<p>I always hear about how horrible college debt is and how we should avoid it at all costs, but one adult phrased it to me as "just another bill." if it's that simple, why is it considered so burdensome? I'm probably just being naive, but why is paying off college loans a larger burden then, say, paying the electricity bill? obviously, it's nice to avoid debt, but why must it be avoided?</p>
<p>The electricity bill is not a debt, but a bill, for services recently provided. If the bill is too high, you can modify future behavior to reduce the amount of that bill. Not so with student loans. Also, the bill tends to be much bigger, and takes longer to pay off.</p>
<p>Even a mortgage is a better bet, because you have the house, which could be sold, to secure the loan. When you take out a mortgage, you figure out what you can afford to pay each month, based on your income, and that determines what you can afford in a mortgage. With student loans it is simply based on the cost of your education - and that may or may not correlate to your income once you graduate. If you’re earning a degree in a field that doesn’t pay particularly well, you shouldn’t take on significant debt. Even if you’re in a field that pays very well, you still don’t have a guaranteed job, so you still might have difficulty paying off significant debt.</p>
<p>Most college graduates are about 22 years old when they get out and they do not have any job waiting for them. If they are lucky, they’ll have something from previous summers to tide them over a bit while they look for a job. By the end of the year, the first bill will be coming due on the student loans. If you are in the situation of my friend’s daughter, she couldn’t find enough work where her family lived to even clear $400 a month, and she owed $90K. You do the math. She was lucky in that she had access to a family junker of a car that she could drive to her coffee shop job to earn that much and needed every cent of that and more for job hunting, gas, etc expenses. And there were a lot of etc expenses. Family was having financial problems too and could not take on another bill or help her in expenses at all. </p>
<p>So she never made enough to pay for the loans, they went into forbearance or otherwise delayed, but they still were racking up the interest charges. </p>
<p>Read GWGrad’s take on his loans. He has a good job and is managing his loans and it’s still painful. The thing is, some kids owe a mortgage payment right up front and they still have to pay that electric bill, car payment, insurance, buy clothing and sundries. My kids have no loans and they still find it tough to make ends meet. If they had to pay Aunt Sallie Mae on top of their monthly bills, they’d have no extra money for anything. It’s tight enough as it is, and one of mine isn’t really meeting all of expenses as it is. Basically, sometimes you can’t afford to pay ANYTHING, but that loan keeps on growing with interest, late fees, charges.</p>
<p>It should be looked at like any business investment. Is the education worth the risk of the loan/tuition? Unfortunately, excluding extreme exceptions, the right answer is never known until years into the future. Anyway no one really knows the right answer, but I’m in the camp of good & cheap over great & expensive.</p>
<p>
Because your loans are in addition to all the other everyday bills you have to pay. And you are stuck paying them every month for 10 long years. </p>
<p>No one says they should be avoided completely as this may not be possible. Just minimize them as much as possible. (my daughter only has about $250 a month. She does not earn much as she has had to stay in the small college town where her husband is in grad school and jobs are scarce - she does find them a burden)</p>
<p>Unlike a mortgage or a car loan, student loans are not dischargable. Meaning, if you go bankrupt, you cannot walk away from them. As CTScout points out, if you find yourself in a financial bind in the futures, you cannot sell your education the way you could sell your house to get out of a mortgage.</p>
<p>[Project</a> on Student Debt: Home](<a href=“http://www.projectonstudentdebt.org%5DProject”>http://www.projectonstudentdebt.org)</p>
<p>Click on the tab labeled “Voices” to read about what student debt can do.</p>
<p>Also having those loans restricts your ability to do other things.</p>
<p>You may not have money for car payments.</p>
<p>You may not have money to buy a house or apartment.</p>
<p>You may not have money to start a business.</p>
<p>If you wanted to travel after graduating college, that will be much harder, since you have to start paying back the loans.</p>
<p>You may not have money for savings, which you could need if you lose your job, get sick, or have to relocate. Plus you’ll have trouble starting longer term savings.</p>
<p>If you get involved in a relationship, all this could weigh on it, since your options are restricted.</p>
<p>@momfromme
That pretty much covers everything, well said :)</p>
<p>My aim has always been to graduate without any debt, I’m a junior currently and so far I have zero debt! I actually have almost 30k in savings, but have been working part-time since graduating high school. Most of that money went straight into savings. Between grants and scholarships my tuition has always been covered - which I’m eternally grateful for almost everyone I know has debt.</p>
<p>Everything in moderation. A finishing college with $1,000 in loans is an annoyance. Finishing college with $100,000 in loans is more than just “another bill”. The interest alone is $5,000/yr, and if you repay the loan over 20 years, that $8,000/yr. If you make $40,000/yr when you graduate, then that is equivalent of taking 1/4 of your earnings after taxes.</p>
<p>If 1/4 of your earnings is “just another bill”, I hope you don’t have too many bills.</p>
<p>Here is my take:</p>
<p>If you want to buy a house you have to meet certain requirements before getting approved for a loan (income, credit, etc.). If you do not meet any of this criteria you can’t buy a house. The bank stops you. </p>
