<p>In my time in the CC forum, I have noticed utter and almost unanimous disdain for one thing and one thing alone: students taking out large amounts of loans to pay for college. The general idea I've gotten is that students should forfeit the opportunity to attend a highly rated school or their dream school in order to avoid having to take out loans. Sometimes, members even suggest the community college to state school route to avoid loans. I just wanted to say that, for many students (especially middle class students), graduating from a four year university loan free is not an option. My own experience is a perfect example of this. My parents make 140 K a year before taxes, around 100 K after. My parents say they can realistically pay 12 K per year to help me with the cost of education. (Some may say this is low, but we live in a high cost region of California and I know that this is truly all they can afford). My state flagship and the other UCs do not offer me any financial aid because my FAFSA calculated my EFC to be around 38 K (over a third of my parents' post tax income). Privates offer me aid that makes the COA between 30 and 40 K, the same price as the UCs. My super safety would cost only about 13 K a year, but I am not going to forfeit Duke, Berkeley, or Bowdoin for a CSU, and I know many others in my position feel the same. So that leaves me with one option: loans. There is essentially no way I can get a high quality education without them, so yes, I am going to take out loans. And so are hundreds of thousands of other students across the nation. Do you really think I would be better off at a CSU? I don't. And I know that many posters are trying to discourage students from taking out huge loans, but really? For many, debt free isn't an option and loans are the reality. </p>
<p>Very, very few posters are naive enough to think that debt free is an option for most going the traditional route. Instead, they advocate minimizing debt and no more than direct loans (5500 in loans freshman year with increases sophomore & junior year).</p>
<p>Why can’t you go to a cc? Can you comute to a uc?</p>
<p>You get to make the choice of whether prestige means more to you than significant debt. Personally, I think prestige and significant debt is the wrong option but most 17/18 year olds cannot fathom what it’s like to make $300+ loan payments every month for TEN LONG YEARS after four years at their “dream” school.</p>
<p>I kinda agree with @romanigypsyeyes</p>
<p>If your parents can pay 12k a year. Goto CC for 2 yrs and transfer. With that said I wouldn’t commute to a UC because it straight up feels like CC if you do. </p>
<p>12k x 2 years - 4k (or so) for CC = 20k in college savings.</p>
<p>30k in state COA at a UC x 2 = 60k total - 20k in savings - 24k = 16k in loans (which can all be federal.)</p>
<p>I think most people are against advising most people to take on 50k+ in loans with parents co-signing. It really doesn’t make sense even for the top-tier schools. </p>
<p>First of all, most of us are not adamantly against ANY loan. I think most of us who give advice on this forum consider any of the subsidized loans as well as the unsubsidized DIrect Loan entitlements pretty much a given part of what a student is going to be asked to take out for college. Even the most generous colleges require a student contribution and sometimes unrealistice (IMO, especially for first term, first year students) work study hours. There are limits on what students can take in loans on their own, however, for good reason. For an 18 year old to be making commitments to be borrowing large amounts is not a wise thing. Most of such kids are just coming out of high school, and though legally adults have not yet understood the ramifications of such loans. As it is a student can end up in debt for more than $80K in student loans alone with accrued interest and maximum conferment of Perkins loans, and if parents are denied PLUS. To owe that kind of money before you are can legally order your first beer is insanity. With the job market these days, and with the power of interest accrual, you’d be owing six figures long before you are making a living wage.</p>
<p>That isn’t the worse scenario, dire as that may be. Some parents have not learned to manage their finances and are frankly in bad shape, in trouble financially even before college costs have come into the picture. They love their kids very, very much and want to give them everything and anything, and become, as Sybbie aptly says, “fools with pens”, and end up taking PLUS at close to 7% interest, delay the payback as long as they can so it accumulates, again with the frightening power of interest accrual. That they have not saved the money, cannot pay the money out of current budget is a very strong indicator that they will not be able to pay back the loan. It’s a fact of life. They are putting themselves at financial risk and possible ruin.</p>
