The education "at all costs" myth

Parents Forum
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<p>I still think that limits need to be for both the student and the families. The mortgage crisis showed all of us that age does not ensure financial sense. I know of too many parents who have, in my opinion, irresponsibly advised their children to take out massive loans to fund their “dream” education. Their justifications are usually, “child will do better in small classes offered in private schools” (yes they might and so might many others but if you can’t afford it then they need to learn to prosper in larger venues), “child will be more likely to graduate in four years from a small school than a larger one” (once again I think if the child is ready for college and not majoring in a field that usually takes five years - engineering - the child can do it in a less expensive non-private school).</p>

<p>Basically, we all would do better in schools that we have more individualized attention, but we can’t all afford it. The reality in life is those who have more money can afford more luxuries.</p>

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<p>I know many families who think that the college’s ranking in a magazine, and name recognition are going to be important to secure a job, or to gain admission to “the right” grad school, so they feel that massive debt will pay off down the line.</p>

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<p>I still think that limits need to be for both the student and the families. The mortgage crisis showed all of us that age does not ensure financial sense. I know of too many parents who have, in my opinion, irresponsibly advised their children to take out massive loans to fund their “dream” education.</p>

<p>But, aren’t those “student loans” and not “family” loans? Parent Plus loans are the sole responsibility of the parents. While I agree that some parents are naive enough to take out Parent Plus loans that they can’t afford, I don’t think they should be limited like students should be. And, certainly, no one can (or should) control what parents do with signature loans, refis of their homes, etc, to pay for college.</p>

<p>That said, I do agree that some parents make silly choices…such as taking Plus loans for freshman year without thinking if they’ll qualify for junior and senior years (or qualify for more loans when younger kids go to college). However, I think that would be better handled thru the qualifying process.</p>

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<p>BTW, if you enlist the Army will payoff your student loans up to a max of $65K.</p>

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<p>Honestly, I don’t know what the specifics of the loans are, but no matter what type of loan it is I don’t think parents should not be allowed to take out unreasonable debt to fund a child’s education because that could get them into financial trouble. I understand where you are coming from and I do agree somewhat, but I think there should be some monitoring of debt accumulation to help people keep their debt loads manageable.</p>

<p>We saved for our son’s education and he had a full tuition scholarship the first year and drew from the savings for room and board. After the second semester of sophomore year he decided to drop out (he felt that he was wasting his time and money on college because he didn’t know what he wanted to do). I wholeheartedly agreed with him and he joined the Air Force (just waiting for basic to start) to figure out what he wants to do and get some life experience. He plans to finish his undergrad while in the military and use the GI bill for grad school, unless he makes a career of the AF. </p>

<p>I guess I am sharing this because I have seen a lot of young people go through a lot of money pursuing a degree even though they really don’t know what they want to do because, as my son told me, “everyone was going to college - that was the thing to do.” I wanted him to join the AF right out of high school because I knew he wasn’t ready for college but he insisted on going. </p>

<p>I see a lot of seniors go off to expensive colleges and take out a lot of loans or run through a lot of their parent’s money when they have no idea of what they want to do, but everyone is going to college so they do it. My husband and I could have been like a lot of parents and stayed blind to our son’s readiness for college and taken out a lot of loans to fund a private education, but it would have been very irresponsible because he would have been back like he is now. Instead we sent him to a state school and didn’t incur any debt. </p>

<p>A lot of kids who take challenging high school classes and have great GPA’s and great test scores, leadership positions and state and national awards bale out of college the first or second year. I see so many talented kids not succeed in college like “everyone” expected them to based on high school performance that I strongly feel it is a gamble to put a lot of money into an undergrad education and parents need to open their eyes to the possibility that their darling child might need a few years to grow up before they figure out what they want to do.</p>

<p>Every child is different, but this desire to send the child to the very best school no matter what the costs is foolish and sometimes I think it stems from a “show-off” mentality similar to a trophy wife or the expensive sports cars or the huge mansion. I think debt monitoring is critical because people are not perfect.</p>

