I’d be interested to know how much everybody did take in loans, and to what extent you regret it?
(Read: I’m wondering how much I can take in loans…)
I do think a large school loan is very risky for many reasons. Some years engineering doesn’t have the openings (this happened a couple of years before H graduated, and we learned about it from some of his co-workers).
Being in the top 10% of a law class is more likely for getting a job out of law school. Don’t know if getting a law degree from a pretty well rated school but being in the bottom half of the class will hurt on the job search.
What happens if the student can’t or doesn’t finish?
Loans mean RISK. Many minimize the true level of the risk, until they get bitten.
Many of our S/D have had a growing up lifestyle pretty good - and they think that parents’ salaries (which are maybe at peak by the time the student is a teen) are going to be what they jump into after college.
DD’s college off campus apt and amenities are nicer than the apt H and I had with our professional salaries - and colleges are putting in big rec centers etc to attract the student mix they want. As anything, colleges compete for the students and provide the amenities and services demanded to a certain level. That does help drive up the college costs.
The other DD’s college dorm style apt (for two) was as big as our first apt after getting our degrees, and it had a full kitchen with full size refrigerator (including oven and cook top). I know that was unusual, but all their public school dorm situations and amenities were better than H’s and mine - and we both were at private schools for UG.
Emergency funds are for emergencies.Many young adults never discipline themselves to have savings because it may not have been modeled at home. Or perhaps some think mom/dad/grandma/grandpa will bail them out financially. That does happen for some for many, many years.
Loan repayment is necessary if one has a decent paying job or not.
Due to identity theft, elder abuse etc, some older people cannot and will not risk taking in a boarder (kitchen privileges type with a bedroom). Sometimes can match up with a room-mate - usually can get more apt with paying less by sharing - and for a gal, if the room-mate is also careful, there is safety for two gals sharing an apt IMHO.
One element of maturity is to be ‘satisfied’ while living within one’s means. Learning how to earn, save, spend, and give with discipline. That means saving up for important things and budgeting so as to not have money be spent in areas not important (food shopping within a budget for example - may splurge once in a while there too, but learning how to shop smart).
How many times has a teen wanted something but once they realize they have to spend ‘their own money’ decide not to buy an item?
We as parents have managed pretty well, and it seems DDs plan to continue to learn from us as they handle their taxes and make future financial decisions. They both feel great that they will complete their UG degree with no debt, and we as parents have a great relief about that too.
Parents and students early in HS do need to learn about colleges etc - often a good source of info besides CC is other parents and students that are a few grades ahead - so learn from their college ventures.
While this thread was originally dealing with undergrad student loans, some have mentioned grad, law, etc, loans.
Big undergrad loans are different. They’re often emotionally-based, and made with the decision-making skills of a 17/18 year old or a guilt-ridden/indulging parent.
Grad school loans are another story. The student is older, and hopefully less impulsive. At that point, s/he should be more aware of future likely earnings. But, that doesn’t mean that there aren’t some poor decisions made for grad school and professional schools as well. Upthread someone mentioned a nursing student who now has big grad school loans (not NP). I know a new BioMedEng’g MS student who opted for “full loans” at one school over a “free ride” at a nearly comparable school. His new salary is NOT what he expected, so his loans will be a struggle. We are seeing new law grads with huge loans who are barely earning $50k per year…and many are unemployed.
True freedom comes from not owing anyone anything.
So many of these issues that have come forward are things hs seniors just don’t think about. How could they? A few of them didn’t cross my mind as a parent, and yet they have come to pass. All the more reason to avoid as much undergrad debt as possible.
The safety issue for young women living alone, didn’t cross my mind. Why? After college I moved to the city where my sister lived and then got married. Never really did go off in search of a place by myself. Well different story for my oldest. Moved alone to the city where she wanted a job. A major college town, so little was left to rent by the time she had her offer and could sign a lease. Moved into an expensive place with too many high end finishes she didn’t care about because it was the only apartment available that was not on ground floor, a choice her dad supported because it was safer. Not having to set aside hundreds a month for student debt repayment made that decision possible.
