<p>Agent…your EFC per FAFSA is the MINIMUM you will pay for each year of college. Most colleges do not guarantee to meet the full need of all accepted students…and they don’t meet that need. These schools “gap” students…offer a need based aid package that is NOT enough to cover the cost of attendance minus EFC. Families must then decide whether they are willing to fund this difference, with loans, current income, or savings.</p>
<p>You think there is no cost to society having the present situation as it is? I have no idea what solutions are the best for the most people. I think stopping this debt factory is a start, or at least slowing it down, but clearly we have yet to come to that point We shall, when the loan repayments reach a point where there is not enough to lend out to the new crop of suckers…er, students. But right at this moment there is no movement to do anything other than have colleges list out the information on jobs or some such thing. Won’t make a dent on the crowd looking for loans, just like the oysters in the Walrus and the Carpenter, a verse that I highly recommend you read. Then, I guess we need to see what can be done with those who have already gone down this rabbit hole and try to figure out what the best solution is. Maybe just doing nothing is the best way to go for nation as a whole. I think it is a huge waste of young talent.</p>
<p>Agentnineytnine, I recommend you look at the Financial AId board and ask about EFC. If your EFC says $30K, then that is probably the least you can hope to pay unless you get merit money. The vast majority of schools in this country do not meet financial need. Doesn’t matter what your EFC is. They gap. Those schools that guarantee to meet full need or tend to meet most of it for all of their students define their own need, they don’t use the EFC alone.</p>
<p>
</p>
<p>Agentninetynine - All the EFC calculation will tell you if what the government believes that you can afford to spend for college. It is not a percentage except when compared to the overall costs of attendance, which will of course vary by college. If, for example, your EFC was $10,000, College X, a school which claimed to meet full need could give you grants or scholarships or work study and loans to meet all but your $10,000 EFC. So it is really costing more than $10,000 to attend College X.</p>
<p>“Mini, if they default on govt-secured student loans, the costs are just passed on to taxpayers. If they default on private loans, the banks will pass it on to consumers.”</p>
<p>The banks already passed on their own defaults to consumers, and to taxpayers. And it’s not “if”; it is “when”. That horse is already out of the barn.</p>
<p>In the long run, the banks end up with all the money anyway (isn’t that why government exists?) But the banks need young people out there making money and buying things. (So does the government, which is a tautology.)</p>
<p>Hat, actually, even colleges that meet ‘need’ do not generally meet the FAFSA’s EFC number. The colleges that meet need define the need theselves so they often require additional information. Many of those schools use the College Profile form-- but that form doesn’t produce and EFC. </p>
<p>Anyway, I am unclear whether Agentninetynine is referring to actual EFC (as produced by the FAFSA) or referring to a college’s assessed “parental contribution” as EFC.</p>
<p>Thanks everyone for the EFC refresher. Read up on it but it’s been awhile. I also recall that some schools believe families should pay more EFC despite what the calculator says.</p>
<p>Hat, ok. I wasn’t really thinking about the IRS.</p>
<p>I disagree with you about the banks. The Fed has bought 3 trillion of financial paper from financial institutions. That’s a bailout.</p>
<p>Of course they already pass on their defaults to consumers and to taxpayers. If we were to allow more defaults, even more debt would be passed on to consumers and taxpayers. A loan amnesty would just allow those who borrowed more freedom to spend but would limit those of us who didn’t borrow.</p>
<p>If I was queen of the country this is what I’d do:</p>
<p>Require every senior (or 18 year old) to do one year of service in Americorp BEFORE college. I’d love to see them travel across the country and work – build homes, clean up slums, teach children, help the elderly. </p>
<p>In exchange - each kid gets a $20k voucher to go to school or receives $10K to get on with their lives.</p>
<p>
</p>
<p>dstark - source? I can find nothing that the “Wall Street Bailout” was more than $800 billion and that it was paid back by all the “major” banks. Some of the smaller banks have not paid back or have failed, but certainly not $3 trillion worth. Now if you are talking about all the Fannie/Freddie mortgages that have gone bad, that might be a different story, but I would still doubt $3 trillion.</p>