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<p>Proud Mom, lots of my son’s friends at MIT graduated in 5 years with engineering degrees… but the fifth year was a Master’s, not a BS. Many private colleges do a very fine job of getting their engineers out in 4 years-- and that includes engineers with sub-specialities like Nano, bio-medical, etc.</p>

<p>Despite the oft-repeated wisdom on these boards that it doesn’t matter where you go, and that all undergrad education is the same since most colleges use the same core textbooks, and that for most disciplines the name on the diploma just doesn’t matter as long as you can get into grad school… the fact is, that there are substantial differences between colleges which take undergraduate education seriously, and those that are diploma mills or have low 4 year/6 year grad rates.</p>

<p>Taking on debt (whether the parent or student) should not be done lightly. But there are many schools that have documented success getting their kids in and out with degrees and training and a thoughtful education which is well respected among employers and grad schools. There are kids at dozens of engineering schools who struggle to fulfill their BS requirements in 5 years- and there are schools that are happy to admit talented engineering students to a Master’s program after a successful junior year.</p>

<p>YMMV.</p>

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<p>*I don’t know what the specifics of the loans are, but no matter what type of loan it is I don’t think parents should not be allowed to take out unreasonable debt to fund a child’s education because that could get them into financial trouble. I understand where you are coming from and I do agree somewhat, but I think there should be some monitoring of debt accumulation to help people keep their debt loads manageable.</p>

<p>…but this desire to send the child to the very best school no matter what the costs is foolish and sometimes I think it stems from a “show-off” mentality similar to a trophy wife or the expensive sports cars or the huge mansion. I think debt monitoring is critical because people are not perfect.
*</p>

<p>I agree. But, that can be handled thru the qualifying process…just like the financing of a luxury car. The qualifying for Parent Plus loans and co-signing Sallie Mae loans should be done with the consideration that loans will be needed for multi-years (and perhaps multiple children). </p>

<p>If it’s rather obvious that a family that is borrowing $15k for their child’s freshman year will not likely qualify for the same loans for later years, that should be addressed at that point. I agree that some parents get all caught up with the hoopla and sometimes aren’t even thinking beyond freshman year.</p>

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<p>For those who think it’s OK to take out massive loans for professional/law schools, you may need to rethink that. Haven’t there been recent stories on CC about an MD whose loans had ballooned to over $500k as well as lawyers who are in similar situations? Medicine and law may not be as lucrative as they once were. There is supposed to be a 21% decrease in medicare payments to take effect this week. If there is some sort of government healthcare in the next 15 years or so (just about when today’s college freshmen will be finished with college, med school, residency) that results in significantly lower salaries for physicians, how will the young doctor with 150K plus in med school loans pay them off? Debt needs to be taken with caution and with a realistic eye towards the future whether it’s for undergrad, grad school or professional school.</p>

<p>I’m continually amazed by the number of people who have saved absolutely nothing for college by the time their kid is a junior or senior in high school. I’m not talking about people who had job loss, major losses due to the stock market crash, medical expenses, or already are at poverty level or close to it, etc. I’m thinking about people who really could have planned better. I know one family that spent massive amounts each summer for many years on camps/summer programs to the tune of about 5-7K each summer. When it came time for college their kid had to go to community college because they had saved nothing. Even the four year commuter school was off limits because of cost. </p>

<p>When parents leave the hospital with their newborn, maybe they should have to read something that says: college is expensive. If you want your kid to go to college, start planning and saving now. You will have to make sacrifices, choices, and compromises along the way. Scholarships and free rides are rare, so start putting money away now.</p>

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<p>For those who think it’s OK to take out massive loans for professional/law schools, you may need to rethink that. Haven’t there been recent stories on CC about an MD whose loans had ballooned to over $500k as well as lawyers who are in similar situations?</p>

