The education "at all costs" myth

Parents Forum
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<p>Parent please don't feed your kids the, "go where ever you want to" myth if you can't pay for it. Colleges and universities are money making for profit cash cows. They routinely refer to faulty studies claiming that college graduates will make $1 million more than the typical person who has not graduated college in order to justify their horrendous $40k-50K tuition costs. Don't buy into the hype. If your kid doesn't get a boat load of grants and scholarships or other financial aid help, sending your kid to a private university that is "brand name" is very overrated. Send your state school instead, no matter how much they may ***** or moan about it. In hindsight, they will DEFINITELY thank you for it. Too many kids are leaving colleges with absolutely crushing amounts of student loan debt that they will be paying for the next 30 or 40 years of their life. Don't let your kid go to a private school if it means he or she will need to take out so many loans that they won't be able to buy a house until they are 45. I am one of these students. I bought into the faux prestige of going to a private, big name university and had to take out $50,000 worth of loans to do it. Complete waste of money. If I could do it all over again, I would have easily gone to state school. With interest, that $50,000 is projected to cost me over $80,000 and will take me almost 30 years to pay off at the rate I am currently paying. I am warning you now. Don't set your kids up for failure by letting them pursue an overpriced, overrated education at an expensive college if you can't pay for the vast majority of it with grants and scholarships. Many, many, many Ivy league trained professors teach at state universities, you can get pretty much the same level and same quality of undergraduate education almost everywhere. Don't buy into the hype. Don't let your kid take out what basically amounts to a mini-mortgage (some kids are even taking out mortgage sized 30 years loans now) when they are only 17 years old when a lot of them are only going to find jobs paying only $40-50K a year. </p>

<p>Don't let the stupid US News World and Report school rankings brainwash you or your kid into forking out thousands for an education that is overpriced and overrated which you can't afford. Don't let your kid graduate with an oppressive amount of debt. I know you don't want to hear it, but to be brutally honest, finances and money should take first priority of where to send your student, not on where little Johnny or Jenny would prefer to go.</p>

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<p>gravenworld, I am sorry that your educational debt has become so crushing.</p>

<p>Have you gotten a professional to take a look at your finances to make sure you are using the best possible options? Do you have other debt on top? Are you using credit cards for things like groceries?</p>

<p>Your situation is very sad… but I know kids in your shoes and they often make a bad situation worse by compounding their problems with more debt and a suboptimal financial plan. A professional may help you identify ways to pay the loan off much faster and to limit the amount of interest and other fees in the process.</p>

<p>There are many situations where taking out loans is a good strategy for college-- but sorry that yours has turned into a nightmare.</p>

<p>what do you do professionally and do you have options for moving to a lower cost place or a higher salary field???</p>

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<p>Thank you for this post. I hope many kids read this. Many, many kids have stated on this forum…“If I get into _________ , I’m going no matter how much I have to borrow.”</p>

<p>As for you…can you move home for awhile so that you can make double/triple payments?</p>

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<p>I agree with you.</p>

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<p>$50,000 is a lot - I agree. One of my kids graduated from the expensive private school with no loans; one will graduate with about $7500 in loans. But - you have what you have, and if you have a decent job and find an old copy of the “Tightwadder’s Gazette”, and put your game face on and treat frugality as a game that you are going to play for the next 2-3 years, you may be able to payoff or seriously reduce that debt. My husband and I did this with two young children; they drank “earth juice” (aka water), we mixed half powdered milk with whole milk, bought bulk yeast (1 lb costs $3, and lasts about 6 months in the freezer) and baked and froze our own bread - baking 6 loaves at a time. We had low rent, and on very, very low wages saved enough money to pay off all debts and start working on buying a lot to build our house on. Part of the frugality thing is to think of it as a game; borrow instead of buy, delay, reduce, reuse. An important tenet is to look for the biggest bang for the buck - splurge in little ways, while totally reducing your fixed costs to as low as possible. Can you live free in someone’s home in exchange for babysitting or handyman chores or helping an elderly person? Or a housing coop where you share work and food. If you can combine free housing/ public transportation/ free food (maybe work at restaurant and get free meals) with paying job - you can knock that loan out in a pretty short time. The real problem for a lot of kids is that they have not embraced DELAYED GRATIFICATION. They want what they want right NOW. See what you can do without - cable tv/cell phone/car etc. and live cheap - and the debt will melt away. Hope this helps!</p>

