<p>“This is a question of personal responsibility and parenting.”</p>
<p>Exactly true. I can’t imagine letting my kid getting into that sort of debt, for any school. If we couldn’t pay for it, or he couldn’t work and take out much smaller loans for it…he couldn’t do it. End of story.</p>
<p>“What is she waiting for? The bailout?”</p>
<p>Maybe so. Along with the healthcare bill, they put in provisions that lower repayments to 10% of income about living expenses, and all is forgiven after 20 years (10 years if you’re in a favored field). Can you imagine any other sort of loans that you can just string out with the minimum payments for as long as possible, then the government deems you don’t have to pay for them anymore? I wonder how many will take out the maximum amount, finance their tuition and living expenses at 55K/year, get a job in a low paying field (or quit to stay home with the kids) and stick the rest of the taxpayers with the bill so they can have bragging rights about going to XXX college?</p>
<p>I did not read the OP nor all the posts. However, I really appreciate this view point (#16):
</p>
<p>One day at lunch table, one of colleague told me his D is taking over $30K a year in loan to be a school teacher. I almost felt out of my chair when I heard of that. Why, I asked. He said - she wanted to attend X university since she was 5 years old and she always wants to be a teacher. How do you tell your DD that she can’t pursuit her dream? beside, he said, X University has the best program for training teachers so she could get a higher pay. I smiled and noded. (FYI, X Univ in discussion is highly ranked master university with about 80% admission rate.)</p>
<p>To me, he is nuts to let his DD do this. But what could he have said to her? He is so proud that she got into her dream school.</p>
<p>beside, he said, X University has the best program for training teachers so she could get a higher pay.</p>
<p>I think that teachers pay is based on years of experience and number of credits (per a “pay schedule”). I don’t think she’ll be hired at a higher salary because of a particular school. </p>
<p>If so, this dad is going to be shocked when his D is hired at the same rate with someone with the same degree/credits from the local cheaper public.</p>
<p>If this girl is only beginning her college education, she and her dad need to look into that before they go forth with this wrong-headed idea. They need to know what her loan payments will be when she graduates and what her likely pay will be.</p>
<p>I think the Private/State school dichotiomy isn’t really applicable when discussing grad school. For example, in clinical psyuch most of the “powerhouse” programs are in state schools–Wisconsin, Minnesota, Cal, and UCLA are generally considered to be at the same “level” as Yale, Harvard, and Penn. In my field, school psych, all but about three programs–and all of the “top” programs–are housed in public schools. Plus, it’s usuially a lot more about WHO you work with then WHERE you go to school. Yes, the Ivies attract some big names but by no means do they attract all of them. </p>
<p>This is based on what I’ve seen in psych specifically, though, so it probably varies considerably by field.</p>
<p>Because the article involves NYU, I do think that the university bears a big part of the blame - and so I agree with the author of the article, who wrote:
</p>
<p>Based on my own experience with NYU, I feel that they package their aid in a particularly deceptive way, as they label parent loans as “financial aid” – thus a financial aid package that includes $30K in parent loans is passed off as meeting 100% need in the paperwork given to the student. This is coupled with leveraged financial aid practices that do not really take individual level of need into account. And of course, NYU is playing off of its perceived prestige – but its financial aid practices are grossly inadequate compared to peer institutions. </p>
<p>We see this year after year on CC – kids get admitted to NYU; they are often overjoyed at what they think is a generous, full need award until someone sets them straight about the loan debt. </p>
<p>In the article, NYU’s financial aid department is quoted as follows:</p>
<p>
</p>
<p>Contrast this with the position that Barnard’s financial aid department took several years ago, even before the financial meltdown:</p>
<p>
</p>
<p>
</p>
<p>
</p>
<p>See: [News:</a> Bucking the Tide on Private Loans - Inside Higher Ed<a href=“July,%202007”>/url</a></p>
<p>Yes, the student and her mom could have made better choices – but we are talking about a 17 year old. </p>
<p>Once the student has completed the first year, it becomes very difficult to back off on the continuing loan commitment, because of the [url=<a href=“http://en.wikipedia.org/wiki/Sunk_costs]sunk”>Sunk cost - Wikipedia]sunk</a> cost](<a href=“http://www.insidehighered.com/news/2007/07/16/barnard]News:”>http://www.insidehighered.com/news/2007/07/16/barnard) fallacy. This is a mental rationale that leads people to continue to spend money on a bad investment, under the rationale that they do not want to “lose” what they’ve already spent. When you combine that with a deferred payment scheme on a private loan – that keeps interest running but also avoids the pain of any payments being currently due – you also simply get a situation is not confronted simply because the student does not have to. </p>
<p>I think that the best colleges are committed to their student’s well being post graduation — and for that reason are not going to encourage their enrollees to do stupid, self-destructive things. I think that’s why most private, top colleges have generous need based financial aid policies. (Fortunately, my daughter had the sense to turn down NYU’s woefully inadequate offer of financial aid to her – and also had the good fortune to have a better option at hand. She and I both took on debt for her school, but in a far more manageable amount. D’s debt is limited to subsidized Stafford loans).</p>