<p>Still isn’t the worse situation. There are private loans for those parents who cannot qualify for PLUS, which is a strong sign that things are not going well with parents’ finances, since the criteria for those loans is a lot laxer than that for any other such loans on the market. All that’s needed is a credit report that shows no 90 day outstanding bills. No income, no other history is taken into account. Even bankruptcies and foreclosures are taken into account on a much less stringent manner. These loans basically require the parent AND child to sign together and both are on the hook until death do one part for BOTH parties. Both credit reports are on the line there, and if payments are not made, then the results can be dire for parent AND the student. I personally know a family who has come to financial ruin from this situation. And the terms of forbearance and delays are not as generous as the student loans here, and the interest rates often more draconian than even the not such a great deal PLUS. They will really go after you and parent if these loans are not paid on time, and you cannot bankrupt your way out of repayment from these. Not easy to get out of any of the student loans, for that matter.</p>
<p>For those parents who have managed their finances reasonably, have saved some money, can tighten the belt and pay some of that college expense, to responsibly borrow is not unreasonable, nor is it for a student to do the same. The current model of college payment pretty much is that. Past, present, future payments on part of both student and parent. But taking a lesson from mankind in general, those who have not saved in the past, can’t squeeze out much or any more from the present budget, is a pretty good indicator of how the future with those loans are going to go. </p>
<p>I want to give another view as to the long time danger of loans, as well in another post. But really, the reason to watch these loans carefully is because many of you kids and your parents alike cannot afford them.</p>
<p>For you, with parents who are making 6 figures and who can come up with at number that they can afford, something a lot of folks can’t even do (“we’ll work it out SOMEHOW, it’ll all work out” are typical attitudes), taking out measured doses of loans is probably not such a terrible. thing. But, regardless, it is very painful to repay those things Right now your main focus in life is going to a “dream” school. Other things blur in your focus of that goal. Once you finish that school, and you have to move on in life, and you have loans to pay for that dream, in your new reality and present, that dream can become a night mare. Worse, if you see you’ve inflicted serious financial damage on your parents as they struggle to pay off that dream.</p>
<p>College loans are a fact of life for most students, and I haven’t seen posters say avoid them at all costs. What I have seen is advice to minimize debt. Keep your loans within the federal limits.</p>
<p>You infer that your 13k super safety is a CSU. I wholeheartedly disagree that you can’t get a high quality education there. And, no I don’t believe that any of the other schools on your list are worth 100k in debt. </p>
<p>$100,000 in loans would be over $1000 a month for then years.</p>
<p>Taking out loans is something that is a family decision. The reality is that the student will need a qualified cosigner for loans above the Direct Loan amounts. </p>
<p>If the family agrees to these loans, that is a family decision. THIS family would not cosign student loans. But our kids had good options that didn’t require them.</p>
<p>If you are really a competitive candidate for admissions to Cal or Duke or Bowdoin, you would also be a candidate for merit aid at some excellent schools. Again…your decision.</p>
<p>I’m giving you a whole other side of the issues with binding yourself up with loans with this next soap box lecture. Take from it what you can.</p>
<p>You are likely about 18 years old, and the statistics pretty clearly indicate that you will change your mind about a lot of things that you think you might want to do with your life. Very clear stats, very normal and the way it should be, IMO. To make life decisions at this age is often times foolish as you are half baked. You will hopefully mature, you will not be the person you are now, just as you are not as you were as a child. You’ve grown up and there is still growing to do.</p>
<p>College is not the career maker for most kids. Even those who start out in career directed majors such as a PT program, other health services preparatory programs, the CPA route, engineering, computer science, will be changing their minds. Many will stick it out even when they do change their minds because too much was invested in it for them to feel comfortable changing. I know many a pharmacist, nurse, therapist, etc who felt they could not do what they clearly would have preferred once they had gone so far down a certain path, due to money, expectations. These are some of the more disciplined people I know, and most as young adults cannot stay a path they hate or even are ambiguous about, as the work required is pretty danged tough. The drop out rates in these programs and certain majors are very high. You get far, far more kids transferring out of engineering and other science majors into the social sciences and humanities. The stats are in your face.</p>
