Because the demand is there. Demand drives the arms race for students. It is a circular kind of thing.
Me too. I still get blown away by suite style dorms where you have your own bedroom. I might never have left college had I had that. 
I didn’t even have that at home for much of my life. 
@Portercat Im with you, it should be about lower costs. Im a firm believer that unlimited loans contribute to higher costs. While I am appreciative of the govt loans, I also know that if they were capped or if they had more stringent approval requirements, a lot less folks would get them. Schools charge outrageous tuition, etc because they can get the money, because parents can get loans up to the cost of attendance.
So is anyone surprised that 62% of Americans do not have enough $$ to cover a $500 emergency?
That’s why websites like “SeekingArrangement” are signing on 1000’s of students with sugar daddies and sugar mommas, where students sell their souls for $3,000 a month…
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The government should only “guarantee” loans up to the amount of the highest cost public university in the state. E
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Well, the feds would probably have to guarantee loans up to the highest public university in the country. I can’t see the gov’t saying, “uh, you live in PA, and PSU has crazy-high rates, so we’ll lend up the COA, but this other person lives in South Dakota, so we’ll only lend him $20,000.”
Either way, each state would then raise its rates to at least match whatever the highest public univ is in the country. Soon we’d have a bunch of schools charging the same rates as PSU and UIUC.
I don’t agree, M2CK. Right now the schools can lend up to the COA of the school you are attending, and those COAs vary widely, from just $5000 or so for a CC to $75k for the most expensive. If you are from SD and there is a school you can attend for $15k COA, that’s your limit. It’s okay if someone from PA gets more because they need more.
That happens with federally backed mortgages all the time. A house is SD might cost $100k, and the exact same house in PA costs $200k. The FHA is only going to lend you $100k in SD but will lend you $200k in PA. It’s the same house, but different loan amounts.
The government’s goal is to make college available to everyone, not to guarantee that you get to go to any school you want and the government will finance that.
I think there are simply too many people wanting to go to college. In my high school, even academically incompetent students from lowish income families seem determined to go college regardless of the consequences. If you have have a GPA around 3.0 and easy classes, I sincerely feel you have no business being in college unless if you can completely afford it. Not everyone needs to go to college, there are other ways to spend life after high school.
In addition, all these poor (academically or financially) students devalue degrees granted to students who are actually qualified. Most mediocre state schools are basically degree mills that have completely taken away the value of having a B.A.
I disagree @gearsstudio. I think the statistic is that 40% of jobs require at least a bachelor’s degree, so it is a necessity to go to college for many. Yes, a B.A from a state school may be meaningless, but if lands them a job, so what?
These students should not be going to expensive, top tier colleges, nor should they be taking any significant amount of loans out.
Until you get the easy money out of the system, @Portercat, colleges have few incentives to reduce costs. House prices went through the roof when anyone with a pulse could get a jumbo mortgage. US healthcare costs have become astronomical in part because of private insurance and government programs that encourage patients and doctors to ignore cost much of the time.
Third-party payer environments encourage costs to go up, since neither party is strongly motivated to control cost.
The nasty thing about college loans, whether student or parent, is that the third party isn’t actually paying, they are just deferring the expense by turning it into a future debt obligation.
Isn’t that part of the issue here @gearsstudio? Half the people here say that state colleges and community colleges are degree mills and not worth the $$, and the other half say that you shouldn’t consider the better college b/c you cant afford it and you should go to CC or State U instead. By the way, we live in PA so were screwed on costs.
My local community college is not a degree mill. But it is a better option for a kid who wants a certificate program (radiology assistant, LPN, Pharm Tech, that sort of thing) than for a kid who is university material but wants to save money for the first two years. A lot of kids who try that end up with an extra semester or extra year at the flagship U anyway so the savings are somewhat illusory. It is also a great option for adult learners who need a specific skill for their job (a computer program, need to learn the in’s and out’s of OSHA regulations, etc.)
A good friend of mine asked a senior faculty member and board of trustee at an HYPM school—why do you have list price of $65k for attendance — is it for faculty, facilities, technology, research — ? Answer: Because that is what the banks will loan the student and family. Watch the move The Big Short. — Thinking the whole system has also conspired in self interest (banks, universities and govt.) to take advantage of our young people and the uninformed who tend toward the poorer parents.
I think the mother and daughter both benefitted at the expense of the system. Since she has low income that’s unlikely to increase, she borrows the money. Then her child graduates and gets a much higher income, unencumbered by that debt which is not in the child’s name unless the child co-signed for that loan. The mother can stop working and live simply on the extra that the child makes, that the child does not have to repay.
Sure enough, she and her husband have now moved into her daughter’s house in the nice suburb of Bollingbrook.
If incentives were different, we might see a decrease in such “unsophisticated” behavior.
It was much more clever for him to say YES. And he did, like most parents would who want the best for their kids.
This strategy has to be prevented by checking the parent’s credit before giving the parent the loan, otherwise savvy parents with few assets and low future income will keep doing it.
While this can be upsetting to many people, remember that they did take on the debt. By no means am I wealthy, so I know that I must work hard, earn scholarships, and earn all of the aid that I can. The debt problem is not a national issue, but a personal one. At the end of the day, people control their own destiny in their choices as well. It is difficult to point fingers.
Specifically, I am interested in Penn. One benefit of Penn is their incredible all-grant, no-loan aid. I am estimated to receive nearly all of my tuition in grants from the University based on my circumstance, and will probably end up paying for food and living expenses. Thus, anybody can do anything if they are willing to work.
@spencek Penn, like most meet-full-need schools, is no sure thing/should be considered a reach for everyone. Thus it is important to have safeties.
Most people won’t be able to get into meet full need schools. They’ll be gapped despite whatever EFC they have, and there’s nothing anyone can do about that except look for merit aid, cheaper schools, or get a loan. In the case of merit aid, not everyone is able to get high-enough test scores, and not everyone can pay for the test prep to raise scores significantly enough for merit. And competitive/holistic merit isn’t guaranteed. Being “willing to work” isn’t enough sometimes.
There are unethical companies in any industry. People should start being more accountable for their financial well being. Don’t expect the government to solve the problems. What is the last problem in business the government really solved? A lot of this could be avoided with 4 steps to begin your ability to pay back what you borrow. 1) research the cost of the school. There is no need to go to the most expensive school on your wish list. 2) Start at a community college and save on the cost of your first two years. 3) Look at the average income for a college graduate with your degree and create a budget based on that income in the future (there are many places to figure out how much it will cost to live somewhere). 4) Calculate the repayment of your loans to see if you will have enough income to pay it back once you graduate.
The more research you do, the better off you’ll be in the long run.
If Parent Plus loans were eliminate the colleges would have to lower their tuitions, decrease the money supply… the price will go down…
Do we know how many parent plus loans there are at schools that meet full need? How many parents borrow for what the school believes they are paying?