<p>I’ve said it before and I’ll say it again. People need to live within their means. That’s what my DH and I have always done. We started to save for our D’s college education as soon as she was born so we wouldn’t have to borrow any money.</p>
<p>Parents need to have very serious conversations with their children about money and debt before they go to college.</p>
<p>Dstark, I never did “get” those green squares, but thanks for the compliment.</p>
<p>Agent, there are many wonderful ideas, but there are problems with our rights and this little thing called money and debt that are problems for our country too. I don’t think that these problems are going to get more money, at least not a substantial amount, and there are issues and populations in this country that are in more dire need than a bunch of students and their families who took out too many loans for college. Somehow, I’d like the problem to be solves within a contained sphere.</p>
<p>I don’t want to eliminate loans altogether as it is something that make it possible for those without the funds to provide opportunities to their children. I’ve read some arguments and comments about this that make it clear that there is a function for these. Somehow the system should be revamped so that some of the pitfalls are reduced Yes, I have some ideas, but there is no movement in the areas where things can be changed and a difference can be made. A lot of the problem is that the schools themselves have no motivation to effect this change as it will hurt many of them. Goucher, as I much I do like the school, is probably one that will have some great hardships if government loan policies are changed. I don’t personally know the young man in the article, but you know, I know his NY twin. Same problem. Both gifted young men from hard working middle income families that drank the Kool aid. All of the sudden they have mortgages sized debts without the house as an asset at age 22, 23. Yeah. not good. I think that these schools need to have more accountability in such situations. </p>
<p>I don’t think any of us are well served when families like this young man’s and the one I know, plus some other families I know who are being hurt by the student loan situation end up in a sink hole. I think we will all pay in some form or other as this hole gets larger. Though we cannot require anyone to go into any kind of service, some options can be presented. Right now going into Americorp or toher such programs aren’t going to make much of a dent in that massive debt. Perhaps some sort of reverse GI bill? I don’t know. But doing nothing is costing us as well and will continue to cost us in the future.</p>
<p>The formula for solving the young man’s problem is simple: Get him a decent job, lower the interest rate, extend the repayment period to 20 or 30 years, and have him split the payments with his dad who co-signed the loans. This should bring his monthly payment down to a manageable $217 per month. A similar formula would have solved the housing crisis. The bottom line is, a decent job + lower monthly payments = no problem. Jobs would solve most of our country’s problems.</p>
<p>Hat, it is not a secret. :)</p>
<p>[Fed</a> Enters ‘Uncharted Territory’ As Assets Hit $3 Trillion](<a href=“http://www.fa-mag.com/news/fed-enters--uncharted-territory--as-assets-hit--3-trillion-13191.html]Fed”>http://www.fa-mag.com/news/fed-enters--uncharted-territory--as-assets-hit--3-trillion-13191.html)</p>
<p>I guess the fed only bought a little over 2 trillion the last 4 to 5 years. This has had an affect on asset prices including stock prices.</p>
<p>Then there is this…This was a secret…</p>
<p>[Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress - Bloomberg](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?;
undisclosed-to-congress-gave-banks-13-billion-in-income.html)</p>
<p>“The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day”</p>
<p>“$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.”</p>
<p>cptofthehouse I will say it again-in the situations I referenced tough luck.</p>
<p>I can only speak of my own personal experience but in my mind if you seek advice and are told point blank you cannot afford it and you do it anyway then yes-tough luck pay your bills and if you have to go work three jobs do it-I am talking about people who I know who had excellent advice and chose to take on unreasonable debt because they couldn’t take away the “dream” from their child.</p>
<p>I am not talking about circumstances beyond people’s control. Do I think this mess has many causes-of course it does. It’s a business and their job is to sell-and they do a very good job at it. What do they care if you can’t afford it-they are long gone when the bills come due. </p>
