figure job in a hedge fund company after an undergrad degree in comp sci. I don’t know if incurred a lot of loans, but it’s quitely likely he wouldn’t have landed a similar position from a less rated school. Also kids on 7 year medical tracks - there are many hospitals in rural areas who assume loans in return for x years of service - so gigantic loans aren’t universally bad.</p>
<p>According to here: [The</a> Demand for MIT Graduates](<a href=“http://web.mit.edu/fnl/volume/223/hastings.html]The”>The Demand for MIT Graduates), the average starting salary for a BS at MIT is around 70K. Assume that a HS grad makes 20K 4 years post graduation. Then, assume both workers receive real annual increases of 4.7% for fifteen years, at which point in time they cap out. Assume both workers retire 30 years later. Use a discount rate of 10%. The present value of the MIT degree is $685K. The true cost of attendance is $295K = $80K + $215K. The MIT graduate comes out $390K ahead. If you assume a discount rate of 5% and a 35-year career, the net present value of the MIT degree is close to one million.</p>
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<p>That’s the crux of the issue. 18 year olds cannot get into this mess on their own, their parents have to help them do it. And, then, of course, when this does blow up all of us, including those of us who refused to co-sign for this kind of madness, will be picking up the bill. </p>
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<p>I completely disagree. When parents stop investing their own ego in the name of the college their child attends, then this will end. </p>
<p>I’m impressed by some colleges more than others. I would never, ever co-sign debt for my son. This is a question of personal responsibility and parenting.</p>