I thought most banks cap the age of co-signers (thereby keeping grandparents out of the mix in many cases)?
Some of the kids are defaulting as they hit bumps and needs in their lives.
Oh yes. Parents as well @twoinanddone
The article i read held the premise that there so many endangered retirements out there.
And whatever the relationship. I find it so sad that over 35 percent of these loans to those over 65 are in default. They can’t pay the bills. This can impact insurance rates and personal finances. Plus the stress. And these cannot be relieved by bankruptcy. The calls and letters will never stop after a lifetime of work for so many.
Not sure how the loans are being structured. I just don’t see millions of seniors taking out student loans for themselves and defaulting.
My guess is that these loans were co-signed some years ago and have followed them into retirement. And costs are really escalating. It’s just food for thought as we look at situations that come around here on cc
And at this time of year with the UMD for free or CMU for full pay threads. I don’t care if CMU is number one in the universe in cs. It makes no sense if significant loans or depleting retirement funds is part of the equation.
There are likely several categories of people who find themselves in this predicament. Some are likely people who went for professional degrees in their 30s and 40s who did not get the income boost they expected from the degree and are having a hard time paying down the principal. Some are people who fell on hard times while paying off undergraduate student loans, which are most often not discharged in a bankruptcy, and have no reasonable means of paying them off. Some are also paying for loans used to send children to college. Keep in mind that though the standard repayment plan is 10 years, the real world average is 21 years to pay off student loans.
Hmmm, perhaps those who went into huge debt for law school but could not find a law job or pass the bar exam, or those who went into huge debt for medical school but could not get a residency afterward?
It’s 10 years per loan. We took PLUS loans starting back in 2001. We started paying go each loan as we took them. But starting with the first to the last loan, it was 14 years of payments.
You don’t have to pay till 6 months after kid graduated, and many start then. Calculate, the interest on them by then! They were painful for us even the way we did it. We stretched 4 years of payments into 14 years
@ucbalumnus simplest answer usually is. Consigned loans. And with people having children later in life. Parents in mid 50s with an undergrad is very common.
This, IMO, is how people get into trouble. They justify borrowing more to go to MIT or Harvard because the student is going to make so much more with that degree. It doesn’t always work that way. They could have borrowed less and gone to State U.
Also IMO, student loans should be limited and the PLUS loans should have debt ratio qualifications. No one, the student or parent, should be able to borrow $100k on a $20k salary. Sorry, but your grandmother who lives on $15k in Social Security should not get a PLUS loan for $50k per year, every year, as long as she doesn’t default. A parent can take a COA loan for multiple children, no limit, as long as that parent/grandparent meets the very minimal requirement of having not defaulted on any government loan, not filing bankruptcy in the prior 5 years, and being current on major debts. Mike Pence borrowed for 3 kids and so did Martin O’Malley, both employed as governors (probably making about $100k per year).
I think some families have the grandparents borrow instead of the parents, either because the parents can’t qualify or because the odds are that the grandparent will die before the parent and then the debt will be forgiven. The parents might agree to pay the loans, but then don’t or can’t, and the senior citizen grandparent goes into default. No proof of that, just my opinion.
And it’s not always the directional state u vs Harvard.
It’s Tulane and other relative powerhouses etc with significant merit vs duke or Cornell. Etc.
I’ve seen two threads about full rides to usc vs Vanderbilt. With debt. Not a good idea.
And also Wake Forest Stamps vs Stanford full pay. It went on for pages and it didn’t seem to make a bit of difference what potential economic impact was for thsr families per those who’ve already imbibed the coolaid.
Fine for them. It’s good by me. But make sure those unsuspecting parents or emotionally charged students see the full picture.
While we’re on the “please be careful with your advice” kick- the “oh for sure your kid can get attractive merit” crowd needs to also be a bit more circumspect.
Getting a 10k merit award to a college which won’t stack, and which leaves the parents with a MASSIVE bill that they cannot pay is not the big win that many folks on CC post about. There are dozens of threads where anxious parents (and kids) list the schools they’ve been admitted to with the “got 12K merit” or “won 15K Dean’s award” listed next to it, and it takes posters 10 attempts to get the OP to list ACTUAL costs. And I feel for people who think they did everything right- and are left with 8 unaffordable choices even though their kid did NOT chase prestige and did NOT apply to 30 colleges and focused on the merit only schools.
Fact is that dozens of colleges that are greatly beloved on CC have learned a pretty important insight about human nature and are capitalizing on it. To wit- if it takes 50K in aid per year to get a first gen, low income student to your college, you could take that 50K and award it to 10 middle class and upper middle class kids. Spread the wealth so to speak. The parents get the thrill of “Little Susie won a merit award”; their aid budget goes further; and if little Susie ends freshman year with a 2.0 GPA some other Susie gets her money.
Win win, right?
Except for the low income kid who gets gapped because the college does not meet full need (and therefore can’t attend) and the middle income/upper middle income kid whose parents frantically take the HELOC because after all, their kid won a merit scholarship, right? And Susie worked so hard.
