<p>As long as the job market stays tight & few new jobs are created, no matter the administration the average salary for a new graduate with an UG degree will stay low. Ironically, the percentage of new graduates employed may rise, because of bottom-line conscious companies hiring them at $30K & $35K & 40K per annum, while letting go older, higher-salaried employees. It’s happening now.</p>
<p>How does this filter down to the schools? Well, I see non-Top-50 private universities plateauing their COA’s, while possibly (given their endowment situation) giving out more merit aid to draw better students. The state flagship schools will become uber-competitive for residents because the hierarchies will decide to raise the percentage of OOS students for their financial well-being. That’s already happening too.</p>
<p>I am an intelligent woman who was educated at a fine college. I took some time off mid career & have had to return in an essentially entry level job. I do not earn $40,000 a year. I work my rear off. I am not the only one in this boat. There are MANY, MANY people earning less than $40k/year who have college degrees. The new jobs being created don’t pay all that well. My friend was laid off from an automaker (she is white collar - project management work). After searching for work for almost 2 years, this 57 year old seasoned veteran was rehired by the same company for the same job … at far less pay (and half the vacation time). Hello, brave new world. Students in college need to understand that a college degree does NOT necessarily equal a high salary. That is important to understand when considering how much to borrow.</p>
<p>My D will matriculate next fall with academic, music, and misc scholarships that leave a “gap” of 8K per year beyond our EFC. We’ve been offered a variety of student loans to cover that amount and are turning them all down.</p>
<p>We will cover 3K of it through work/study and summer jobs for her, and I will pick up a part-time 2nd job to earn the extra $5K per year. She will graduate 100 pct debt-free; that’s a non-negotiable in our family and we all feel very strongly about it.</p>
<p>Today, the full in-state price of four years at UC Berkeley is about 160% of the yearly pay of someone graduating from UC Berkeley with a bachelor’s degree in computer science (the major with the highest average pay, according to the career center survey).</p>
<p>About twenty years ago, the ratio was probably closer to 80%. In other words, the cost of studying four years at a university has doubled relative to the pay one might expect for a job after graduation.</p>
<p>Needless to say, had university costs merely kept in line with inflation, there would be many students who would not need financial aid, and many who would need a lot less financial aid.</p>
The cost of living expenses is more than the tuition/fees/books. If a student lives in the area and is very concerned with costs and commutes the cost of UCB would be closer to 85% of the yearly pay of the CS grad (costs of 15K/yr and pay of 70K/yr). Certainly it’s expensive but for in-state students there may be more cost effective solutions if that’s what they really want by attending either a local UC or CSU. </p>
<p>But to join your point to an extent - I don’t understand why the cost of housing is as expensive as it is at most UC campuses. The value of the land surrounding the areas of UCB, UCLA, UCSD (all expensive areas) is generally used as an excuse but the land the housing is built on is generally ‘free’ land that the U already owns - generally owned since before the land price was high and sometimes given to the U at no cost. This leaves them with just the cost of the building which shouldn’t be much higher at UCB than in many other areas of the state and country yet UCB has, I think, the highest cost of housing of any of the state U’s in California. I guess it’s just being used to extract more money.</p>
<p>When you hear the stories of people who attended the UCs 35 years or so ago, though, it’s unbelievable how inexpensive they were then.</p>
<p>Because room and board is a “profit center,” just like the campus bookstore. Tuition is the figure everyone one mentions first and everyone protests first. To the extent that the university can make a profit where most folks aren’t looking, they can balance their net budgets while maintaining more services or increasing tuition at a slower rate.</p>
<p>I guess I don’t really understand what would happen if the student debt bubble burst. When the housing bubble burst, it impacted all homeowners because the value of homes dropped precipitously. Banks were also on the hook for a lot of losses, and our entire financial system was undermined. Congress responded, rightly or wrongly, with bailouts for banks and an attempt at helping people renegotiate home loans.</p>
<p>There is no analogy to student loan debt. Students who have gotten in over their heads are in it alone. Banks are not on the hook for student loans – one way or another they will get repaid, even if it takes the kid 30 years to do it. And congress sure isn’t going to spend any political capital to help out people who took out irresponsible amounts of loans. Frankly, as a taxpayer, I would be very unhappy if my tax dollars went to bail out student loans.</p>
