<p>
[quote]
You load sixteen tons, and what do you get?
Another day older and deeper in debt
St. Peter don't you call me, 'cause I can't go
I owe my soul to the company store
[/quote]
I think it's a pretty common goal for parents to want their children to have a life with more opportunities than they had. In the current political/economic climate I don't see that as a reality. A current high school student is likely to graduate from college with tens of thousands of dollars of debt, into an economy with jobs being outsourced oversees and hobbled by the necessity of taxes sufficient to pay the interest on trillions of dollars of unnecessary deficit spending which now constitutes the third largest component of the federal budget. Their options after graduation will severely limited. We sold their souls to the company store without even asking them.</p>
<p>High amounts of debt take my breath away, and the thought of young adults with $100K debt for undergrad. astounds me. One poster makes a distinction between undergrad debt and debt for professional school. I agree to an extent, but just because someone has a life plan at age 18 doesn't guarantee that it will work out that way for them. There are people who are paying off a high loan for one year of law school (or med school) - found it didn't agree with them but it took a year to find that out. Especially for med and law school it seems to me that the top schools might provide entree into clerkships, internships, etc., but since both are professions with licensing requirements (bar exam and medical boards) the public options are probably better for students who would have to borrow.</p>
<p>You load sixteen tons, and what do you get?
Another day older and deeper in debt
St. Peter don't you call me, 'cause I can't go
I owe my soul to the company store</p>
<p>I love that song- we used to beg our choir teacher to let us sing it.
( another favorite was O'l man river- course growing up in a new bedroom community- we were pretty sheltered from "real life"- then again most who went to college- went to state universities- I don't know anyone from my age group at that time who even went out of state let alone to a competitve school- well ok- I now know that several of my peers went to my daughters school- but they were a few years older than me- and that is where their parents met)</p>
<p>I had no student loan debt, but had an enormous amount of debt I had acquired for business expansion, car loans, big house, credit cards, etc. The net effect is the same of all kinds of debt. Debt is debt. When the gravy train stops and you built your debt burden around a certain level of income, when the income decreases too far, you have no option but to head to the bankruptcy court. And, yes, I did file for bankruptcy. But, it was a GREAT lesson. The only debt we currently have is a mortgage. All other bills get paid monthly. We pay for our cars when we buy them, so we have no car payments, no monthly credit card payments (other than the amount accrued that month). My current business is totally owned by me, with no loans. So, the next time we have an economic downturn, my family will be much better prepared to weather the storm. </p>
<p>what the 100K indebted college loan students are going to face is a lifetime of paying interest on a staggering amount of debt, when they might have otherwise been earning interest on those same dollars (or much of that amount) to save toward their retirement days. I don't have my calculator in front of me, but its fairly easy to figure the difference in what that current student/future retiree will have available when the golden years arrive.</p>
<p>One more note: In addition to failing to calculate the impact of the loss to their retirement accounts, I believe many students fail to understand exactly how much gross income it will take to pay their loans.</p>
<p>This goes for the parents who are taking out huge loans for their kids' undergrad schools! What about their own retirement? A crushing amount of debt is so easy to take on and can be so difficult to get out from. For that matter, so is a "reasonable" amount of debt. (And I say this as a parent who vows to graduate our kids with no undergrad debt for them or us, but who has a whopping mortgage due to the region we live in and having moved in the past 4 years-- at least the interest on the house loan is tax deductible and we can sell the house when we want thanks to it appreciating 100%). On Saturday, when I read the article about the kid with the $100K college debt, it literally took my breath away.</p>
<p>At 4%, a $100K loan paid off over 20 years means a monthly payment of over $600. Let's say that you are getting a Liberal Arts degree, where the average starting salary is $30,828. That works out to $2569 per month. Social security and Medicar takes $205 of that and state and Federal income taxes will take about $308. Health insurance and other benefits will take another $450 of that, leaving a take home pay of a little more that $1600. Subtract the $600 for your loan and you now need to live on $1000 per month.</p>
<p>A car payment will be (for a not-so-new used car - $10,000 @ 6% for 48 months) $235, insurance (under 25) will be approximately $125 per month, and gas and maintenance will be another $100 per month. Subtact these from the $1000 and you have $540 per month.</p>
<p>A one-bedroom apartment (depending on the area) might be $450 a month. That leave you $90 a month for food, utilities (including cell phone and high-speed internet). Which means you'll be using your credit cards and going deeper in debt.</p>
<p>Which really means you'll end up living at home, letting your parents feed and house you while animosities are building up between you and them. Which REALLY MEANS that you'll be miserable as hell.</p>
<p>AND THAT'S JUST THE FIRST YEAR (19 more to go).</p>
<p>I think Digmedia's post should be required reading for those students thinking about taking out big loans. Most have no clue how difficult it will be to pay them back.
I see credit reports for many young people starting out Ages 21-30's and these days it is rare to see any who don't have huge student loans. And many despite graduating from highly ranked schools are not making much money.
