<p>The part of the article that is either most sad or most amusing, depending on your empathy quotient, is a quote from a Rutgers masters grad starting out $116,000 in debt.
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"I feel like I've done everything I was supposed to do, and at the end of the day, I've got this huge debt," Palazzolo says. "What did I do wrong?"
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<p>Hmmm, do you think attending a college you couldn't afford might have something to do with it? The article doesn't explore this line of thought, so perhaps the quote is out of context. It certainly sounds like the,"If I can get in, I should be able to attend" school of thought.</p>
<p>The scariest part: this new grad earned his degree in public policy, so he'll probably be in a key government position a few years from now, maybe director of the OMB. ;)</p>
<p>The article notes that the average new grad debt is $19K. To me, amounts below $20K composed mostly of Stafford loans shouldn't be too worrisome - in all but the most poorly paying fields, a grad should be able to budget to keep up the payments, if not prepay the full amount in a short number of years.</p>
<p>Undergrad students racking up six figure debt, though, or amounts close to that, should be really worried. Unless they are on the fast track to investment banking or are a certified computer genius, these kids won't be getting anywhere near six figure salaries and paying down the loan is going to be very slow and very painful. Many of the high paying careers require an advanced or professional degree, too, meaning even MORE debt may be in store for them.</p>
<p>I just finished my first year of college. I am amazed at the debt loads that some of my peers had (and that's at a state school). There was a thread on the college life forum a week or two ago about how much debt we'll all graduate with. A lot of the answers were $75-100k. And it doesn't seem to really bother people. One of the (many) reasons I chose my state school is I will be able to graduate either debt free or with maybe $5 or 6k in debt. Any debt accrued will happen my senior year when my sister starts college. Grad school is what I'm worried about, but I'll be in a two year program, and I'll try to pick my cheapest option. My dad also said he'll probably split the cost with me, so that reduces my debt there to about $20k at the most and that number is hopefully very high. I'm planning on going into speech pathology so it won't be an exceptionally high paying field, but it's one with a job pretty much guaranteed due to speech pathologists being in such high demand, so once I finish grad school I will have job opportunities. I am pretty worried even about that "small" (by other CC'ers standards) amount of debt and that's after grad school. I can't imagine carrying triple digit debt coming out of underground. I'm not getting a bad education, and have great opportunities even at my state school. I just don't see (and never have) how it's worth it to carry so much debt to go to a certain school. I'm sure mine is an unpopular opinion here, but that's just what I think.</p>
<p>Maybe there should be a mandatory high school class on the implications of debt. What I see among peers is a lack of understanding (the kind my parents drilled into me with spread sheets) of how painful the payback will be. So many people assume they will be rich! Just read these boards to see how many kids say no problem, I'm going to be an investment banker. They have no clue how hard it is, even for a top HYP grad, to get and keep those jobs.</p>
<p>To me, the sad part is how debt stifles creativity. It makes it near impossible to take a year off and travel; spend a year volunteering in Africa; much, much more difficult to borrow to start a small business; virtually impossible to do what is necessary to get a slow-starting career (like acting, or music) going. It turns would-be exciting and creative 22-year-olds into worker bees (and more worker bees is precisely what the country DOESN'T need.)</p>
<p>I read the article and it is very sobering.</p>
<p>There was the example of the young woman who was retraining by getting a nurse practitioner masters degree at USD. She figured to be $165K in debt by the end of her educational odyssey--at least she went to a cheap undergrad.</p>
<p>She wants to get married, start a family, maybe even stay home with the babies--but a $165K debt is a hungry animal that will have to be fed.</p>
<p>People are really clueless about this debt problem. And my response to these articles is: If the kidds have that much debt, imagine the parents!</p>
<p>I work with a great 30 year old woman. She has an architectural degree, which she uses in a not-for-profit setting (a job she loves). She graduated with $130,000 debt ($70,000 of it from her undergrad). She can barely afford a decent apartment. She tried to buy a house and could not qualify for a mortage that would cover anything you'd consider living in. She feels that she will never be out from under the load.</p>
<p>weenie - I too find it incredible that students just have no clue what kinds of burdens they're setting on themselves. Each stage in life should be about keeping options open. A huge debt takes away many of those options (house, family, non-clunker cars,...). Just no clue.... (((shaking head))).</p>
<p>I can understand how someone who believes he's headed for a career with a strong probability of reasonably high-income might incur some extra debt - but it's hard to imagine how students majoring in art, film, theater, etc. expect to pay back these massive loans. One wonders if these students had parents who did their best to counsel them against incurring so much debt and the kids ignored the advice, or if the parents took a laissez-faire attitude.</p>
<p>The sad thing is that there's little doubt that many of these kids could have attended different schools with much lower debt.</p>
<p>I personally think it should be against the law to allow someone who has never had to support themselves be allowed to make such a huge decision. Barring that, I think Suze has a good idea as far as a mandatory high school class, or possibly integrating into a math class, the implications of undertaking such an enormous amount of debt. I would go so far as saying give each student "X" "play dollars" each month (with taxes deducted and/or self-employment tax, depending) based on their anticipated income from their career, a fake checkbook, realistic figures for rent (where I live it's about $1,000/month for a one-bedroom apartment), car payment, food, gas, etc. and have them physically write out those checks for the 10 months they are in class. Then they might actually begin to feel the pain...albeit with fake money.</p>
