USA Today asks how collegians shoulder their debt

Parents Forum
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<p>"the College Board recently reported that college graduates on average enter the real world with student loan debts of more than $19,000." USA TODAY asked a group of young adults if their college experience was worth it and 68% said yes while 44% said the value exceeded the cost.</p>

<p>""I would pay double to go back and (relive) my college experiences," says Dipesh Shah, 23, an Atlanta consultant and Emory University graduate with at least $100,000 in student loan debt."...</p>

<p>65% said that even if they could do it over again, they wouldn't have gone to a less expensive school.</p>

<p>"I may not have had any undergraduate loans if I had gone to a state school, but I (wouldn't) have the pride or prestige that I have for going to a 'name-brand' school," says Tammy Hellings, 26, of Momence, Ill., a Northwestern University graduate who owes more than $30,000. "I still think that it was worth every penny."</p>

<p>But 16% of respondents said they absolutely would have attended a less expensive school, and 15% said they might have.</p>

<p>"Choose a cheaper school if you can," says Jill Eckart, 28, of Washington. D.C., a graduate of Loyola College in Maryland, in Baltimore, where tuition and fees this year are $31,270. "My school experience was great and rewarding, but does it really need to cost that much?"...</p>

<p>54% said they would keep the same major. But 28% might have considered one that would lead to a better-paying job, and 15% "absolutely" would have...</p>

<p>While many said they viewed loans as necessary, 34% said they would have reviewed the terms of their loans more closely."</p>

<p><a href="http://www.usatoday.com/news/education/2007-01-30-collegians-debt_x.htm%5B/url%5D"&gt;http://www.usatoday.com/news/education/2007-01-30-collegians-debt_x.htm&lt;/a&gt;&lt;/p>

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<p>To me, the most shocking part of this article was the table of the students along with their total debt, the distribution of the debt between loans and credit cards (!), and their current occupations. I understand $100K in debt for medical school. I don't understand it for undergraduate school and I certainly don't get credit card debt in excess of $20,000. Is this the norm for college students these days?</p>

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<p>I also would like to know the answer to that question - that part of the article hit me as well and what is equally amazing is just how much of this part of student debt was deemed by the students themselves to be the result of unnecessary spending. </p>

<p>"More than a third said some debt was unavoidable, but 60% said they should have "absolutely" monitored spending more closely.</p>

<p>Books, lab supplies — "those are just excuses we all make to justify our high debt load," says pilot Brian Lee, 27, of Hacienda Heights, Calif., who owes more than $70,000 in loans and $20,000 on credit cards. In truth, he says, much unnecessary spending goes to "luxuries like eating out and fancy gadgets."</p>

<p>The culprit? Credit cards. "Do not use credit cards at all. They are nothing but a trap. If you can't afford it using your checking account (or) cash, etc... then you don't need it. It will come back to haunt you later on in life," says Jeremy Randleman, 30, a detention deputy in Wichita, who has more than $15,000 in credit card debt. His advice: Keep one card, "use it wisely" and pay it off regularly."</p>

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<p>The vast numbers of students at expensive Spring Break destinations provides more evidence of what is really going on with college students at any of the Top 100 schools.</p>

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<p>Interesting re: the credit cards. DS is on the other side of the country but when we set up his local bank account and they offered the credit card we politely declined. People have said "but they need it for emergencies" but I disagree.
In a true emergency, money can be wired into a bank account and there are several other options.<br>
I have found that without the credit card he has had to be resourceful in certain situations but I don't have an 18 year old who is carrying credit card debt. That works for me (and for him).</p>

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<p>[Off Topic Alert] Ebeeeee, do you have any trouble when your S flies? My H has run into situations with the oldest (a few years back) when the credit card he reserved the flight with had to match the name on the ticket. Hasn't happened with second S, since they have the same name! But S2 has a credit card (on our account, not his own) anyway, just in case. S2, who is a musician, uses the credit card also to order music online. He gets frustrated with us when we don't take the money out of his account (which also has H's name on it) to pay his portion of the card.</p>

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<p>barrons: I always wonder about that too. Where do these kids get so much money? </p>

<p>I think that "kids" who are on year 9 of paying back their loans should be surveyed. I wonder if they feel differently about it.</p>

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<p>Whoa -- how does the guy who attended Cal Poly end up with $70,000 to $79,999 of student loans???? If someone borrowed every cent of their full cost of attendance, they'd only have $68K of debt. (See <a href="http://www.calstate.edu/AR/fa_coa.shtml#slo%5B/url%5D"&gt;http://www.calstate.edu/AR/fa_coa.shtml#slo&lt;/a> for numbers)</p>

<p>And what about the kid with the aeronautical engineering degree and the $80K worth of debt? They didn't quote from him, but if he's got a job he probably is earning good money. My "rule of thumb" for student debt is no more than anticipated first year salary -- so while I would see that debt as outrageous for a liberal arts major, it makes some sense for someone who wants to be an engineer in a jet propulsion lab.</p>

