<p>Sadly, some banks are no longer willing to lend money to students for college. You will see much tighter money and higher interest rates in the wake of all this. Check out the follow article: The</a> student loan bubble is starting to burst</p>
<p>Why is it “sad” that some banks are pulling out? Isn’t it better if it is harder to qualify, so that fewer students end up over their heads in debt? Yes, they might have to study part-time, and they might take longer to finish their degrees, but if they don’t owe a boat-load of money, it seems to me that they are coming out ahead.</p>
<p>Actually, I probably used the wrong working. It is probably a good thing in the long run. However, it will make families take choices that they wouldn’t have considered before such as sending their kids to community colleges to a greater extent.</p>
<p>One can hope that that will translate into a stronger and more uniformly excellent CC system nationwide.</p>
<p>Thank God. College costs are outrageous. The only way the costs will come down is if people aren’t able to finance it!</p>
<p>My first car cost more than my entire 4 years of tuition at Purdue back in the 80’s. Based on Forbes most recent data most colleges run $40-60K per year (tuition,room, board and fees)!</p>
<p>Something’s got to give. Most people can’t afford this. If banks won’t give loans, colleges will be forced to make costs more reasonable and in line with what people can pay, especially since todays earnings don’t justify those costs.</p>
<p>Are private lenders allowed to set rates that depend on the attributes of the borrower and the school he or she attends? It’s my impression that private lenders do not do this.</p>
<p>Today, 1 college tuition = 10 “first car’s”. Think about that when you look at the college sticker(s) on the back of your car.</p>
<p>I agree, it’s probably a good thing.</p>
<p>In desperation, too many students/parents turn to ridiculous loans in order to “save the day”. </p>
<p>the whole college app process has become a 12-24 month grueling process. No one wants to repeat it. hope and excitement are high throughout the process. Lot of chatter. </p>
<p>No one wants to be the stinker in May of their child’s senior year and and say, “hmm…none of these schools are affordable, your college visits, your apps and your essay fine-tuning efforts were wasted, you now have to go to a CC.” </p>
<p>We’ve seen low-income single parents pressured to borrow $15k+ per year in order to “save the day”. </p>
<p>And, because the cycle continues, the upcoming students/parents assume that everything works out because “so and so’s kid got to go to X and they don’t have a lot of money.” They don’t know that a big loan was what enabled the student to go. If they heard more stories like, “So and so’s kid is at a CC because none of his schools were affordable,” then maybe parents and students would do their “due diligence” to make sure some affordable options were on the table.</p>
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<p>I would guess that most college students attend colleges whose list price is substantially lower than $40,000 per year (including room, board, books, etc. before applying financial aid grants and scholarships), since most college students attend community colleges or state universities in their states of residency (often commuting while living with parents, which usually reduces room and board costs).</p>
<p>“The only way the costs will come down is if people aren’t able to finance it!”</p>
<p>True, but are we to hope that people’s finances deteriorate so that college costs will come down? :eek:</p>
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<p>No, they don’t. Not even close.</p>
<p>“the whole college app process has become a 12-24 month grueling process. No one wants to repeat it. hope and excitement are high throughout the process. Lot of chatter”</p>
<p>Very true. And the college prep process is several years, where students have an awareness there is a goal they are shooting for (college admission) and awareness where other graduates in the community and family go to college. Their expectations need to be set early on about affordability.</p>
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<p>True…but I’d modify this to say the only way costs will come down is if people aren’t WILLING to finance it. Since that hasn’t happened yet, at least this is one way to protect people from themselves.</p>
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<p>I don’t think it has anything to do with people’s finances “deteriorating”. It has everything to do with people staying within the finances that are AFFORDABLE for their family and getting the best education for their child that they can within that framework. If that means cc/commuting to directionals/etc then so be it. The “bubble” is entirely self-created by people borrowing more than they could afford to because they WANTED to attend a particular school. I’d be willing to bet that nearly all the students we hear or read about that are buried in unmanageable debt had less expensive options they could’ve chosen…but didn’t. Sorry…got no sympathy for self-induced, avoidable pain.</p>