<p>Here’s the thing: this is when many young people get that awakening on what they specifically need to do in order to find a job that pays a living wage (by indiv def) and that they can tolerate, and if they are lucky, enjoy. It’s a whole other story finding others to PAY for you. All that trouble with finding a dream college that YOU PAY is nothing compared to that. It’s a huge transition. What those with rich parents, or at least parents who can pay for that college experience, get, in addition to those fouFor those who have financially stable family situations, and for those who don’t max it out with loans, spending the four undergrad years of college, exploring options and finding onesself while getting educated during the process is an affordable luxury. The fact of the matter, is that most students are going to have to support themselves at some point in time. Find jobs that pay a living wage , and if loans are in the picture repay them as well. The reality is unless your family or contacts can get you in line for a good paying job, those first few years out of college are going to be very tight financially. Many, many grads find them selves in the irony of having to come back home to live after borrowing to go to sleep away college for 4 years. The party’s over, the loans have to be paid, the paycheck from the jobs, if any are gotten won’t stretch to pay for getting one’s own place, and the parents are tapped out. No loans available to make that transition to becoming a working stiff, and it’s even more expensive if you want to live that good life that you feel entitled to after 4 years at some of these schools. It’s a bitter pill to look into the mirror and realize who’s gonna be paying for it and to have back bills for college is going to put a real damper on things. It’s tough enough without those loans to repay. The people of Hamlin (Pied Piper, remember?) have a very typical attitude infused in all of us. Once it’s done, we aren’t going to feel thrilled paying for it. There is a reason why they make you pay for the rides BEFORE you get on at the amusement parks.</p>
<p>Having had years of school loan free, is a chance to go back to school to train for a job that pays so that they can make that next essential transition in life, becoming self supporting at a not so uncomfortable level. This is also a privilege for those who took options that left them relatively loan free, that went to community colleges, say, or local state schools or schools that offered them money instead of the other way around. Though many parents will break their necks to pay for those 4 years of undergrad, the tuition paying club membership dwindles rapidly when it comes to education after them 4 years. Most parents are literally tapped out, even well to do ones, put their hands up into the air and show the empty pockets when it comes to grad school, and professional school. Especially if they are paying loans for ug. </p>
<p>As for the student, after finding that working at the yogurt shop, or as an aide or orderly at the local health center, or other such jobs that do not pay a living wage, and finding that the future for making the money for the time of life envisioned is dim, many look for other career paths, and often find that further education is needed. If you’re lucky maybe a certificate program at the local CC will do it. But when you are making 8 bucks an hour, even scraping up a grand or so in tuition money is no small task. Or you might find some grad program or other as a good possibility that can lift enhance your employment prospects and paycheck visibly and quickly. The problem then becomes them loans you have. If you’ve not gotten behind or not had to go into forbearance with them, you can borrow some MORE for grad school or some such programs, if you have some borrowing power left. But that does mean more is on the line, because that ever churning engine of accrued interest is still gonna be working even if you get a deferral for going back to school, and if you’ve racked up a nice balance, even 3-4-5% is going to grow. </p>
<p>I know an optometrist who went to an ivy league school, graduated with a very nice gpa in a field of interest, juiced every bit of enjoyment from the college experience, did her internships and had some incredibly wonderful adventures …and then tried to find a job in her field. She had to be in the nth degree of qualifications in that field with her impressive resume but the there were only X jobs out there, and the nth degree wasn’t good enough. Think it’s hard getting into an ivy league school for the privilege of paying $60K+ a year these days? Well, it’s even harder finding a job to pay that amount, or in some fields, half that amount per year in that very field you paid to study. That is the reality of the times. </p>
<p>In her case after spending few years in poverty, dependent on her parents, doing internships or getting limited engagements in her field, she decided she needed a steady income, a decent job, a career in order to make the next step in life. She was living hand to mouth and was tired of it. So she went back to school to become an optometrist, borrowing to get the degree, and is now so employed, and can pay her bills, move up in life to get an apartement, think about a house, and having kids. But, she did not have undergrad loans, so that she just has those grad school loans. If I knew how to use the italics, I would use them in that last sentence. She also had parents who were giving her some handouts (and those arms were getting stiff, and the givings were not given so graciously in time). This is a reality that a lot of your predecessors are living, and if you have any sense of the future, that’s yours too.</p>