<p>What congress should do, but probably won’t, is make it hard for people to get themselves into this position. By allowing their pals in the banking industry to make these no-risk loans congress is allowing predatory lending. And a lot of schools are complicit by including huge loans in their financial “aid” packages. (I put “aid” in quotes because I don’t think suggesting that students/parents get loans is “aid”.)</p>
<p>Note that I don’t think it’s unreasonable to expect students to contribute something to their educations, in terms of earnings and manageable loans like the Staffords. Also, if parents haven’t saved for whatever reason, then it may not be unreasonable for them to take small manageable PLUS loans to pay their EFC. The problem is when the amounts of the loans is out of proportion to the income of the parents and future income of the student.</p>
<p>“With high costs, the value proposition for an expensive (net cost after non-loan financial aid) private university that is not highly regarded becomes quite iffy.”</p>
<p>Well …</p>
<p>The challenge isn’t finding enough full-pay students to fill the classrooms. The challenge is to do that without sliding down a tier or two in educational rigor. DW’s private university is facing some of that now … and the results are not pretty.</p>
<p>If enough students cannot repay the loans, it is going to be a big problem for the lenders. My friend’s daughter owes $90K for a BA in Philosophy. She works at a coffee shop for maybe 30 hours a week. Parents have lost their house and have little income either. Can’t squeeze water from a stone. Those loans are not being repaid. Maybe they will get repaid in 30 years, maybe not. But I see a lot of year where there will be no cash flow on that loan. Multiply that times all the students and families in the same boat. That is a huge problem. The banks gave the money to the schools, the schools ate it up. The money is not being returned, never mind the interest. At what point will the banks say "enough " to the outstanding loans that are not being repaid? That they have deadbeats on the leash and can squeeze some money out of them for the rest of their lives is not going to cut it. Other than making those students and families miserable and having them live with no credit, what can they do? There isn’t a house or other secured asset for the taking. Unless the borrowers come into enough money so that the loan can be paid by seizing assets if necessary, there is no repayment.</p>
<p>Basically, kids are permitted to take out student loans via Stafford on their own signature. Some may offered Perkins loans as well. That is all that is up to them to take. I would not co sign for any more unless there is very good reason to take out those loans. I would also counsel my kids against any loans, if at all possible.</p>
<p>My starving artist son is having a tough time making ends meet since graduation, but at least he doesn’t have a loan monkey on his back. His room mate is an NYU grad with $80K of loans. Making about what my son is making, paying the same expenses. I have no idea how repayment is coming along. Maybe parents are making the payments. But that is an awful lot of money for a 23 year old to owe who is living hand to mouth.</p>
<p>I find this all interesting. I must say though that it also annoys me. Repeatedly, when I read threads on money here on CC…it is clear just what bracket everyone is in. I live in rural midwest with thousands of other people. It is not uncommon for household incomes (total) to be $50,000. A few lucky ones make more. They don’t always qualify for any financial aid. Those kids DO go to those state colleges and community college. No one even considers the ivy leagues discussed on here. </p>
<p>No, parents don’t always save for college. Some here think that it is just a given. Apparently they are unaware that there are families out there that work full time just to make their monthly payments, buy food, pay bills, etc. They don’t have high dollar houses or cars, just living like everybody else. You can’t put money into savings if there isn’t any money left over after expenses. </p>
<p>Sometimes I think people forget that there are ALOT of average people in the world.</p>
<p>Yes , I agree with a previous poster, $15000 is a small car loan. Not a truck, not an SUV. It’s not something to sneeze at either, but not outrageous. I believe I’ve paid for about 7 or so of these so far in my lifetime.</p>
<p>I don’t think they should choose to take out a HUGE amount , but the reality of it is that a lot of kids are going to have to take out student loans if they want to go to school. Not everyone is sitting on an endowment or born with a silver spoon in their mouth. I’m not sure how taking out a lot is even possible…my son’s max amount was $5500 per year. Maybe they’re getting private student loans. Yes, we have a Parent Plus loan. I consider it my BMW. I trade cars every 5 years anyway.</p>