Also in any major city you would have to pay much more then $450 for a one-bedroom apartment.</p>
<p>Very few 17 and 18 year old high school seniors know enough about finances to say I can take on this debt. I know that at my age, we kind of think it's those people bad things happen to, never us. That we can pay for it with our high salary on our first job, that our parents can help us, etc. We don't see the whole picture, and it's up to adults and parents to know that their senior doesn't completely know what they're talking about.</p>
<p>The economy will suffer from having a large segment stuck with $90 a month discretionary spending money. Maybe, just maybe, we'll realize that not even Ivies are worth $40,000 a year. </p>
<p>Dartmouth is increasing tuition by 4% next year.</p>
<p>As a proud full scholarship graduate of a state university, I can say that I second the logic and reasoning of digimedia's post!!! (I also agree that $450 is way low for a one bedroom apartment. My first one bedroom apartment seven years ago was $475 a month and that was in a small city in Mississippi! Where I live now is still not an expensive area of the country but you won't find a one bedroom for lower than $600 unless you want to get shot coming out of it.)</p>
<p>Breaking down your possible income and looking at the expenses is the practical way to look at what sort of debt you can afford. My only debt is my mortgage and it makes me able to have sizeable investments as a 30 year old teacher. I have completed three college degrees, but I completed them all on scholarship or assistantship. My take home pay for my very first job was $1497 a month. My rent was $475. After subtracting that I had $1000 for all of my other expenses. Once you add up cable, internet, phone service (including cell), power, water if it's not covered in the apartment, insurance, etc., there's just not a whole lot left. I was completely thankful that I didn't even have credit card debt at that point because it would have made it very difficult for me to save anything or to even get by. I can only imagine if I had had credit card debt and student loans to worry with. I probably would have been in my friend's position who did have student loans and credit card debt. She had a professional job during the day and was a hostess at a restaurant at night. </p>
<p>I feel that students need to take a hard look at the actual salary of jobs they are looking to have. If their anticipated income is high, then it's possible to take on some debt. However, it is best to look at the average salary because not everyone is going to be in that lucky top few percent....and it often takes time to be there. You can't have everything you want at 25...it takes patience. My parents have a lovely home that they designed themselves, but they built it at 50. Until then they lived in a modest home and saved, saved, saved. I guess that's the mentality I was raised with.</p>
<p>"The economy will suffer from having a large segment stuck with $90 a month discretionary spending money. Maybe, just maybe, we'll realize that not even Ivies are worth $40,000 a year."</p>
<p>Sorry, but I don't think there are any Ivies you can attend for $40k/year.</p>
<p>My first job I made $650 a month- I lived in a 2 bedroom apt that cost $450.( I paid 1/2, plus utilities. this was about 25 years ago- this wasn't an expensive area or apt)
I think students need to travel more- what we are exposed to through televison gives people the idea that everyone has expensive wardrobes and homes- they don't- nor do they need to.</p>
<p>
[quote]
The economy will suffer from having a large segment stuck with $90 a month discretionary spending money. Maybe, just maybe, we'll realize that not even Ivies are worth $40,000 a year.
[/quote]
</p>
<p>So when are you coming home? </p>
<p>$10000 in undergrad debt - well okay, $20000, maybe even 30-40000 if a person is in a good income profession straight out, like engineering, or to a lesser extent nursing, and that is the only way to pull themselves, and probably their family, out of poverty - but going beyond that is crazy. I also think that level of debt for professional school is nuts, although lots of people have to do that these days, it affects your choice of specialty, lifestyle, etc.</p>
<p>Reading various boards here at CC. It's amazing how cost of education means nothing to many students. </p>
<p>For example, someone with a full scholarship to StateU and admission to Ivy League, planning on grad/med school afterward. Says no need based aid. So cost difference is going to be at least $170K after 4 years. But since parents are apperently paying the whole bill there's no consideration what-so-ever to the cost between the chioces. </p>
<p>Now assuming StateU is at least decent, maybe that parent should just give the kid the 170K difference in a bank account. Letting them start out after college life with a nestegg like that can open other opportunites than the name on the diploma might. For example, starting a business, or joinng the peace corps.</p>
<p>It's amazing how $170K means so little to students. Unless you're millionaires, thats a lot of money for anyone.</p>
<p>He MAY also hurt his chances for medical school. The same student, as top student at the State U., may have more research opportunities, more mentoring, more internships than if s/he turned out to be a middling student at a prestige u.</p>
<p>People choose this debt, so don't feel sorry for them. If they don't have the money, they don't "deserve" to go to an expensive private school, any more than they "deserve" to drive a luxury car. (The used Hyundai doesn't have that "wow" factor, but it gets you there). Don't forget that the majority of students are going to state u.'s and community colleges. In some places there seems to be a frugal backlash against high college costs. Example: my nephew attends a large wealthy suburban HS where nearly all students go on to college. Because of the great deal offered by the local community college (and this particular cc's high quality), a huge percentage (like over 30%!) of last year's graduating class--including many of the top students-- is attending the cc. I was shocked when my sister told me this because cc was considered "only for losers" by this school's grads 10-20 years ago. I think parents are looking at the $. These are parents who probably don't qualify for a lot of aid, but could afford to pay for more than cc. But why take a second mortgage or quit saving for retirement when there is another way? </p>
<p>BTW, I actually had savings when I graduated from college--which I used to pay off my H's (ivy) debt. He's driving the used Hyundai now.</p>