<p>My son’s SO, graduated with a psych degree like so many college kids. No job in sight for her, but she found something she like working in an ortho rehab center. She’s now back in school–tried for two years to get into a state program but even with a 3.4 gpa and her job that is so related to the field of study she wanted was shut out, so it’s a private school, working to get her master’s which is essential to getting a living wage in a field pertaining to her work. She really liked physical therapy, but that’s a phd program these days, so she’s going for a master’s in OT. At $40K a year full time. And she’s 30 years old. Time’s a ticking for her. But, she did not have undergrad loans. This time in bold print. She can move in with parents, take a part time job for some expenses, get some help from parents (and boyfriend), and take out not as much in loans as some to get this danged program done so she has a decent shot of making enough money to repay those loans as well as thinking about moving forward in her future with good financial prospects. She has strapped her parents with loans, she is just taking them.</p>
<p>That’s the gift I gave my kids by the way. IF they can’t make a go at it with their UG degrees, they are free to take out loans to take courses, get a cert or degree in something, a second chance if that is what they may need, without having the loan monkey on their back from age 18 from a long done deal. They are free to be bums after college as the only bills they have to worry about are those in the present, and they can think about the future </p>
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<p>I know lots of people in this same boat. For the most part, historically, they’ve done what you are planning on doing - i.e. taking out loans to cover a massive gap and graduating with between 60k to100k or even 120k in loans. I think you should talk to recent graduates about their loans. See if they regret them. See if you would find the consequences (living at home til your 30, driving a beater or taking public transportation to work, maybe putting off just about everything - getting married, having children, buying a home, travelling, etc.). It’s important to find out if these grads have their loans on deferral or if they’re actually paying them. </p>
<p>I can tell you that my own kids and I have been talking with these debt laden grads and their parents. It’s practically unanimous that they wouldn’t do it again, if they had things to do over. For sure, some would - they enjoyed their undergrad experience so much - but my kids look at those grads and assess for themselves: they’re living with their parents, riding public transportation, etc. My own kids want more freedom than that and so they have come to accept that accumulating as little school debt as possible is their ticket.</p>
<p>If you’re good enough to get into Duke, you’re good enough to get merit money somewhere else, somewhere, probably not as prestigious as Duke, but somewhere plenty good enough where you can be happy. If I were you, I’d go ahead and accept at your first choice school, then defer admission for a year. Maybe you’d even want to apply again to colleges for Fall of 2015, this time keeping in mind merit money. Once you get your new acceptances, you may find that you still want to go to your first choice school, but at least you’ll have a year’s worth of savings to put toward it. Work as much as you can. Think of this year as prepaying your student loans. </p>
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Let’s turn that question around. Do you really think you’ll be better off at Duke, Berkeley, Bowdoin with debt? I don’t (at least for debt beyond Direct/Stafford loans).</p>
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<p>But debt free is an option for you.</p>
<p>You are looking at a false dichotomy. There’s no such thing as a student who can get into Duke who can’t get merit aid at a good college. Think more about what you want to do and be after college and less about fancy names, and find a good college you can afford that will get you there.</p>
<p>Your title is about “reality”. If you’ve never been saddled with debt, you really don’t understand that reality.</p>
<p>Going into huge debt for college is much more about Fantasy than Reality, the Fantasy of Dream Schools and unrealistic expectations.</p>
<p>There is also a difference between taking out the Stafford loans because without them you can’t go to ANY college and taking out $100k+ to go to a dream school. The ROI for a student who owes $20k but now has a nursing degree and license after attending her state college is probably much better than the ROI for the brightest kid in the world who borrowed thousands to go to BU or Notre Dame, majored in history, and has no job prospects. You have to look at the entire picture.</p>