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<p>^^^</p>

<p>Great ideas anxiousmom!!! </p>

<p>Graveneworld…may I ask how old are you? Are you married? Have kids? </p>

<p>How many years have you been paying on your debt? </p>

<p>Can I also ask this (which many students need to hear answer)…at what point did paying off big debt really get “old”? </p>

<p>At what point did you realize that you had less expensive alternatives?</p>

<p>And…lastly…what has the debt prevented you from doing that you wish you could do (i.e. buy a home, build some savings, etc)?</p>

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<p>Wife and I remember hearing the snide remarks of fellow parents when our son who, was number three in his HS class, elected to attend a state school. They were sending their kids to a “better” schools. Son got his job offer September of his senior year and is now handsomely employed without any debt burden. (Nor us). While most of his pricey school buds are unemployed or dreadfully underemployed and all deeply in debt. They and their parents both will be paying dollar dearly for many years to come for that now sun bleached rear-window decal.</p>

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<p>To answer some questions that have been raised</p>

<p>I am a chemist. I was making around $56k before I got laid off. I moved back home with my parents after graduating because of the crushing amount of debt I had that I wanted to pay off. I knocked it down to about $38k in 5 years. Now I am back to paying the bare minimum on the loans which is why it is going to take me forever at this rate to pay it off. I feel sorry for the tons of grads out there working less lucrative jobs making only $30-40K with $80k+ in loans. I know of 2 myself. I thankfully have $0 in credit card debt, however, I did have to take out a loan in order to buy a new car to get to my new job after I graduated. I paid that off though. </p>

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I’m 27. Married, no. Have to delay marriage until I can become fiscally sound. No kids, can’t afford them. Been paying off the debt for 5 years. </p>

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<p>After 3 years it starts to get VERY old when you see almost 1/3 of your monthly income going to loans. Some of my friends are in much worse shape, some of them are seeing 1/2 their monthly incomes going to places like Sallie Mae. </p>

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<p>When the loans started getting old, I realized yeah, in hindsight I should have gone to in-state school to get the same education I would have gotten where I went for 1/4 the cost. </p>

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<p>MOST DEFINITELY! This is what kills me the most. I’m 27, and sadly yes, I still have to live with my parents because of my debt. I can’t buy a house (which I don’t think I will ever be able to do until I’m close to 40 or in my 40s). I can’t get married. Who wants to ruin their credit by marrying someone who is swimming in debt? Can’t have kids because I can’t afford them. It’s hilarious that you are expected to save for your kids’ college education when you are still paying off your own student loans when you are in your 40s. I can’t travel the world while I am young because I have literally $0 for disposable income. I can’t save for retirement. I can’t save for a down payment on a house. I can’t do anything. </p>

<p>My situation isn’t that bad compared to some other kids out there. My one friend is crushed with $83,000 in loans, lost her job, and is basically screwed for life because she can’t afford her payments and her credit rating has tanked. Do the research. Sallie Mae and other lending agencies won’t touch private loans now making consolidation very difficult. You can’t get rid of student loan debt through bankruptcy either, they follow you for life. It’s absolutely obscene how much some students now have to borrow in order to finance their education with the jobs and salaries that they are getting when they get out. Do the research. Default rates on student loans is increasing at an alarming rate. It’s indicating that many students are pursuing educations that they can’t afford and it’s ruining their credit for life. The student loan bubble is going to be the next big loan bubble to burst. </p>

<p>You can’t “work your way” through college either when tuitions cost $45,000 a year. Many students also rack up huge amounts of credit card debt in order to pay for things simply like books and food because all of their parents’ and their own income goes to paying ridiculous tuition fees. </p>