<p>You are forgetting debt service and taxes in this equation. Also the question is not to compare to a HS graduate but to a graduate of say a in state university, where the student graduates without debt and gets a starting salary of say $50,000 instead of $70,000. So for many years, the student with a $50,000 income will actually have more disposable income than the student with a $200,000 loan who would be paying about $28,0000 -32,000 a year just on loan service. Interest on student loans are not tax deductible. If that student with no loans were invest that saved money, the difference will be even more stark.</p>
<ol>
<li>I am not forgetting debt service. That is incorporated into the discount rate and the concept of present value. If I have a $100K asset that yields 10% and a $100K debt with a 10% interest rate, then my books are balanced, ignoring taxes.</li>
<li>I did ignore taxes. According to <a href=“http://www.cbo.gov/ftpdocs/100xx/doc10068/effective_tax_rates_2006.pdf[/url]”>http://www.cbo.gov/ftpdocs/100xx/doc10068/effective_tax_rates_2006.pdf</a>, the effective federal tax rate is 25.8% for the top quintile. If you add in state and local taxes, the effective rate might be 35%. 35% of 685K is $240K in taxes. Then, the MIT graduate only comes out $150K ahead, still a profitable investment. Taxes are about at the point where they discourage people from going to college and attempting to earn a higher income.<br></li>
<li>If you accept that people should get a BS/BA, then the argument is even stronger to go to the best school that will admit you. People who go to a state school and get a job in engineering may turn out financially just as well as people who got to a top 20. However, many of those state school graduates will not get engineering jobs and be forced to do work that essentially a high school grad could do at wages in the $15-35k range. Those people still paid the opportunity costs of not working full time for four years and might leave with $40k in debt. They will find their modest debt far less manageable than the larger debt of someone who graduated from a top school. Even the lowest rank student at MIT should be able to find some engineering job.</li>
</ol>
<p>Timmy2 (I have not read the remainder of this thread in detail, but I felt I had to respond to your post) - I am an international student who will be attending Tisch beginning this fall, majoring in film, and who deferred admission for one year due to a lack of finances. NYU, of course, doesn’t even offer aid to international students (and with their financial aid the way it is they probably shouldn’t try to).</p>
<p>Believe me, there was a time I felt the same way as you do now - that given the potential value of my degree (to be fair, a career in film doesn’t guarantee anything the way a career in, say, accounting or law or medicine might, but I did feel certain I would use enough of the school’s resources in this field to justify the cost), I would be willing to go six figures into debt to attend. However, as an international student, there is virtually no way to take out loans for the entire cost of attendance without a U.S. cosigner, so I had to sit tight and hope something else came through spectacularly.</p>
<p>It did - I landed a full tuition, room and board scholarship from a local private organisation, so I will be one of the extremely, extremely fortunate few to graduate from NYU debt-free.</p>
<p>In the meantime, I’ve been working full-time on a contract basis at a government job in the arts in my country, and having seen how hard my coworkers work, how much responsibility they take on and how little they (we!) are paid (P.S. a fraction of what this young woman gets paid as a photography assistant - low even by local standards, so it’s not an issue of geography per se), it’s become clear to me that the odds of paying off that kind of debt after graduation - even with the degree - are considerably longer than getting a full ride to NYU, and the odds on that are very, very long in the first place. Bearing in mind as well that many jobs in the arts are contract-based rather than salaried, I feel like I really dodged a bullet when I think about my circumstances now.</p>
<p>What changed from last year to this? It’s not because I now get to graduate without debt that I feel I can go around tut-tutting everyone who is going into five or six figures of debt for college, but rather because I now understand exactly how much money it is in terms of my career. In my job, I see budgetary numbers for productions that have toured internationally that we’re bringing to our country, and one begins to match it up - so this is the level of accomplishment I need to achieve before I have even a realistic chance of paying off that kind of debt? </p>
<p>I think that is as much of the issue here as the value of the degree vs amount of debt or the issue of who should bear the blame for her plight. I do think NYU needs to take a much stronger stance on the amount of loans their students take out (or that they suggest their students take out). I do think Citibank was daft to give her the $40k loan. But having been in the “I would seriously consider taking out $100k+ to attend” camp myself, I wonder if the realities, the concrete meaning of this kind of debt only sinks in when one enters the working world, when $100k stops meaning “$100k” and starts meaning “mac and cheese and 12-hour days for the next 20 years”.</p>
<p>That doesn’t mean I’m giving her a free pass. If at no point did she stop and wonder what her career or post-undergrad life was going to be like, then one has to wonder what she learnt in college about independence, adulthood or taking responsibility for herself. But as rocket6louise has pointed out, it’s quite possible for someone to know the numbers but not understand the consequences in concrete terms.</p>
<p>So, back to your point - even if, even if the student could conceivably pay it back, it might be a sacrifice that he/she would never have made if the numbers and consequences were laid out very clearly at the beginning of his/her undergraduate career. It is not as straightforward as you make out, and I certainly hope banks do not allow students to borrow the full COA as long as tuition stays this high, no matter the projected value of the degree.</p>