<p>I could be wrong, but I don’t think the people that are only borrowing the Stafford med school student loans of $224k are the ones whose loans have ballooned to $500k. I think those were private loans.</p>

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<p>I know students who made little effort in HS but received merit aid from colleges where a 3.0 (which puts you in the bottom half of our local HS) will be rewarded for merit. I also know students who worked their you-know-whats-off to attend Ivys or other top schools and didn’t get a dime in merit.</p>

<p>Yes, I know that these students had a choice to attend schools which would have awarded them big time, but I’m just saying that I disagree with the concept that effort/academic achievement equals merit.</p>

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<p>Ivies do not offer merit aid. </p>

<p>Lots of schools offer merit aid to entice students. There is a whole industry behind this. You might want to google enrollment management and see what you find. There was an article in Atlantic Monthly 2005 that explained this well. If you are a B+ applicant with an 1100 SAT score, try a school that puts you in the top 10-15% (maybe a 3rd or 4th tier). Don’t try to get it where you are below the middle of the applicant pool, unless you are counting on an athletic award, a music, or leadership award, or have something unique to offer that a school really wants.</p>

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<p>Well, it’s all about choices. Cast a wide enough net and you might reel in some cash at a less desired school and then have the good sense to choose the less expensive option.</p>

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<p>*I’m just saying that I disagree with the concept that effort/academic achievement equals merit. *</p>

<p>Did somebody make this claim on this thread? I think the concern is about borrowing excessive amounts of money when another good but cheaper option is available. </p>

<p>There are a few schools that give merit for a 3.0, but many typically require a 3.5 or higher GPA and a high ACT/SAT.</p>

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<p>The OP tells an important cautionary tale. Way back in the dark ages, when school was so much more “affordable” (a point I would dispute, but this is a long post already so I will save it for some other time), quite a few top students who lived in the same suburban area ended up going to a local private u that offered $$$ to top local students. You could commute there, and go for basically only the cost of books. One of our HS vals went there over Harvard due to finances, as I heard. My brother attended there too. I good friend of ours went there, and the wife of a former college of mine went there, and then to Yale Law school. It is tier 3. Good financial choices, and a good education.</p>

<p>I thought I was middle class growing up, but truth be told, we were a blue collar family. I went to a private school, away from home, and managed by extremely frugal means to graduate with only 5k in undergrad loans, but I went to grad school, and eventually had much more debt than that. My loans were slightly more than 50% of my starting salary after grad school and payments were a little less than 10% of my starting salary per annum. By good fortune, when I tried to extend the payments over 20 years through Sallie Mae, they had run out of funding, and I had to pay back in 10 yrs. Yes the payments were larger, but then it was done with less total expenditure. For undergrad, I worked at work study jobs, and each summer I had a paying job - whatever I could find. I worked in grad school too: during the school year and during each summer. During those 8 years, and for quite a few years after I graduated, I lived extremely frugally. For most of the time I had no car. I had a hand me down car during grad school that was maintained inexpensively due to some mechanics who took pity on me. Once I was working in NYC, I lived in a very cheap apartment, with no tv (no cable bill). I did not have any cable tv bills for all of undergrad or grad school. I was lucky in that I got many raises and my salary after 5 years was more than double my starting salary, something I doubt will be repeated any time soon.</p>

<p>I see some people who really are willing to sacrifice their “quality of life” in order to pay for their education, and just forgiving loans is not a solution or fair to others who did sacrifice and do the right thing. I know a recent med school grad who claims to have 200K in outstanding loans, and as a resident these payments are way out of proportion to the salary, and they are not deferred. However, this former student has a great condo, a 60 inch tv, goes on vacation, has top quality designer goods etc. Must have the best cell phone, computer etc. I have to say that I did not live that way even for years after I became a lawyer at a top NYC law firm. Maybe a good living is still possible in medicine, but I am not at all sure that this will be the case. Medicare payments may be slashed 20% quite soon, but perhaps not - we will see. It is probably a big mistake to have 200K in student loans for law as well. Law practice, even at top firms is experiencing unprecedented cutbacks currently.</p>

