@Creekland So it seems that at least part of the problem is the ease at which loans are available without any regard to future ability to pay off. While still risky, a loan to med student with the potential to repay in the future is different than a loan to a major in something that ends in “studies”. It seems however that ability to repay is of zero consideration. Is it a crisis when it seems to be working as planned?
@Knowsstuff Being from IL D19 is doing just that. She applied to AL just to have it in the back pocket and we went on the hunt for merit. D19 never even applied to UIUC. In the end she found a school that definitely would be cheaper. At a dinner for top students about 4 weeks ago I was a little surprised at the amount that were still going to go to UIUC. The more I thought about it I started to get some clarity.
A student with 33+ ACT most likely can find a state flagship OOS and it be cheaper than UIUC or the same even with in state status. It is the kids that are 30-32 ACT that will struggle to get the merit OOS to make it cheaper than UIUC. But also then it depends on what you want to major in at UIUC as well for the 30-32. We heard some kids getting deferred for eng in that range. All second hand talk.
So IL is losing a decent amount of kids with high stats. D19 should get out of school with no loans where she would have had loans at UIUC.
I will say the kids I was shaking my head were the ones are going to go to a LAC with a sticker of $50-70K. Sure they got some merit, but I know the COA will still be in the range of $20-35K per year. And most of these kids will taking out loans. That is unless Grandparents left them something.
Correct. Federal loans are capped at a max of $31k. For Grad/professional school you can borrow up to the cost of attendance. No credit check on either rrequired.
Correct. Parents can borrow up to net cost of Attendance for undergrad, i.e., after any college aid. Minimal credit check required, i…e, just not having filed for bk in last xx years.
Never happen. Too political. Moreover, all education establshment would be 100% against such an idea. (It would pit English Profs agains Engineerng profs, for example.)
See above about credit worthiness.
Again, too political. The feds do have repayment data on professional schools since it is easy to track grads from law, med, social work programs, and the like, but there’s no way they’d ever publish it. Instead, they focus on the low-hanging (and un-pc) for profit colleges.
Maybe IL isn’t so dumb, it isn’t like the IL students will stay in AL post grad. People pay OOS rates to go to UIUC. It seems to be able to be expensive but hold on to desirability.
@bluebayou Thanks for the info. My disdain is now shifting from young students and financially immature adults to a government run and backed system that sets people up for failure.
I am not for eliminating loans because it opens up opportunities to many who cannot otherwise pursue them. To close that door without coming up with alternatives is limiting many who make good use of the loans.
I have no good answers as to how to handle the loans that have become a crisis. I think someone living close to poverty level, ham strung by a loan cosigned 20 years ago for a kid who bailed on repayment along with other responsibilities and did not work out the way as planned should have some leeway. No sympathies for the kid who wants a bigger lifestyle than obtainable having those loans to pay.
It’s maddening not being able to get through to people at the onset of these loans, how onerous they are going to be. I think one way do this is to require repayment to start immediately. The interest accrual and half of the principal on a 10 year payback. If not on schedule with the first loan, can’t take the other next year. Just an example on the pay back mechanics. It would limit the damages to the parent and show how hard that repayment is. Parents are too confident that the kid is going to be able to payback that loan and can’t fathom the pain of payback when co-signing.
I don’t know what sector of the population that is adversely affected by these loans has a discipline problem , misunderstanding of the pain, in repayments , but those are the folks I know.
As soon as you start having some “leeway”, you have 20x that many people who are angling their situation to qualify for the same leeway.
Eliminating loans definitely limits futures for many students.
I’m not sure what the answer is though, nor do I really want to be the one saying, “This one can have the chance and that one can’t.” Some kids just need to get away from home and other kids from very respectable homes (aka would qualify) blow their chances.
College is that first fly away from the nest for many. It’s too difficult to tell who will fly successfully and who will be lured away by various temptations.
I have definitely seen capable kids who ended up not being able to afford college do horribly when shuffled in to a lower level job around home - working to try to “save” money while their peers head off to school. The “defeat” that gives them mentally is a catalyst to various temptations, none of which end well. At least give them a chance.
Object strenuously to the “crack” about majors which end in the word “Studies”.