<p>You assume people who are not having financial problems have not had any misfortune-at least it seems that way. I beg to differ-I can tell you in my own life I have unfortunately not been able to work for years-but since we lived within our means and allowed that bad things can happen we have been able to do fine. I would never not lend a hand to someone less fortunate than me due to circumstances beyond their control-the behavior that I am talking about is well within their control.</p>
<p>I think the banks are part of the problem too-I think the first thing we can do to fix it is to first stop making it even worse-but since it seems unpopular in this country to say no to anyone-and that goes for everyone-I don’t see that happening anytime soon do you?</p>
<p>Dad probably did not cosign all of the loans. It is entirely possible that this young man took close to $60K of Stafford loans after Dad did not meet PLUS standards. He may also have not even had need and the whole lot of the loans are unsubsidized. The interest rates for unsub Staffords are usurious given today’s interest rates and the meter starts ticking the instant the funds are released. He can easily owe about $70K right there. Check me on the math if you please. Then the rest are really Dad’s problem, in such cases. THe father is a business man from what I can see, and he is going to have to work out something in terms of loan payment on what he borrowed for his son. </p>
<p>Until son gets something better, he 's going to be washing windows. Son will be able to get some forebearance and stretch out the repayment period for the Staffords. Finding a job… now that’s a problem a lot of Americans have and with needs more dire than repaying college loans. </p>
<p>There must be some things that need to be done where a young work force can be utilized . But maybe not. I have a young cousin at a Work Program, out of state, where he boards, and has gotten his GED and is being trained for some job. Talk about dire straits–truly an at risk young man, high school drop out, couldn’t even find 30 hours of work at min age, no transportation options other than bumming rides which was a problem as his parents who are under stress–marriage break up, house in foreclosure, medical issues are also broke. And it took him a while to get into this program–many on the list waiting for such an opportunity. Government funded–and the big question is whether all of the resources spent on him will even get him any job. When one looks at such scenarios, that, and convicts getting released from jail needing jobs, those who need a job to pay off college which enrichened their larders from those funds become a low priority. No, whatever solution has to be within the resources already at hand. i cannot see taking from those even more need to address this. But it is my firm opinion that there is an abuse of funds allocated here and it stinks. The smell goes right to the colleges.</p>
<p>"I think the banks are part of the problem too-I think the first thing we can do to fix it is to first stop making it even worse-but since it seems unpopular in this country to say no to anyone-and that goes for everyone-I don’t see that happening anytime soon do you? "</p>
<p>Student loans are the only ones out there which are not backed by an asset. This is based on the assumption that no one should be forced NOT TO ATTEND college because they can’t afford it. The loans seem to make no distinction between income potential vs loan offered and this is how for profit schools are making full use of the loans and admitting students. Meanwhile, the regular are turning out to be not much better.</p>
<p>Pepper03, it may be tough luck for them right now, but you do understand that this tough luck may not be so contained. By the time it reaches YOU and yours, it may be a problem of such proportions that it is not easily solved. As I said earlier, when one neighbor lost his house, it was “tough luck”, when enough of the neighborhood goes the same way, it starts affecting those who are left, and it becomes tough luck when you have to sell your house. It’s not a matter of feeling sorry for those affected, but how this is going to be affecting all of us.</p>
<p>Why should the debt be discharged?</p>
<p>That means taxpayers have to pay for the student’s bad decision.</p>
<p>The kid will be working, eventually, for probably 50 years.</p>
<p>The debt can be paid slowly over time.</p>
<p>Other students have made intelligent, practical decisions, concerning college, and they would in effect be bailing out this person for making a bad decision.</p>
<p>This kid could have gone to a state university, not a private school.</p>
<p>My son has made a Goucher type decision himself.</p>
<p>He could have gone to the state flagship university for free.</p>
<p>I am not asking YOU to bail him out for him making such a decision.</p>
<p>This sluggish economy isn’t helping students with debt loads, either. A young cousin of DH’s graduated last June at the top of his class from Duke. Actually, he was 10th. He’s working for his dad making $15 an hour.</p>