<p>The moral of the story is this: Don’t ignore the hidden costs of pursuing an expensive education that is most likely overpriced. Are you willing to let you kid take on so much debt that they won’t be able to buy a house until they are 40? Delay their marriage until they are 35-40? Bog them down in student loans until they are 50 years old? You can only pinch pennies and be fiscally conservative in order to help pay off loans for so long. You start to go insane when all you do is work and pay bills and have no money for yourself left over. YOU HAVE TO LIVE. Please don’t let your student become a prisoner to their overpriced education. Most 17 year old don’t understand a thing about personal finance. They only care about “going to the school of their dreams” no matter what cost. They need to be hit with a dose of reality, the reality of the fact that the vast majority of recent college graduates are going to land jobs that are only going to pay in the range of $30,000-55,000 and that it is going to take them 30 years to pay off a big sized loan. State schools all the way. Same education for half the cost. I’ll repeat myself again. Don’t buy into the hype of all the school rankings so that you’ll be tricked into forking over thousands for an overpriced and overrated education. You can get the same undergraduate education at pretty much any university. Go to the one you can afford the most, not the one that is most preferred.</p>

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<p>Thank you for taking the time to share your story. I wish this could be a “must read” before taking out student loans. </p>

<p>We’ve always been upfront with our son that we would pay for instate, public college and anything beyond that he would have to earn merit aid. We’re not taking on or co-signing loans. </p>

<p>I truly believe the bigger gift is to graduate debt-free, or with minimal debt, rather than graduating from a “name brand” school.</p>

<p>I wish you the best of luck.</p>

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<p>There is a flip side to this. In our high school, almost noone applies to privates. Many should at least try to apply and see what their packages are. Top schools have fabulous financial aid and can be cheaper than a state college or university. And many privates give both financial aid and merit aid. Too many kids limit their options to state schools, when they could be going somewhere else. (I am a big fan of our state university, but also a big fan of all kids having options if possible)</p>

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<p>Wow- thanks for your honesty. I hope every kid and their parents on CC reads your story…I have no idea where our economy is headed, but it doesn’t look good. Best of luck to you.</p>

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<p>I wish that all could read the first post, also. </p>

<p>We told our S that we were able to pay for a state university, and that anything else he would have to pay for with merit money. We discouraged him from racking up high loans, since he is planning on going to law school. We have excellent state schools (and he got into the two most selectives ones) that are extremely well-regarded on a national level. But he also applied to privates. He was one of those kids who applied to a lot of schools (and there is plenty of criticism here on CC from certain folks for students who apply to a lot of schools). </p>

<p>He’s now at a Top 20 LAC with a full-ride merit scholarship that pays for everything, including personal expenses. If we had limited him to state universities/colleges, we would have been out ~$80,000 over four years. He now has that money for law school or grad school, instead.</p>

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<p>DEFINITELY apply broadly. The moral of my story isn’t to not apply private schools, it is simply go where you can afford the most. Many students never pay ‘sticker price’ for tuitions after grants and loans, if you get a good deal at a private university take it if it suits you and your student. $20,000 worth of student loans is doable for your student if you think they will get $40-50 K jobs. $30,000 starts pushing the envelope. If you need to take out $40K+ worth of loans, then forget it. If your kid starts defaulting on student loans, employers won’t hire them. Employers do credit checks. You only have 6 months grace period before you need to start paying them back, and in this economy, it is taking a lot of students longer than that to find a job. </p>

<p>The default rate on student loans is an often cited 6.7%. That 6.7% rate, however, is a sugar-coated statistic. This official rate only examines a student loan default that occurs within a two-year period after the student loan payments begin. According to Ben Miller, a policy analyst at Education Sector, it often takes 14 months before the federal government even characterizes a record of nonpayments as a defaulted account.</p>

<p>When the time period is stretched to three years, the default rate jumps to 11.8%, which is a 76% increase</p>

<p>Currently only 40% of student loans are being paid back. The 60% of loans are in deferment, default, or aren’t being paid. What is this really saying? When you take into account the large sum of loans that students must take out for a lot of university degrees and also the fact that the median income for a bachelor’s holder for recent college grads is only $41,000 for women and $50,000 for men, the “college grads make more than $1 million over their life time than non-college grads” is a grossly overstated myth. Many colleges have stopped using this statistic in their marketing campaigns because they are realizing how much of a myth it really is.</p>

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<p>OP, thank you for sharing your story.</p>

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<p>I do agree with fiscal responsibility when it comes to college. Sometimes the burden is on the student, other times it is the parents who take a hit. I know a family who completely shields their son from expenses in college. HE goes to a fancy private at full cost, has a car, fancy phone and laptop, and designer cloths. Meanwhile the parents are living paycheck to paycheck. What’s wrong with this picture? Must we be martyrs?</p>