<p>From the young people I know, I think that part of the problem is that they have never had to handle money. They don't know how much things cost and any money they make from part time jobs is just "fun money". My son was shocked when he first got a paying job and they took out (gasp!) taxes. </p>
<p>I know my own parents kept their finances to themselves, and I consequently entered adulthood without much budgeting or investing knowledge. We parents should share our family finances with our kids, let them pay some bills or participate in doing the taxes. </p>
<p>It is naive for students to think that 100K will be easy to pay back. Many either expect their parents to pay for it or plan to get very high paying jobs. What they will most likely get is a dose of reality.</p>
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<p>It is naive for students to think that 100K will be easy to pay back. Many either expect their parents to pay for it or plan to get very high paying jobs.<<</p>
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<p>Maybe they are expecting that trillion dollar wealth transfer from one generation to the next to bail them out. ("I'm not dead yet!")</p>
<p>It used to be that doctors coming out of medical school were the only ones having 6 figure debt. But at least you could see where their future income stream could comfortably cover debt payments some time in the future. But for others? Much tougher to justify such debt loads.</p>
<p>A $100k-200K debt is like a mortgage--how can you support that kind of edu debt and a mortgage at the same time? Can you only finance one at a time?</p>
<p>Instead of a high school course a better solution would require the college finaid office to provide the student with an interpretive statement addressing the issue of loan payments with respect to monthly payments, term of payments, and in the context of a reasonable range of a monthly salary expected based on the student's chosen major.</p>
<p>For students with above average student loans perhaps a personal counselling session should be mandated to discuss the short and long term implications of the debt being incurred.</p>
<p>To simply loan naive undergrad and grad students tens if thousands of dollars seems illogical and shortsighted. Yes, it is in the colleges' self-interest to enroll and retain as many students as possible but it is also in their interest to provide its students with the ability to enter the world as happy and successful graduates. As others have mentioned, high debt can severely limit choices at a time in a person's life when freedom to make choices can have a profound impact on his/her life.</p>
<p>The alternative, originaloog, is for the college to tell applicants up front, "we can't accept you because you can't afford to come here without your debt load being too high" or, after spending two years at the college, "we can't allow you to continue here after being here for 2 years, because your debt load will be too high if you were to continue". </p>
<p>The American way is to have the freedom to make your own choices and then take responsibility for them.</p>
<p>Maybe this is just more of the predatory lending trend that seems to dominate the economy at the moment. </p>
<p>Rip-off credit cards, realtors convincing customers their monster mortages are just fine, car dealerships promoting very high end leases...</p>
<p>When I read recently that the average American household is carrying over $9300 in credit card debt I simply could not believe it. To me that is an astounding figure. It's a fifth of the median income for cryin' out loud!</p>
<p>I have no idea why anyone would carry credit card debt of such high amts. What are they buying with their credit cards? I pay off the 1 credit card I use each month.
Other than car loan and mortgage, there is no other outstanding debt. Even when we re-did our bathroom last year...we waited at least a year to save the $ to be able to pay the remodeling bill.
Don't people work that way anymore, ie. save to cover big expenditures?</p>
<p>"When I read recently that the average American household is carrying over $9300 in credit card debt I simply could not believe it. To me that is an astounding figure. It's a fifth of the median income for cryin' out loud!"</p>
<p>It's high, but you need to remember that families in this income bracket or lower (a full 50% of the U.S. population) are intermittently without health insurance, and may be hit by "uncommon" events outside their control. They are far less likely to own their own homes, and therefore are at the whims of the rental market. Energy, food, and sales taxes make up a much larger share of their family budgets. The education costs they are worried about may have less to do with college educations and more to do with equipping Junior's back-pack. Their cars are much more likely to breakdown. Family stress is much higher, and there are economic costs associated with dealing with such stress. </p>
<p>It IS an astounding figure, but I wouldn't unilaterally blame the borrowers.</p>
<p>no people don't- I think people have been charging everything for sometime now.
SOme people do pay it off everymonth,but I don't think that it is hard to get behind.
We don't have any credit cards- we just have education loans and a mortgage which total about $110,000 ( house is worth probably $500K)
I have noticed though that we get lots of offers, and even people with really bad credit get lots of offers for loans and credit cards- there is a lot of predatory lending going on</p>
<p>"When I read recently that the average American household is carrying over $9300 in credit card debt I simply could not believe it. To me that is an astounding figure. It's a fifth of the median income for cryin' out loud!"</p>
<p>It's high, but you need to remember that families in this income bracket or lower (a full 50% of the U.S. population) are intermittently without health insurance, and may be hit by "uncommon" events outside their control. They are far less likely to own their own homes, and therefore are at the whims of the rental market. Energy, food, and sales taxes make up a much larger share of their family budgets. The education costs they are worried about may have less to do with college educations and more to do with equipping Junior's back-pack. Their cars are much more likely to breakdown. Family stress is much higher, and there are economic costs associated with dealing with such stress. </p>
<p>It IS an astounding figure, but I wouldn't unilaterally blame the borrowers.</p>
<p>"Don't people work that way anymore, ie. save to cover big expenditures?"</p>
<p>Try it on $49k in San Francisco or Seattle.</p>