You just don’t know what may happen. I guess it’s the same mentality as the emergency fund. Plan for the longer term future, not the immediate gratification of the dream school.
I absolutely agree about no ground floor apt for DDs - dorm or apt. One has to think about personal safety. Freshman UT-Austin student killed last night going a short way from dance rehearsal to her dorm - evidently a homeless 17 YO has been arrested with her bike and was burning her items. This is a terrible crime.
Youth do let their guard down a bit due to thinking they will live forever, believe in the safety of their surroundings, and in other circumstances wanting to respond in a positive way and be friendly to someone who they should not trust so quickly because they should not trust them at all.
In listening to my favorite advice Guy Clark Howard he says your college loans should never be more than the starting salary of your desired career. Good advice!
I’m reading quite a few threads today where high school kids feel entitled to go to X school because they worked so hard. That sums it up to me. That they don’t understand there isn’t a direct correlation is frightening.
Agreeing, Rdtsmith. Asking parents to take on PLUS loans to pay most, if not all, of the COA because you’re embarrassed to attend a community college is just going to lead to another generation that can’t afford to pay for their kids’ education because they’re still repaying their own college loans. It’s sheer madness.
Of course, the problem with that @Rdtsmith is incoming college students have no idea what their first year salary will be. I had a couple of business major hopefuls indicate they expected salaries of 6 figures!
A lot of good points here, but the cheapest in the short term is sometimes not the cheapest in the long term. Looking at 4 yr graduation rates in important too. Picking a cheaper school that has a low 4 yr grad rate, may end up costing more in the long run, b/c you may in reality be signing up for 5 yrs, and in that 5th yr there’s a chance your aid goes away. You do have to look a bit at ROI as well
Nobody said “cheapest.” We’re talking about affordable over the clearly unaffordable. There’s a big difference.
This is true only if you assume that the institution itself is primarily responsible for the graduation rates of its students.
What amount of money is considered taking on a huge loan? $5k per year, $10k?
@Lololo5, obviously it’s going to depend on your financial situation, but generally sticking with federal Stafford loans is a reasonable amount ($31,000 over four years).
https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized
@Lololo5, Anything over the federal student loans (~$27k total) is probably too much, especially for a low income family. Your family makes ~$30/year and you’re considering ~$40k in loans over 4 years, right? There will be interest on the PLUS loans.
Do you have any options that are more affordable?
How much is too much is endlessly debated. Some people say ANY loans are too much, and while I respect that, I disagree. I say there’s nothing wrong with loans that you have carefully considered and that you will comfortably be able to pay off in a few years. For many people, that’s no more than the 27k of Fed loans. But I would never judge someone who opts to go to a more expensive school if they’ve done their homework and know precisely what their payments will be and that they’ll be able to handle them. Not in a vague way, but in an “I’ve studied the amortization tables and I know exactly how much I’ll have paid in interest” kind of way.
And obviously, the less money owed the better, in general. If you’re taking on more, it had better be for a more concrete reason than “dream school.”
No I don’t… Why don’t they offer more for low income students? I emailed them and they told me I just received the maximum amount of grants which is bs because there is no way I can pay for this
You don’t have a Community College nearby?
Anytime you are paying full sticker price while others are getting a free or reduced ride means you are subsidizing them. If you find that the school is so worthwhile that you don’t mind this, well, I guess you can pay whatever you think it’s worth. However, is it really wise to pay full sticker price to subsidize others by taking out loans to do so?
It’s one thing to pay cash but another to borrow for the honor of giving others a tuition break. One might do this for an ivy league/public ivy but seems stupid otherwise.
^in that case, you pay to be surrounded by high achieving peers that will provide insight into issues you can’t guess at, and which you wouldn’t have in a university that is geographically, culturally, ethnically, socio-economically homogeneous, and getting enriched through the diversity of talents and perspectives.