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<p>There is a flip side to this. In our high school, almost no one applies to privates. Many should at least try to apply and see what their packages are. Top schools have fabulous financial aid and can be cheaper than a state college or university.</p>

<p>True, but generally, most students won’t get accepted to the top schools that give great aid packaged, or they’ll get accepted but not receive the great aid packages (because some of those schools give the best aid to the best students and give crappy aid to those with modest scores.)</p>

<p>The same can be said about some OOS publics. Some of them will be cheaper than your instate public because of merit or whatever. Yes, kids should apply broadly and not “zero in” on a dream school.</p>

<p>Back to the OP :)</p>

<p>$20,000 worth of student loans is doable for your student if you think they will get $40-50 K jobs. $30,000 starts pushing the envelope. If you need to take out $40K+ worth of loans, then forget it.</p>

<p>I am so glad that you’ve said the above. Some think that the guideline should be, “borrow an amount that is equal to the amount that you’ll earn when you graduate.” I don’t agree with that at all. I think you’re right - Borrow only up to half of what you might earning when you graduate (and don’t exaggerate your expectations!). Anything more than that become stifling.</p>

<p>I know a family who completely shields their son from expenses in college. HE goes to a fancy private at full cost, has a car, fancy phone and laptop, and designer clothes. Meanwhile the parents are living paycheck to paycheck. What’s wrong with this picture? Must we be martyrs?</p>

<p>That is irresponsible parenting. Do they think they are teaching their child how to be responsible for himself? This is crazy. When these people are up to their eyeballs in debt, their spoiled child is likely going to still expect handouts from his parents.</p>

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<p>This is a message that is posted in various permutations over and over and over. The OP is doing a wonderful job of managing through the debt load, but the sad truth is that starting salaries are not what many expect and are stagnant or slightly depressed these days because of the general overall economy, the derth of candidates and other factors. It’s nice to see the OP post in vivid detail the sequence of events. Thank you.</p>

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<p>but the sad truth is that starting salaries are not what many expect and are stagnant or slightly depressed these days because of the general overall economy,</p>

<p>Not only that, but many young students have no idea of how much of their income will be “spoken for” with rent, utilities, insurance, transportation costs, food, etc. And, many can’t live at home to save money because their jobs will be out of town.</p>

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<p>It’s little more than indentured servitude. All I can picture is a huge ball and chain.
Thank you for your insight, I hope students and parents heed your warning. I couldn’t agree with you more. When I married my husband, we had nothing but we had no debts and so we were free to move wherever there was opportunity. Moving temporarily to Alaska allowed my husband to get the entry level training he needed to start a lucrative career. With debt, we would have not had that opportunity, regardless of where he graduated.</p>

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<p>All very thoughtful comments. I’ve seen a number of posts on various CC threads from parents who are taking the approach of “we’ll pay up to x amount and you (kid) have to finance the rest through jobs, loans, etc”, often advising other parents to do the same. In a booming economy, this would be fine. I think most college-age kids can’t have any idea what that level of debt means (many thanks to the OP for spelling it out), but many will think it must be okay if the parents are presenting it as an option. Student jobs won’t make enough of a dent either, even for those able to find them. I don’t see that the students benefit from the parents driving themselves into insolvency or enormous debt either.
My older D is at a state U, applied to a few privates and got some merit offers but the difference in cost would still have been vast. Having done the financial aid apps once, and learned that our EFC is $43k a year, we told younger D, similar academically, that in the absence of a miracle, she might as well just pick her favorite SUNY. We’re very lucky we can afford to pay SUNY without help; I know many people struggle to pay for public colleges also.
A footnote, maybe frivolous - I went to the City U of NY in the 70’s (very reluctantly, because I didn’t want to live at home, but my parents refused to pay tuition when CUNY was free - and I still would have done it differently if I could have, though the education was pretty good), my husband graduated from Middlebury around the same time. We’ve both been lucky to find meaningful work that we love and we both managed to have fairly adventurous youths before we hunkered down. However, I make almost twice as much money as he does.
OP, I wish you lots of luck.</p>