What $200,000 in debt looks like

Paying for College
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<p>The whole story is quite puzzling. If she was not eligible for any financial aid then her parents must be fairly well off and should have been contributing. Plus should have been able to give some financial guidance re loans (I certainly nagged, er I mean guided, my kids re debt). If she received aid then why such high debt? </p>

<p>My kids have both received aid but have also both worked some during school. I have one who is a saver, and one whose money burns a big hole in his pocket (though he intends to contribute the full amount that will be matched in his 401k at the job that he starts at in a week and a bit - woohoo). Both would have a stroke at the thought of debt like this girl has.</p>

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<p>That’s true. I’m not saying that people who are on financial aid or have loans at all should never ever join a frat or do study abroad, but you should seriously reconsider doing anything that would push your debt load to above the federal Stafford maximum. It’s one thing to supplement a scholarship with a reasonably-sized loan to pay for an experience that you really want – as long as you’re clear-headed about it – but it’s another thing to be $30k in the hole your freshman year and think about using a credit card to finance a trip to the Netherlands to look at seashells or something.</p>

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<p>I think the solution to this is to allow private student loans to be dischargable through bankruptcy. (I’m not talking about federal programs such as Stafford.)</p>

<p>The way things are now, financial institutions don’t really care about whether it’s a good idea for kids to get deeply into debt – they get repaid no matter what.
Kids could still get smaller private loans if the banks thought they had some chance of being repaid, or if they had co-signers who could guarantee their debts.</p>

<p>I suspect that Congress won’t do this because the financial sector has some cozy relationships with our representatives.</p>

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<p>Since there doesn’t seem to be any mention of any fed loans, I’m thinking that her parents didn’t fill out FA forms.</p>

<p>Maybe they thought they couldn’t for some reason?</p>

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<p>I am in a similar situation with regard to student loan debt, though around half this woman’s debt. it was instilled in me by parents and grandparents that college was the way to be successful and get a good job. I went to a community college and nearly finished an associated there while working a near minimum wage retail sales job. New administration took over and scheduling became difficult so I took a year off in frustration.</p>

<p>After that year I found a good job in my field and shortly after went back to school at private university while under pressure from the family to finish my degree. i bought the universities lies hook line and sinker. it was supposed to be 2.5-3 years and done. With an optional “co-op” during which I could either not take classes or pay tuition and just work “to help pay for school” or take classes as normal and pay tuition.</p>

<p>I took a private loan for my first year, and for second and third a combination of federal loans and private loans. I had racked up some credit card debt over the years which I finally paid back in earnest, paying about $1500/mo towards and eliminated relatively quickly once I got serious about it. I’ve only paid around $5000 to student loan debt, since I was focusing on credit card debt first.</p>

<p>Here I am now looking at year 4 and unable to pay for it. The school lied to me about co-op, during which I went to work every day as I always have, but the school would not allow me to take more than one class. All classes applicable to my degree were canceled, as co-op students are not allowed to register for classes until two weeks after courses are cancelled from low enrollment. I had a petition signed by over 15 students in a similar boat as I was to run a course during each of my co-op quarters. The school would not run the courses, citing low enrollment. To add insult to injury, I was charged $18,000 for the six months during which I went to work every day as I always have and was not permitted to take any classes. Furthermore, I was charged full time tuition for 3 quarters in which class cancellation resulted in me only taking classes part time. Tuition over 3 years has risen from $26k my first year to $40k this year. This is something I had not planned for, and realized the college scam too late.</p>

<p>After a recent significant raise I now make around $57k/yr (of which government takes nearly 20% that I never see again). I have been promised a promotion and another 20%+ raise next year upon completion of my degree. I see this as critical to be able to pay back my loans, but am unable to get a loan for my final year of school. I also do automotive work ont he side which takes up a lot of nights and weekends though does not bring a predictable income. So I’m basically chalking up three years of my life and nearly $100k to “experience”. I’m looking at minimum loan payments of $1300/mo which is no problem. I should be able to pay nearly twice that and hopefully pay back my loans more quickly, though I won’t have a degree to show for it, nor that raise next year at work.</p>

<p>The current plan is to start over at a state school with a more modest cost of under $15k/yr and pay it cash as I go. It’ll be about 2-3 years factoring in the credits I can transfer from community college, but I know I can afford that. I’ve learned it doesn’t matter what you get your degree in, and colleges don’t teach you much of value. It’s just a slip of paper that allows you to earn more money.</p>

<p>Everyone at school I talk to about how they can afford it comes to one of three answers…

