<p>I agree that student debt is not necessarily a Bad thing. Yes, it’s preferable if parents, family,school were able to make the experience loan free, but it certainly can be a worthwhile thing to borrow. The same with PLUS and other loans. The problem comes when the loans simply are not a good deal, and it’s so difficult to explain this to young adults, teens, that it’s not worth the bit of freedom they are buying at inflated future prices, and to parents that this is not a good “investment” or even an investment at all. </p>
<p>I also agree that student debt is not a bad thing I don’t mind taking out student loans myself, but I wish I had someone in high school to encourage me to research other options like scholarships. I thought grant money and scholarships was a lot harder to get.If I had know otherwise I could of gone to school after graduation sadly my school did little to inform students.</p>
<p>I think taking out $25000 for a college education is not bad. I know a lot of kids have no problem buying a $25000 car yet complain when they have to repay a $25000 student loan.</p>
<p>It seems the mainstream media is not covering the student debt story very well. Does anyone have recommendations for the best current reporting or research on the issue? Books, articles, reports, documentaries, anything? </p>
<p>Many student find that they have to pay the equivalence of a $25K loan in buying a car, getting insurance, upkeep on the car, parking etc, when they get out of school and they have the loan as well. That’s what hurts. My one son has really been hit hard with car woes this year. Had he also had a loan payment, he’d have really been in trouble. A lot of kids do have both the loan and car payment. My son needs a good reliable car for work, two of my kids do, and it doesn’t pay for either of them to stint on that as it is crucial for their jobs. </p>
<p>A number of kids who are very successful in getting a good start on first career type self supporting jobs find the going very rough when they have to take on their own expenses, including buying a reliable car. Throw a loan in the mix and it gets tougher. Some of mine have had a terrible time making ends meet even without loans.</p>
<p>@Millancad
Oh, come on. I am aware that your question is rhethorical, but MIT is not just some school that anyone can attend.
Interestingly, average UT Austin ChemE starting salary was just around the MIT school-wide average, and average PetE engineering was much higher.
<a href=“Salaries and Statistics”>Salaries and Statistics;
<p><a href=“How to actually save more money”>http://www.usatoday.com/story/money/personalfinance/2014/06/29/how-to-actually-save-money/11538875/</a></p>
<p>Great link, Igloo.</p>
<p>“In truth, the payments could be 50 a month and she would say that she cant pay.” -mom2collegekids</p>
<p>That quote has been my experience too. </p>
<p>I have advised a lot of college kids and graduates about managing their student loan debt. I have found it curious how I see a lot of people with $10k in debt that say they are struggling to make their loan payments while driving a new car they financed and attending concert festivals regularly. </p>
<p>At the same time I have seen a handful of kids with $100k+ in debt that aren’t bringing home any more money but they are managing their payments and making progress to pay them off early while sharing a cheap apartment and driving the same car they had in college.</p>
<p>Though it is not always accurate, a good rule of thumb is that the monthly payment will be $10 for every $1,000 borrowed (or $100 a month per $10k borrowed.) The monthly payment increases slightly the longer you take to graduate since some loans accrue interest starting at disbursement. </p>
<p>When you start thinking of it in monthly payments and about life decisions you will see that the majority of these young adults aren’t struggling but rather are not making their debt a priority. </p>
<p>One of the problems I have found is the lavish living that college kids have these days. The college facilities and on campus apartments are great. They finance the use of these facilities for years and grow accustom to these nice apartments. Once they start to make an income they realize that their money doesn’t go as far as they thought it may and then they are asked to pay back what they borrowed for their years in a nice apartment. </p>
<p>Perhaps these kids have seen the help given to homeowners who over borrowed and got caught out during the recession so they figure that they too will get bailed out eventually.</p>
<p><a href=“The Next Massive Bailout: Student Loans | Time”>http://time.com/72786/the-next-massive-bailout-student-loans/</a></p>
<p>@igloo, I think I said something about that in another topic on here, specifically on housing. Some people pay insane amounts on rent for no good reason. I know a dude where I work who spends $1200 on rent, half a mile from where I spend $500 (and my $500 still gets me a pretty nice place) on rent, and he still cooks every day to save money. It doesn’t make any sense. I eat out a lot, but the difference between eating every meal at home and eating every meal out still doesn’t even make up half that difference in rent. Sure, he can afford $1200 on rent, but that’s a lot of money that’s not going anywhere useful. </p>
<p><a href=“Could you put your hands on $2,000? - #40 by Vladenschlutte - Parent Cafe - College Confidential Forums”>Could you put your hands on $2,000? - #40 by Vladenschlutte - Parent Cafe - College Confidential Forums;
<p>What I am seeing is a lot of eating out. I see kids who are making very small wages, can’t afford this and that, and the Dunkin Donuts, McD, Subway wrappers Starbucks evidence are all in plain sight. I see it with my kids too, and it’s upsetting. </p>
<p>It’s just too easy these days. When I went to college, you didn’t eat at the cafeteria because it was a good deal, the food was great, it was convenient, etc. You ate there because it was just about the only place to go for a meal and it was paid for. Even the kids from the well to do families ate there. Now some schools are not even having the traditional cafeteria offerings with some mall food court like arrangement and all kinds of options all over the place with rings around the campus of fast food and other eateries available. One could count on one hand where to get a quick meal around campus in my day, and now there has to be a hundred options right there. The cafeteria is now expensive because it can’t get the number of commitments for its meals. Lose, lose in terms of food cost though a lot more choices. </p>
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<p>What choice should someone make? They can get a cheap meal for $5. They can get a great meal for $10. Or they can get a poor meal from the cafeteria for $11 (which is literally what it costs at Michigan when you buy several meals, and for one meal alone it’s $20). Why would anyone eat at the cafeteria?</p>
<p>Why would anyone eat at the cafeteria? - Sometimes it is required, very often the case freshman year. But f for students receiving FA, sometimes the extra costs end up be in the beyond-EFC category (ie not so painful). </p>
<p>@cptofthehouse
Yeah, it’s insane. Some colleges even boast about the number of Starbucks or Chick-fil-As they have on campus.