<p>I’m a little confused – is your opinion about the value of of an MIT degree based on your experience? Do you feel that your employment problems are because you graduated from a university that lacks sufficient prestige?</p>
<p>(I’d note that from the nature of your question in the other thread, you might not have a good handle on the practical aspects of determining salaries.)</p>
<p>*So why didn’t N.Y.U. tell Ms. Munna that she simply did not belong there once she’d passed, say, $60,000 in total debt?..</p>
<p>“I think that would be completely inappropriate,” said Randall Deike, the vice president of enrollment management for N.Y.U., who oversees admissions and financial aid. “Some families will do whatever it takes for their son or daughter to be not just at N.Y.U., but any first-choice college. I’m not sure that’s always the best decision, but it’s one that they really have to make themselves.” *</p>
<p>Frankly, I can understand why AT THAT POINT, NYU didn’t tell the family anything. The mistake was done at the beginning…when the student was first accepted. It’s hard to tell a current student to go elsewhere. </p>
<p>When parents/students are expected to borrow large amounts, that’s the time for some financial counseling to make sure the parents/students can handle the amounts. If that had been done, perhaps this kid wouldn’t be where she is today.</p>
<p>I read an article about enrollment managers and they are being encouraged to tell low and middle income families to turn down unaffordable aid packages that will load them with debt. But, some enrollment managers refuse to take that advice.</p>
<p>I take issue with the notion that the lenders are blameless. As professionals, their job is not to give money to anyone who asks for it. The same holds true and was evident in the housing industry. Borrowers are to blame but lenders bear responsibility as well. What is really galling is that the banking/credit card industry were the chief protagonists behind the so called “Bankruptcy Reform Act,” which made it practically impossible to discharge student loans, knowing full well that many of the borrowers would never have the ability to repay.</p>
<p>I am not sure if it’s appropriate for a school to tell an applicant whether a school is affordable to the family. A school only has family’s financial information because it offers FA, something to benefit students. If a school were to not offer FA, then it would have no need to have any information on students’ financial situation. How would people feel if a school were to out right reject students they feel couldn’t afford the tuition? I think most of us would say it is discrimination.</p>
<p>Would you expect a car dealer to tell you that you couldn’t afford a car? Or a Prada salesperson to prevent you from buying a $2000 bag on your credit card because you didn’t look like you could afford it.</p>
Nobody is saying that here. Where you get into that discussion is at schools that meet 100% of demonstrated financial need. Hypothetically speaking if a school that meets 100% of demonstrated financial need has an incoming class that is 100% EFC=0, they’re out of business, no?</p>
<p>And you’re right, oldfort, most of would call that discrimination, but the question is whether that is *unlawful<a href=“as%20opposed%20to%20undesirable”>/i</a> discrimination. I don’t condone it, but I doubt it’s illegal as financial capability has yet to be added to the protected categories (race, color, religion, national origin, gender, sexual preference.)</p>
<p>As a first generation immigrant, my father put 3 of his kids through top tier schools by having 3 mortgages on his house, and us shopping at salvation army. Dartmouth financial aid told my dad that maybe my sister didn’t belong there because of his income and they didn’t want to give her more aid. </p>
<p>My father, as a financial responsible adult, decided he was willing finance our education, and he has paid back every dime. He even managed to have a decent nest egg. We also help him out financially now to make his life better because of what he did for us. </p>
<p>This is the choice our family made not that it’s right for everyone. It would have been a shame if Dartmouth have decided to reject my sister because of our financial situation. </p>
<p>Every adult, especially people with children, need to make their own financial decision. When we start to put that decision or blame on someone else, then don’t be surprised the decision may not be the right one for you.</p>
<p>We can’t idiot-proof the system because, as someone somewhere said, they just keep making better idiots. I don’t have much sympathy for adults who cry “you shouldn’t have let me do what I wanted to do!” after the fact. I’ve been wondering whether this mom might actually have an ethical (not legal) responsibility to sell her bed-and-breakfast to help with the daughter’s loans, because the kid couldn’t be in a mess like this if the mother hadn’t been such a prestige-minded airhead a decade ago.</p>
<p>I’ve also been thinking that NYU is a highly selective university. A student accepted there could surely have gone to another good (if not as prestigious) university on a merit scholarship, or to an excellent state school. It’s amazing what people will do in the prestige hunt.</p>
<p>What I want to know is this: Are parents forgetting completely that they need to sit down with their kids and talk finances even before the applications are in the mail?</p>
<p>We did that with our oldest son, who just completed his freshman year of college. He got into some awesome schools, but we told him that he needed big merit money or he would have to choose another school. He got some great merit offers. In the end, he chose a National Merit offer from a state school, and he loves where he is attending. His high school friends admire his decision, because he will graduate debt free.</p>
<p>No one wants to tell his or her child no, but sometimes one has to. Oh, and we’ve ready had this discussion with our eighth grader.</p>
<p>Consumers shouldn’t borrow the money irresponsibly and institutions shouldn’t lend the money irresponsibly. College has become a big business and lending has become a big business. Both are in it for the money.</p>