<p>My kids do a budget project as seniors in high school. They are to pretend they make $35k/yr and then the teacher gives them a list of things they must buy, including food, a car, utilities, insurance, savings, furniture, etc. There are some things that most would do differently like have a roommate, but basically it is almost impossible to live on the budget and LIVE. And there is no student loan payment (because Mr. Bennett doesn’t pay them, and he thinks everyone should live just like him). There is no vacation money, no gifts for all the friends who will be getting married, everyone buys the cheapest insurance, cheapest furniture, cheapest sheets and towels and spoons and dishes available.</p>
<p>What happens in real life? Grads move home, make $2000/mo and pay much of it to the student loan, car and insurance to get to a job, and taxes. </p>
<p>It is not just taking on loans, but also graduating from college with a degree that does not lead to an income that allows one to pay off those loans quickly. I have a family member who graduated with a degree in Mechanical Engineering, and already had a job offer before graduation, and began working at a job paying him $80K a year. Any 22 year old going straight from college to an $80K a year job is going to be able to handle a reasonable amount of loans. My family member minimized his loans, and was able to pay them off within a few months, and moved on to buying his first house at the age of 23. He is now 26 and has already sold that house and purchased a new one (thanks to a job transfer, promotion, and higher salary.)</p>
<p>But for those who insist on pursuing degrees that do not lead to $80K a year jobs, taking on significant loans is a bad idea. I admire people who want to teach, but those who do should not be racking up student loan debt, because their incomes are going to be low for years to come. I have met too many young, enthusiastic teachers who did not take that into consideration, and now find themselves with loan payments that prevent them from even being able to rent an apartment without getting a roommate, or even two.</p>
<p>The standard repayment plan for $26,000 in federal unsubsidized loans (the amount that every student can take out if they wish) is $262 a month for 10 years. You end up paying over $31K to pay off that $26K, but as long as you know you can handle $262 out of your monthly budget for the next ten years, then fine (let’s hope that you are catastrophe free for the next ten years.) For that entry level teacher, that monthly payment could be about 10% of his/her gross monthly income - not insignificant.</p>
<p>How many students, though, end up signing on for loans that far exceed $26,000 over the course of four years? And how many do so without ever running the repayment estimator at the federal financial aid website so they can see the reality of what their payments are going to be? Unfortunately, many don’t think about - both students and parents - and then they get to the end of four years, with six months until repayment begins, and they are shocked at the bill.</p>
<p>Taking on debt is a risk, and can be mitigated somewhat with careful planning and realistic budgeting, but what can be done for those who take on $50K or $100K in school loan debt? The only asset they have is that college diploma, and too many who take on that debt burden, don’t have diplomas that will be able to be cashed in to pay the bill - ever. $100K in school loan debt is going to cost you at least $1000 a month for ten years depending on the interest rate. Now, if you are a new teacher, that is over 30% of your gross income, at least here in Florida. Even for the $80K engineer, that payment would 15% of gross income for the next 120 months. Does it make sense to take on so much debt?</p>
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<p>I also have a nephew who got his BS/MS in mechanical engineering from Cornell in 4.5 years. He graduated with 100k in loans. I know because I co-signed for his final semester when his parents got rejected. He also had job offers before he graduated. Including offers from both Boeing and McDonnell-Douglas. I don’t know what his current income is but I know two years later he’s still living with his parents. He needed a car to get to work and he’s saving for an engagement ring for his girlfriend so moving out is just not an option at this time, no matter how high his salary (and I suspect it’s pretty high). He now wishes with all his heart he had taken the full ride offered him by Drexel. And that’s exactly what he’s telling his younger brother.</p>
<p>Those $80K a year a jobs in ANYTHING are not usual. Even in engineering and fields high in demand. Also, not everyone has the disposition, interest, desire, motivation, discipline to stick with some of these programs that promise high paying jobs. It’s really a tough situation when you commit self and family to high cost on the premise that you will be making big bucks, and you find you cannot handle the type of work entailed. It happens quite often. </p>
<p>It 's really a bitter pill to be paying back substantial loans even when you are lucky enough to have a job that can cover them for all of those years. You are ready to move forward, and you are strapped to paying for the past. It hurts.</p>