I think every post to a newbie which talks about merit needs to have the caveat that in some cases, need based aid is more generous/leaves less to pay. In some cases, a family which really cannot pay anything close to their EFC needs to focus on the kid living at home and commuting. In some cases, a kid who had a rocky HS experience is better off with zero debt (not even the federal loans- zero debt) at a local college or community college, because dropping out after sophomore year with no degree and two years of loans is absolutely the perfect storm of financial insecurity.
And don’t forget Morehouse. In the last couple of days, I seen several reports on grads who have $70k+ in debt. Fortunately, this will all get wiped away for these few students. Unfortunately, for the rest of the student body, these are poor kids to begin with and incurring thousands of dollars of debt to attend a sleep-away college is educational malpractice, IMO. The colleges are culpable.
Ok. Forget merit since we are on the it doesn’t stack kick.
Significant debt for an undergraduate
degree should be very carefully weighed.
And the recommendations that act like economic outcomes at school x vs y are assured is negligent.
Every situation is unique and the options and tools available are as well.
I consider the long term financial health of retirees and parents to be an incredibly important subject. The heat of the collegiate chase can lead to very consequential decisions, long term.
I think we are a tough crowd on this board. Sometimes too tough where it seems like the auto response is to go with the money.
But it’s important to try to get the message that it’s not doing anyone any favors to take on all that debt for a preferred school when you cannot afford it.
And that’s where the issue is. Kids who come from households where parents, family are financially struggling don’t get it that asking the parent to co-sign that loan is putting a stranglehold in the parent as well as on themselves. And the parent co-signs with no clue, now both of them shackled to that loan for even longer than “death do us part” since each party now responsible for the loan.
If your family can afford it, that’s a whole other issue. When you go to these pricey schools, many classmates come from such families. This is not a level playing field once you graduate, and you have the debts along with new need of funds to get started on the job and a new life.
My kids have no loans and we’ve subsidized them after school, and they still often feel poor when with free wheeling friends who can live higher, a lot higher in very nice places, vacation, great car, designer clothes, etc etc. They do feel the squeeze of a budget.
Then they have friends with the loans , some back home because of finances. My one is dating someone who is living paycheck to paycheck with loans, and a family that has needs. It can get very difficult.
Are there any good stats on how much of the American student loan burden comes from students who attended elite private colleges vs how much is from students who went to public state schools? I don’t disagree that the student loan debt issue is a major one; I’m just not convinced that a big percentage of student loan dollars goes to elite, $70K per year kinds of schools. Would really love to see some good stats on that.
CC a tough crowd. Nah. Lol.
At least for me there is no stock answer, it’s the exact opposite. It should be a very objective and reasoned approach to the whole situation.
This assumes comparable majors and accredited programs.
It also has all to do with personal finances and not desirability . If you can effortlessly, reasonably or comfortably afford any option, through savings or finaid, go wherever.
My concern is for the vast majority stuck in between or a bit less financially savvy.
But it’s a rare thread that elite x versus near elite y or wonderfully solid z at a significant cost savings doesn’t devolve into a usnwr rank-off, middle 50 % stat-off or acceptance rate a-thon.
Long term economic impact is a throw away line or answered away by a self reported outcome stat. Never had an “outcome stat” pay a bill.
It’s all useful information. But in the end it seems that this site is to help the parents and students take a step back and reflect carefully.
In the end, one can do anything the prefer. And that’s ok too.
The undergraduate students who rack up the biggest student debt are not going to the state school or even a private non-profit, but going to for-profit schools. Average student loan debt for state schools is $25,500. Average debt private non-profit is $32,300. Average debt for for-profit schools is $39,800.
@MadcityParent The numbers going to the for profit schools are incredibly small in scope and scale compared to the college student universe. Many of the for profit schools also cater to mid career people as well.
But if we are going to look at the private versus public numbers. We have to also look at instate flagship or top directionals vs ooS public u.
My position is debt for school, if a nearly comparable school (in the big picture not usnwr) and no or low debt is an option that is available, that’s the conversation to have in an open and honest way.
But kids and parents just seem to not love the instate flagship unless it’s a last resort.
Yes, the FA/scholarships angle needs to be considered when assessing “reach”, “match”, “likely”, “safety”. Most posters seem to assess these on admission only, ignoring whether getting to affordability falls into a more difficult category. Since admission but too expensive is effectively like rejection, the assessment must consider likelihood of affordability.
In general, if a merit scholarship is necessary for affordability, then:
- If the scholarship is competitive, it and the college should be considered "reach".
- If the scholarship is automatic for stats or NM status that the student has, the scholarship can be considered "safety". If the college will automatically admit the student, then the college overall can be considered "safety". If not, then the college overall can be assessed based on admission likelihood.
Isn’t the number of students going to public schools much larger than those going to private non-profits? So wouldn’t it seem reasonable that the biggest overall percentage of student debt originates at public schools? I’m surprised to see that the private non-profit isn’t all that much more than the public debt per student. I can’t find any data that breaks it down in the way I’d like to see, but it seems to me that we can’t blame most of this problem on status-seeking students who are trying to go to expensive elites. I think we need to take into account the massive demographic shifts (more credentials needed for jobs, delayed onset of professional life, delayed childbearing, etc) and the decreased funding for public colleges.