<p>“the only way costs will come down is if people aren’t WILLING to finance it … entirely self-created by people borrowing more than they could afford”</p>
<p>Lenders determine what we can afford to borrow (except for those more conservative than lenders!); if lenders find they have erred, they will tighten requirements and/or raise rates (while remaining competitive with each other). To do the best for their children, there are enough parents willing to borrow what lenders will advance, allowing college costs to rise. It’s supply and demand all around.</p>
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<p>Sorry again…but I totally disagree. This is exactly why people find themselves with unmanageable amounts of debt…because they didn’t have the common sense to figure out how much they could afford to borrow. </p>
<p>Of course lending institutions bear some of the blame for talking people into borrowing more money than they can afford, but no one put a gun to these people’s heads and forced them to take out those loans. Every car we’ve purchased or house we’ve bought over the years has seen a salesman trying to convince us we could “qualify” for more than we were asking for. I don’t like the practice, but the final decision is MINE and the responsibility rests with ME to know what my limitations are…not the lenders.</p>
<p>Caveat emptor…since that’s Latin I’m guessing it’s been a truism for quite some time. :)</p>
<p>As the gap between college-educated and non-college grows, borrowing money for an education is still one of the best investments, even with the inflated price. The problem is that the whole college loan industry is based on two foundational ideas: near 100% employment for college graduates and rapidly increasing earnings that make the initially onerous payments more manageable. For a variety of reasons we have large cracks in that foundation and people are starting to notice them.</p>
<p>A sign that a company is about to fail is when the board reprices their stock options. That way they can pull the little remaining value out before the next quarterly earnings report, kind of like drilling a hole in a patients heart to pull out the blood while telling everyone how calm the face looks. Recent increases in interest rates for student loans is the repricing, the drill, while all the talk of the “green shoots of economic recovery” is the cover. </p>
<p>Just like real estate loans are ultimately dependent on rising middle class wages, college loans are ultimately dependent on rising college graduate wages. When that implied social contract, that education is the path to a comfortable life, loses its basic value in the public psyche, then the financial industry built on that implication will crumble. </p>
<p>Unlike some on here, I don’t see anything good coming from this. If other recent financial crises are any indication, only a few benefit. A lot of good, smart people will be out of work.</p>
<p>“This is exactly why people find themselves with unmanageable amounts of debt…because they didn’t have the common sense to figure out how much they could afford to borrow.”</p>
<p>But most don’t find it unmanageable, so the system continues and “borrowing money for an education is still one of the best investments.” Lenders try to calculate how much won’t be paid back; again, if they err, they tighten requirements and/or raise rates.</p>
<p>vonlost…I’m not completely against borrowing, but borrowing anything beyond the Stafford limits IMO is unnecessary and could become unmanageable…especially in the current jobs environment.</p>
<p>Do you honestly think that people borrowing a maximum of $27,000 over 4 years have been the cause of college costs skyrocketing over the last few decades? Is it part of the issue? Absolutely. But it’s the people borrowing $20K/$30K/$40K+ each year to send their child to University X when University Y was available and affordable that keep the self-licking ice cream cone scenario going.</p>
<p>Parents “buy the brochure” from University X and think their child won’t be successful if they don’t pay exorbitant amounts of money to attend the “name” university. It’s complete garbage…and until people actually start thinking and applying common sense and financial responsibility instead of pure emotion in the college app process nothing will change. When people start voting with their wallets you’ll see the cost of a college education come down to a more reasonable rate. Don’t expect to see it in our lifetime…but it could happen.</p>
<p>A lot of people can afford to borrow a lot more than the Stafford loan limits which is just some arbitrary number. Without the availability of more money, a lot of people are going to be hurt.</p>
<p>I’m afraid I’m not going to agree with anybody who uses simple minded “rules of thumb” about how much is reasonable to borrow. How much to borrow is a complicated question and each situation needs it’s own analysis. People must do their own math.</p>
<p>Let’s make the distinction between student loans paid back over ten or more years of college-enabled employment, and parent loans from, e.g., home equity, paid back over many years.</p>