The most girted CEO I ever worked for was a Renaissance Studies major. Majoring in “Asian Studies” right now, if it means developing fluency in a strategic language (Mandarin, Korean) is highly marketable. Banks and multi-national companies are filled with talented executives who did a “studies” major in a region of interest to them-- at my college, Russian Studies was distinct from majoring in Russian- the former meant a deep dive on history, economics and political science in the region PLUS language fluency; the latter focused on language and literature.
Your ignorance of the labor markets is showing. Corporate America needs MORE young professionals who understand other parts of the world, not fewer. There’s a reason why many companies have stumbled in Brazil, India, China… and a lack of nuanced understanding of the history and culture of these countries is part of it.
How about banning Recreation Management or Travel and Leisure majors? There is zero evidence that the “studies” majors have any impact whatsoever on the student debt problem. And a new grad who is fluent in any of the strategic languages (defined by the CIA and state department) and can’t get a good job- well, either he or she hasn’t tried very hard, won’t leave their hometown of Toledo, OH, or can’t pass a drug test (or has a criminal record- most of these jobs require clean urine and a clean background check).
@blossom My intent was to ask about ability of some majors to repay loans as opposed to others. If Renaissance Studies majors (or any other) are so crucial then the loan repayment metrics should reflect that. The point is that these loans are not approved or managed as loans. There is no consideration of ability to repay. So this is a crisis of our own making.
There was some consideration analyzed for Parent Plus loans early on in the Obama Ed department, but it was dropped due to push back from interest groups for the poor and colleges that serve a large proportion of poor students, such as the HBCU’s.
Correct.
First, one needs to identify the problem’s elements, which right now is (conveniently?) conflated. How much of the balloon is for grad/prof loans vs undergrad? How much is due to racking up debt to attend a private sleep-away college vs. instate public? (Our tv station interviewed a local young man who was the recipient of the Morehouse largesse. He could have easily attended a Cal State or UC at much less cost, but chose the OOS sleep-away college based in part on the availability of loans.)
@Sybylla UIUC has a large contingent of international students. Most if not all are full pay. UIUC isn’t really hurting for students because of this. The effect is they don’t give high stats kids much merit and therefore many in state kids leave. I totally understand what is going on and the economics of the situation. It is some what similar to CA.
I just hate to live in a state where my D19 should have been able to go to the state flagship as in-state for under $20K COA. I am willing to bet she get could that COA or lower in more than half of the states.
In the end it just complicated D19 search and she had to apply to more schools.
No, probably because many students enter undeclared and/or change major while in college in the US.
@Rivet2000 kids change their majors all the time. People also get jobs after graduation that has nothing or little to do with their degree.
@Rivet2000 If jobs and earning weren’t dependent on education, would you not educate your child?
If someone wants to live in poverty conditions, without the assets and only a small Soc Sec benefit you to get out of their school loans from 20 years ago for a kid now dead, in jail, or totally broke, I think Id give that break.
Yes, some people make out in loopholes. That’s the price of helping out many in dire predicaments. To be so concerned that someone is getting away with something, that the demise of many others are ignored is certainly not looking at the whole picture. The biggest outright cheaters in buying college for kids have been the ones with the most money, and there are legal loopholes there that you can run a Brinks armored car through. Those whose credit has been ruined for 20 years, and their kid, no resources to pay a loan that has balloned to 3-4x the original amount and now has the social security check garnished — I’ll give them a pass. I’ve met these people, by the way.
True on students changing majors, but that doesn’t mean (unless we want it to) intended major could not be considered as part of a repayment risk assessment (undeclared could be considered as well). When people get a car loan, for instance, that loan is approved/denied based on, for example, your current employment. That employment could change or even go away in the future, but it’s still used in the loan process.
There is so much data that could be used help improve the process, but there is no will to do so. In the end, when these loans are forgiven or restructured at much favorable terms, it will be the people that actually met their loan obligations that will scratch their heads in wonder. But, that’s what usually happens, right?
If loan risk based on major were used, it seems like the way to handle changing major would be if terms like the interest rate are given with a predetermined list (that the student knows before taking the loan) where a particular set of terms is associated with each major that the student graduates with.
However, a car (or a house) can be repossessed if the borrower defaults, allowing the lender to recover some of the principal. Hard to recover anything that way if a student loan is defaulted.
I think the root cause of ballooning student loans, including parent loans, is the ballooning costs of college. The inflation adjusted sticker price for my daughter next year is is about 185% the sticker price of when I went to the same college 26 years ago. It’s not exactly easy to save for college under such conditions.
A lot just drop out too.