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<p>I am proud that my son will be graduating with $50,000+ remaining of his $76,000 college fund. A nice situation to begin his real world adult life. And total freedom to choose whatever he desires to do come graduation time.</p>

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<p>I was at a meeting last night and ran into a friend I hadn't seen in a while. His daughter had just graduated from law school and I told him my S#1 was in 1st year law school. His D graduated with $150,000 in debt :eek: :eek: :eek: !!!!</p>

<p>My son will graduate from law school with no debt (fingers crossed), and I'm contributing zero. </p>

<p>How, you may ask?</p>

<ol>
<li><p>State school. Law School tuition approx $7000 per semester.</p></li>
<li><p>For the last few years he has had a great job making good money, yet lived VERY frugally, saving almost all of his salary.</p></li>
<li><p>He sold a piece of real estate when he moved off to school and used that profit for two things:</p></li>
</ol>

<ul>
<li><p>first, he bought two newly-constructed houses near campus which were perfect for roommates - each BR has a private bath. The tenants are paying the mortgage PLUS his living expenses.</p></li>
<li><p>second, part of the profit was added to his savings</p></li>
</ul>

<p>It will be tight, but he might make it without debt (or at least low debt). AND, in 3 years he might earn more profit when he sells the houses near campus.</p>

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<p>Congrats on your sons accomplishments, Dig.</p>

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<p>OTOH, friend's D (with a degree from a more prestigeous school) got a high paying job in a very large firm. She HAD to get a high paying job to pay off the debt. However, she's doing something she did not especially want to do and feels like she's sold out to some extent. My S, from lowly state school, probably will NOT get such a job. But he doesn't HAVE to either, and he will be able to do what he likes to do with his degree. And his plans (now, anyway) don't include a giant law firm.</p>

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<p>
[quote]
If you can't afford it using your checking account (or) cash

[/quote]
</p>

<p>I budgeted well as an undergraduate working my way through school by keeping all my spending on a strict cash basis. (I went to State U, and didn't take out any school loans either.) People told me then that I was an idiot for not establishing a credit record. By the time I went to professional school, credit card companies that they could hook students with preapproved credit offers because all college students think they need to "establish credit."</p>

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<p>binx, you asked about needing to show the credit card for flying. Before my daughter had a credit card she was able to purchase a flight (Southwest) with her debit card. She did not have a credit card until her Junior year in college, just didn't want one and liked using her debit card because she could keep track of the money. However, we wanted her to have a credit history for when she graduated and would need an apartment. </p>

<p>She had a tough time getting a credit card without us signing because "she had no credit history". Even her own bank where she had had an account for 4 years with direct deposit of her paychecks, never went over the minimum amount to keep it free - even they would not give her a student credit card! Finally a guranteed offer from Capital One came for a student credit card with a $250 credit limit worked. She started using it for minimal purchases just to get the credit history and pays it off on-line monthly. After one year, she's up to (whoo-hoo!) a $500 credit limit. Because of this we strongly encouraged our college freshman son to get a credit card right away while the offers were flowing in. He's activated it, but still hasn't used it.</p>

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<p>Friend won't last if she doesn't want to be there and makes the effort to impress. It's harder than you think to stay at a top law firm. Maybe she will use the firm for the high salary a couple years but the partners will catch on. She will be asked to leave if they don't feel she fits in. It's the partners calling the shots, not your friend.</p>

<p>Why are you again big law firms, Dig? They offer challenge and excitiment.</p>

<p>Here's a way to get into a law firm. Run for office. Your son is obviously young and attractive. The best way to network is running for office.</p>

<p>But real estate law is hot. Congrats to your son!</p>

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<p>I believe that taking on a large debt for an undergrad degree is rarely a wise decision.</p>

<p>However the same cannot be assumed for attaining a professional degree(med/dental/vet/law/etc) where the financial payoff will be quite significant.</p>

<p>Though Dig, no debt is obviously much better.</p>

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<p>Digmedia, I'm impressed that your S able to afford 2 places</p>

<p>Originaloog, Sometimes a student decides to not enter grad/law/med school after college. Job opportunities beckon, and grad school looks like a slow journey with no money.</p>

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<p>What about the parents? My kid's educations will cost me approximately $380,000 of which I've paid with their college savings $70K, which leaves me with $310,000 more to go. The last two will be going to out of state, state schools, no private ones. If I send them instate, I will only be saving $80K...for a grand total of $300,000 out of my pocket. I know I'm not the only parent in this boat. Why does the media say things like most kids come out of school with about $20K in debt???</p>

<p>And out of my pocket....ha-ha-ha, that's just a figure of speech....out mortgage loans........</p>

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<p>How in heaven's name do these kids qualify for credit cards with a $20000 line of credit????</p>

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<p>momwithquestions, that is b/c they don't look at parent loans when they are looking at student debt. There are people paying the college bill from savings, and or current income. Some parents are going to put themselves into debt by taking out loans, but many are not going to take on debt.</p>