<p>Yes, $80K jobs are not the norm - never said they were - but those high-paying jobs are not rare. It is just that most students are not willing to pursue the programs that prepare them for those kinds of jobs or just do not have the aptitude or desire to pursue those programs. I don’t believe I gave the impression that such jobs were available to the majority of students. One does not need to get an $80K job in order to handle student loan debt (though, obviously, it is easier to pay off debt with higher income.)</p>
<p>However, if a student goes to college with the intention to embark on a career where the entry level pay is less than $40K a year, then taking on more than the $26K in easily obtainable financial aid is highly risky. With all of the online repayment estimators, students can run the numbers to see how much income they would need in order to comfortably handle 120 months of student loan payments. Will a $50K salary be enough for $26K in loans? $50K in loans? $100K in loans?</p>
<p>Too many students and their parents don’t link student loans to future earning potential or to the return on investment of a particular college in light of the cost of attendance, which is, I believe, the reason there is so much discussion around here on CC discouraging students and their parents from signing up for tons of non-dischargeable student loan debt. Too many students have been burned, and find themselves strapped paying for past, and, yes, it hurts, but with a little forethought. many of these students could make better choices. Thankfully, CC is a great place to come to learn how to be proactive and prevent a lot of the heartache.</p>
<p>A problem is that even those kids who start out in a program that has a high potential for finding a good paying jobs do not always stay in them. Age 18 is awfully young to commit to something like that, and too often students find they are not suited to such a program. The attrition rates for these majors are high. </p>
<p>It IS rare to be making $80K a year right out of college. Very rare. </p>
<p>It’s difficult enough for students to find jobs at even the $30K mark. If there is some guarantee for that, even, one can more securely take out the loans. MANY students get NO job or one that won’t even pay the interest on the loans taken out. Can’t get the hours at a job, can’t get the pay, or there are no jobs. </p>
<p>Frankly, I am afraid for the first time in my life, for the future solvency of young people these days, even as I am worrying about my generation’s retirement. It’s never been really easy to get a living wage right out of college, but in the last decade, the odds have plummeted and I see many uemployed and underemployed young people who did all the right things and have not yet found a niche in the working world to become self sufficient. It’s frightening to me.</p>
<p>Admittedly, I am surrounded by lots of engineers and so those higher entry level salaries are not uncommon, though in the big picture, yes, I agree those salaries are rare. I agree with your concerns especially as I watch the middle class disappear, even as it has tried to keep up with the new economy and has taken on loans as all of those public and private schools seem to be profiting off of that financial aid rather than opening access, as financial aid was originally intended to do. The only solution I can think of at the moment is to give priority to students who choose public universities. At least the taxpayers could strengthen the public institutions rather than have so much taxpayer money going to private schools with endowments. Just an idea but I am hardly smart enough to solve the problems. </p>
<p>I don’t get the issue with community college. Take the evening classes so you’re with the older students. They’re hungry for the education. If you go that route and then to a UC, you get a bachelor’s from the UC. It doesn’t say you went to -gasp!- community college. It’s not a lesser degree. It’s a bachelors from a UC just like the kids who go from freshman year to graduation get. Freshman and sophomore years are really grades 13 and 14 with the bulk of classes being generic pre-requisites. My daughter spent her freshman year at a CC and then spent 3 weeks that summer in Paris on a study abroad course. Oh, and the CC gave her a half scholarship for the travel abroad. Her sophomore year she transferred to a state college with reasonable tuition and will graduate next spring with no to very little debt with a bachelor of science degree in nursing. Did I mention she’s likely going to visit friends in Northern Ireland this summer? Would she have rather gone to Earlham or Oberlin like two of her girlfriends? Yes. Is nursing school easy? No. Was the CC a blast? No. She wants to go into the Peace Corp and from there, maybe get a graduate master’s in public health or nursing. She would not be considering either if she had to start paying back loans. I get the costs of living in California. That’s where I grew up. I went to Berkeley but so did a girlfriend who started at Contra Costa College in the Bay Area. Her dad died and there wasn’t money for college. Strangely - no this is really really true I swear on a stack of college brochures - she’s had a stellar career in banking, travelled the world with her husband, and I don’t think anyone’s ever asked her if she went to community college before Berkeley. If they did, she’d be delighted to tell them yes.</p>