Heck, when I visited TAMU several months ago, I felt like I was in an extremely large-sized mall instead of in a school.</p>
<p>@Vladenschlutte It depends on the college. At my school, all meal plans have unlimited dining hall swipes/you can eat all you want at a fixed cost, so it’s actually cheaper.</p>
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<p>Ouch :)) </p>
<p>Believe it or not, I remembered McD to be sort of a treat when I was going to college (may be once a week). Most of the day, I would skip lunch or go home and eat a quick sandwich. Or, perhaps I am suffering the “I walked 20 miles to school, uphill, both way” syndrome in my dotage.</p>
<p>There is a mentality that has people detached from the amount of debt, the growth of the debt with accruing interest, etc.</p>
<p>Not only are students taking out lots of debt, they continue a mentality that digs a big financial hole.</p>
<p>I read/hear about why so much advertising is geared to males age 21 - 35. They often have more significant ‘disposable income’ (or again are borrowing and spending) and how much these ingrained spending habits influence them many years later. Kind of makes sense. </p>
<p>My nephew (chem eng) is making more than his dad (pharmacist) and my husband (senior eng) combined, but he probably is not paying off his student loans as aggressively as he could. I know a MD that has the same attitude about not paying off the debt (making payments; kids are now in college) - his wife said they are paying for his brain for life…lol.</p>
<p>The time value of money goes both ways. Someone young that pays off any debt and starts modest savings can accrue incredible amounts of money - esp when they use Roth, choice mutual funds, etc.</p>
<p>My one daughter is paying for her data plan (the other we pay for cell phone/text). H and I do not have smart phones. In her circumstances we allowed her to go to the plan, but she knows she is paying for the costs above a basic phone/text. We cannot go back on the plan.</p>
<p>The reason banks and companies encourage credit cards is that people do spend more freely, and then of course are paying the interest on balances, or when making minimum payments.</p>
<p>We have recently received two SallieMae Smart Option Student Loan pieces of mail trying to tempt to take out a student loan. Some people would look at this and say ‘lets shift some of our debt’ instead of looking to be debt free.</p>
<p>We will pay off our home in less than 10 years (2.5% interest). No way taking on any more debt. Teaching kids to be debt free.</p>
<p>Living with huge debt is very stressful - for those cognizant of the short term/long term ramifications. </p>
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<p>If I could get a loan at 2.5% I’d take as much as I could and invest it. 2.5% is just 10 or 20 bps above inflation. You’re paying practically nothing for that loan. </p>
<p>Guess that attitude is why someone will loan you money at 2.5% though, no one’s gonna loan me money at 2.5%. </p>
<p>Just remember that lots of these eighteen year olds are conned into believing they have no choice but to go to these expensive schools if they want to compete in the Job Market, and the Schools are all about taking advantage of the Federal Loan program and increasing their tuition year after year after year . . . after marketing a product to young people that is often of dubious value at best. In many respects, the educational industrial complex has become a scam and the Feds keep that scam going by making unlimited amounts of money available for the asking . . especially at the graduate school level where the amount you can borrow is determined by the school who sets its own cost of attendance. </p>
<p>The loans are non-dischargeable in bankruptcy for the most part (gambling loans of course can be discharged, but not educational loans), so the Paye and IBR programs are simply an extended bankruptcy plan to encourage students to pay off some of their loans when otherwise a huge number would otherwise be defaulting, but these plans do NOTHING for reducing the cost of education. If we want to solve the problem of the ever increasing cost of education, the answer is simple. Make student loans dischargeable in bankruptcy again. When they are not so easily acquired, the unlimited funding for attending these private colleges will dry up and finally rationality will come back into the market. . . but unlikely to happen. The schools will lobby to make those loans available no matter what . . in the interests of social justice of course.</p>