<p>Seems really easy for all of you who take pride in the fact that your kids don’t have loans to sit back and say how evil student loans are, and that banks should stop giving them. My daughters and most of their friends would not be in school without them. </p>
<p>What needs to be done is allowing them to consolidate loans, and to knock down the ridiculous interest rates. </p>
<p>But then again, if you cut off the loans and reduce the number of college graduates, there will be less competition for the jobs the wealthier graduates are seeking… I guess there is a reason for cutting off loans!</p>
<p>^^ I am with you. Without loans, my DS will not be able to go college, private or state schools. Especially when you have two students attending colleges at the same time.</p>
<p>Actually, it is more of a problem that the cost of a university education has gone up faster than inflation in other things, so that now (compared to when today’s parents were in school) more students need loans or larger loans, relative to the students’ future earning ability.</p>
<p>In the parents’ generation, a university education was much less expensive (especially at a state university), and employment opportunities with a non-specific bachelor’s degree were better. This contributes to the “common wisdom” of “study whatever you like and find yourself, it will work out in the end, even if you have huge student loans”, even though that can lead to the “$100,000 in debt and no job” type of situations at graduation today. Students these days of high educational costs have to be a lot more “careerist” (or at least aware of job and career prospects) when planning their university educations.</p>
<p>I am not against student or parent loans. What scares me is that there is not due diligence in checking out if those taking out these loans are able to pay them back. The same thing happened with the housing market. At least when the borrowers reneged, there was property to take back. Here we have banks giving loans to people who may not have any ability to repay them. For no other purpose can some of these folks qualify for an unsecured loan. Heck some can’t even get a secured loan for less than those amounts. Yet these loans are being given in huge amounts. They cannot be discharged, there is no security, and a lot of the onus is being put on the head of some 18-22 year old who knows little about this sort of thing.</p>
<p>Also, I don’t see why people should be borrowing money for LIVING EXPENSES. Why should sleep away college be subsidized? You are borrowing not for the education, many times but for highly priced food and rents that may be more than the family is paying. Most kids have a commuting option that is affordable, and if they have to borrow to do that, so be it. They are borrowing to pay for an education. But to borrow additional funds so that they can live in the dorm and eat at the cafeteria or be on their own is not education.</p>
<p>I also have no problem with student loans. They allow students who would otherwise not be able to attend school to do so. What I object to is “overborrowing.” I actually have a very real sense of what people earn and how much they are saving, because I se it every single day in my line of work. I am at a public U with many VERY needy students. Believe me, I get it. </p>
<p>But students should be doing everything in their power to avoid borrowing more than they NEED to borrow. An education is a good investment, but as with any investment, it is wise to do your due diligence.</p>
<p>The govt has already stepped in to make loans easier to repay. The following from the above article. </p>
<p>"A new federal program starting this fall promises relief and hope for millions of students and recent graduates burdened with big federal educational debts. Starting July 1, those with federal student loans can ask the government to limit their monthly payments on their federal student loans to less than 15 percent of their income. Many of those who qualify for the new Income-Based Repayment (IBR) program will pay much less than that.</p>
<p>"Those who earn less than a base budget allowance of one and a half times the poverty level for their household (which was $10,400 a year in 2008 for a single person) won’t have to pay a penny on their federal student loans. Everybody else who qualifies for IBR will have to pay 15 percent of the difference between their income and the base budget allowance.</p>
<p>Best of all, those earning a low income because they are in public-service jobs can have their remaining federal student debts forgiven after 10 years of income-based payments. Those who maintain low incomes and stay current on their income-based payments for 25 years can also have their remaining debts forgiven, no matter what job they have"</p>
<p>Is this the case for the non Stafford, non Perkins loans? I don’t have a problems with those loans and pretty much look at them as the maximum a kid should take out except under special circumstances. The loans that are really hurting some kids and tearing apart families are the loans where the kid needs a co signer. Some of the terms and interest rates look high too me and if the student cannot repay the loans, the lenders are going after the co signer.</p>