  1. They’re a minority with no job and get ridiculous amount of free money (that’s where that 20% out of my paycheck goes).
  2. Mommy and daddy have money and pay their way.
  3. Over $100k in student loans. The thing that puzzles me about this is everyone who says this does not work, yet I work and have a good credit score and can’t get loans.</p>

<p>Bottom line, I’ve made some terrible mistakes with regards to college. It’s something I have to live with. The best I can do is advise others not to fall into the college trap I did. Just get the cheapest degree you can. Money spent towards an expensive private school would be better spent gambling. That’s basically what I’m doing now, banking on more raises after a degree so gambling everything to get it (not at casinos mind you) and going for broke. Either win and live the American Dream or lose and be a homeless bum. Hopefully kids these days will be smart enough to not get themselves into this miserable situation I’ve got myself into.</p>

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If they are getting ridiculous amounts of free money it must be coming from the school. Federal aid does not involve ridiculous amounts of free money - the main federal grant is the Pell grant and the maximum is $5750 a year. It also does not take into account minority status - just financial situation. If the money is coming from the school it has nothing to do with what is coming out of your paycheck at all.</p>

<p>Why did it take you till being $100k in debt to realize this was not a workable situation for you? That is what puzzles me most when I read these debt stories.</p>

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<p>The minority students getting a free ride, or near free ride, get their money from a combination of government handouts, handouts from the school (amounts to significantly reduced tuition) and private handouts from minority organizations.</p>

<p>As for why it took me until nearly $100k to realize this was not realistic… I had figured 3 years at $26k (tuition on my first year), so was figuring around $80k at most. A lot, but my decision at the time was to either buy a house or go back to school. Like I said my family has me convinced from early on that college was the only way to be successful in life. I bought it and am where I am.</p>

<p>I never figured on tuition riding $14k in 3 years, I never thought it would take more than 3 years, I never thought the school would cancel classes to bring me to part time enrollment, I never thought the school would charge me full time tuition for part time enrollment, I never thought the school would make me pay $18k for 6 months in which they wouldn’t let me take classes, etc. Basically I never envisioned so many money grabs and I foolishly trusted their sales and marketing folks.</p>

<p>Work 40 hours a week at a day job, then another 10 a week on side work, do another 30 hours a week in classes, spend another 10 hours a week on homework, and another 10 hours a week commuting back and forth to school. It’s easy to put the money out of your mind. Even more so when you think you’re making decent money and getting increasing raises every year.</p>

<p>Part of my downfall was credit card debt when I started school. It took a year at school and working a good job before I realized my predicament and started making efforts to pay it off. The plan now that I have no credit card debt was to continue making $1500+/mo payments towards my debt before repayment is mandatory on all my loans. That would not be until 18 months from now, and paying $1700/mo towards only my highest interest loan would have that paid off in 18 months when the rest of my loans would become due. Assuming I got the loan for my last year it would be 5 years of $2000/mo payments, which I was figuring more like $2500/mo for 3.5-4 years until paid off, that’s assuming I keep my $10k security blanket in case I am injured, lose work, need car repairs, etc. other options for repayment more quickly include cashing out my 401k, but i don’t have a huge amount in there so I don’t think the tax hit would make it a wise decision. You want to get inside the mind of a college student taking out massive loans and how it’s was justified, so that’s how I justified it after I realized I was in trouble. Before I realized I was in trouble I just blindly trudged on racking up debt because it was instilled in me that college was the was to success and it would pay for itself.</p>

<p>The problem was all the unforeseen expenses and money grabs by the school. In hindsight I should have gone to one of two local state schools and paid $15k/yr which I could have done out of pocket without taking any loans. For perspective, at Thanksgiving dinner with the family we have two kids nearing college age both looking for schools now. The kids and their parents were throwing $40k-$50k/yr numbers around. I was ostracized for suggesting colleges don’t teach much, that the best knowledge comes from experience in your field and they would get a perfectly good education going to a state school with a much more reasonable tuition. My family doesn’t know how much debt I’m in, but I have mentioned in passing that college has been the most expensive mistake of my life. They ask “When will you be done?” to which I respond “Not for a very long time.”. I’m sure they’ll figure out sooner or later that can’t afford to finish. I was never given any help from family to pay for school and will not get any.</p>

<p>So to boil it down, I believed going to an expensive school, one of only a few on the East coast offering a degree in what I do for a living, was the road to success and making a good living. Little did I know that decision would rob me of achieving my dreams.</p>