<p>A plan of forgiveness will have unintended negative consequences. Abuse will be the way of things. It will cause people to take out as much as they can borrow. Who will care about repaying it? People who don’t need to borrow will do it, and will spend their own assets on cars, luxury goods etc, because they wouldn’t worry about repaying. It will be free money. Back in the dark ages, when Jimmy Carter was in office, people who did not need the money had their students borrow at subsidized rates so that they could invest the money short term because the short term interest rates on money markets was 17%. Wasn’t this an abuse?</p>

<p>I can understand that there should be some insurance component for the disability/unemployment of the borrower. This would be a difficult product to structure, and this is not my field, but I would think it could be done, much like it is done for the home mortgage market. Maybe it should be built into the product in the first place because in the home mortgage market it has generally been optional.</p>

<p>On a personal level I have to admit that it bothers me when I see people who default on their credit cards and other debts, and have the latest cell phone, manicures, and expensive car payments. I still live well under my means, have a hand me down cell phone, no manicure and a 12 year old car. I am saving for my child’s education. I guess I am the dumb one.</p>

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<p>I know. I should have been more clear in my post. What I meant is that not all students who receive merit aid are top students and not all top students receive merit aid. Students attending Ivies don’t receive merit aid.</p>

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<p>*I thought I was middle class growing up, but truth be told, we were a blue collar family. *</p>

<p>I think that the blue collar families of the 1950s, 60s, 70s, etc were middle class. Many of my neighbors were “blue collar” and had middle class incomes. Their earnings weren’t that different from my dad’s white collar job - as a matter of fact, some earned more.</p>

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<p>^mom2collegekids, I can’t speak for your neighbors or about other people’s experience, but we were generally not well off at all. Dad worked 7 days a week, and in HS mom went to work too. Ends barely met. I worked in HS too. My dad was a manual laborer without a HS education, not a skilled worker like an automotive or construction worker. My parents were somewhat delusional to believe that they were middle class. The neighborhood was middle class, but we were not. Ultimately my Dad died at a relatively young age, and I am convinced that overwork definitely had a lot to do with it.</p>

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<p>^^^
Ahhh… I was just speaking of blue collar in general of the time…factory workers, construction, tradesmen, etc. </p>

<p>However, I must say, most middle-class families were “barely making it” when I was growing up.</p>

<p>Most middle-class families lived rather paycheck to paycheck because families were larger and many things cost proportionately more money back then. A simple TV set (not big screen quality) could cost a few weeks’ salary. A cheap washing machine could cost a few weeks’ salary. Many couldn’t afford dryers. A camera cost a week or two’s salary. People had to save and save for things that people now can just go out and buy without much time spend saving for it.</p>

<p>I went to Catholic schools and our tuition was ridiculously low for grade school. The entire family could go for $11 a month. Some parishes didn’t charge any tuition at all.</p>

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<p>I do think people lived more simply in the 60’s which is what I can remember. We did not have a color tv or clothes dryer for years (the dryer of course came first - the tv I think we got when I was in HS). I do think my family was poorer than most in our suburb (and worked more hours), but of course there were truly impoverished people in other places, like Brooklyn where my grandmother still lived.</p>

<p>I think people go out and buy things now that they can’t afford, but they just charge them. My parents did not buy household items or cars with credit. I may use credit to get “rewards”, but I almost always pay in full each month, and never credit for cars.</p>

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<p>We have always lived well below our means–I really HATE owing anything to anyone. It was a huge struggle to take out a mortgage. I love getting benefits from credit cards but hate finance & interest charges, so we always pay our credit cards in full every month and only carried a balance ONCE, during 5 of the 6 month introductory period when it was 0% interest & we were saving up to pay off the balance on the car in full (which we did).</p>

<p>Crushing debt is one of the major problems of this economy and these times. There really needs to be a revolution in thinking – it would be a healthy change, in my mind.</p>