The Great College Hoax (Forbes) -- All that debt is a bad investment

Parents Forum
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<p>Dstark--yeah, I think the lawyers are a bad example. But undergrad, it's a definite concern and I agree with you there. I work at a private which accepts low performing, low income students. We're pinched for money and are throwing big loans at them, especially if they live on campus. the gov programs and our FA can sometimes stretch to cover tuition, but rarely much farther. I have met students who have taken out 9-11000 in loans freshman year. The reality is many will not graduate, and those who do may have, say, a 2.3 GPA in Sociology, which is not going to get them a job which will cover a 30K loan.</p>

<p>Those are the ones i worry about, not the two-lawyer couples.</p>

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<p>Cannot a student's debt be erased by bankruptcy or does the law shield educational lenders from making questionable loans?</p>

<p>Since bankruptcy and government bailouts have become the usual mechansms for dealing with poor management performance, why should individuals be held to a higher standard than corporate America?</p>

<p>The law used to be that a bankruptcy was carried on credit reports for 7 years. Has that changed? Clearing $200,000 in debt in seven years sounds like a bargin.</p>

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<p>Because they borrowed enough to hold the country hostage. Perhaps execution by firing squad would discourage the banking and finance behavior in the future. Getting huge salary and bonus, screwing up, and then getting your bonus because you scarfed the TARP money should be criminal.</p>

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<p>Can</a> I discharge my student loans in bankruptcy</p>

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<p>Yes, it's capitalizing on the trust of people who haven't thought things through for themselves, and I'm not judging, because I've been that person myself, but I wouldn't call it a hoax. It's a travesty that someone isn't counseling students and their families on the ramifications of post-college debt, but hopefully some of the recent publicity will increase awareness.</p>

<p>And I agree on the lawyers. No way they couldn't have paid that off if they'd lived frugally for a year or two.</p>

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<p>I also agree that for low performing undergrads, low income or not, massive amounts of debt are very risky. You don't finish, (more likely since you were underperforming in high school in the first place), you have to start paying on your debt within 6 months. And you don't have anything to show for your debt except an incomplete transcript. </p>

<p>We haven't talked about parents who took out PLUS loans or drew down on their HELOC to pay for junior's college--only to be stuck when junior dropped out.</p>

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<p>Well San Diego is a high price locale in which to live and I don't think a year or two would have done the trick. But they certainly could have done better than they did. The 12% interest rate is was a killer!</p>

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<p>I know a lot of people that make quite a bit less than that couple that have paid off larger mortgages over a long period of time. $200K a year should be enough to get them through it. Not overnight but eventually.</p>

<p>One of my sisters worked in a law firm that did M&A work. The lawyers either made or billed out at $400 to $500 an hour. The company just closed up shop as the business is just not there. Those experienced lawyers will be out looking for jobs and competing with new grads. Maybe that results in income deflation for new and experienced lawyers. One can only hope.</p>