<p>Same thing with a car. But with college it is a whole different story. You can take loans on your own (Stafford up to $30,000 or so. virtually no requirements) and you parents could take out a parent plus loan for the rest (fairly easy loan to qualify for, almost breaks all the rules of lending out money). </p>
<p>The different between a house and college, is nobody is stopping you with the college debt. </p>
<p>Additionally the idea that college debt is another bill. Most people cannot afford the bills they have currently and this new bill will only hurt them. One of the biggest mistakes people make is the unrealistic expectations they think there college degree will have. They think they will automatically qualify for a higher salary.</p>
<p>If student loan debt is “just another bill”, then prison is “just another place to live”.</p>
<p>When DH and I first got married, he did get a job making above the market, and I left my job to join him. Until I found another job, we literally lived hand to mouth and though it was supposedly doable on paper, we ended up racking up credit card bills on things we NEEDED. Not wanted but NEEDED. Things always happen. The company that hired DH took months to repay him for moving expenses. A 5K hiring bonus that we counted on–they said he’d get in 6 months, and his salary was less than quoted as it also included a year end bonus And this was a mainstream great opportunity job and company. Our car insurance went way up in price, and we lost the apartment we were supposed to get and had to take another at a higher price, though reduced from the market price for it The list just went on every single month. We lived in a wonderful big city and could not afford to eat out or do anything other than freebies or dirt cheap things, NOTHING. And yes, the school loans were kllers. If we did not have those payments, it would have made things a lot easier. We did not finish paying them before my oldest started pre school. and we were not young parents. The Obamas are not long out of their student loan repayment years even, and most of us are not Obamas in our money making success.</p>
<p>We had to pass up some great buys in terms of housing because we did not have the money. When you are paying off student loans, that 's money you could be saving for a house. So, yes, they can be a big deal. I was determined that my kids would not have that monkey on their backs. Whatever money they make and whatever loans they take, they would do so after college without college costs still having to be paid long after graduation. It’s still difficult for them.</p>
<p>It’s a business decision. Is it likely to be worth it. You may be wrong after the fact, but life is long and there is a risk in not taking any risks. </p>
<p>Ultimately there is no hard and fast rule, you have to do the math. I think people on CC are sometimes overly risk averse, but often there are students who have reckless ideas about what they will be able to pay back, and whether it’s likely to be worth it. </p>
<p>Sometimes it is, often it isn’t.</p>
<p>I want to make it clear, that I don’t think it MUST be avoided. Sometimes, it’s worth it. Most of the time it is worth it, if you stay within the Stafford basics. That, for a 4 year degree is probably the gold standard in terms of what one should take. You’ll be right with a lot of others when you borrow those amounts. The problem is that school ends in 4 or so years, and then you are out looking for work in competition with everyone, and those loans can be a real burden when you have a lot more than anyone else, especially if your family isn’t helping your repay them. </p>
<p>My friend’s daughter had a wonderful 5 or so years at college and took advantage of everything that her university offered. Took extra time for her degree because she stopped to smell the flowers, go abroad, do some great internships have some wonderful experiences and she was shoulder to shoulder with all kinds of kids of all financial levels in terms of family income and assets. Like a litter of kittens, they were all pretty much the same in the college setting. </p>
<p>But when they graduated, it became a whole other story. The university doesn’t care if you are borrowing the money to buy that experience because they get the proceeds whether you are paying for it for the next 25 years at some outlandish interest rater or if your parents have in an account for you. You’re all equal. But the kid with no loans is going to be in a whole other situation than a student who is walking out with say $100K in loans which students posting here are contemplating taking or have taken. That’s one nasty gorilla to have on your back which is where it’s gonna be come repayment time. The kids who owes about $30K and whose parents make the first six months payment and the interest accrued on it that first year, is in far better shape. And the kid who has no loans can take that trip to Tibet with graduation money, decide to live at home and work at a coffee shop for a year and take some nuclear medicine tech cc courses to get a job that pays a little bit more since the job market for philosophers is a bit slow and low these days. </p>
<p>Now if parents have the money and for cash flow reasons, need the loans taken and truly take over the loans thereafter, it’s not as bad either. But if you know your parents are a bit irresponsible with money and you have a good sense that they are over their heads already, to put them deeper in the mire is doing them no favors. Too oftnen students and parents alike want something, like particular colleges on the kid’s resume so badly that they don’t look at thing rationally. Unlike a car that is too expensive for you, you can’t turn around a school loan for less. It’s not like a house, you can sell and recoup some of the losses and stem the future payments somewhat. Once you owe Uncle Sam and Aunt Sallie Mae, it’s pretty much until you die, and if your parents co signed, both of you die, that the debt is gone. Pretty serious stuff.</p>
<p>If student loan debt is “just another bill”, then prison is “just another place to live”.</p>
<p>This ^^^</p>
<p>And, when you have large student loan debt, then you’ve built your own personal prison.</p>
<p>I read through this thread quickly, so if someone has already mentioned the limited ability to discharge educational loans in bankruptcy, I apologize. </p>
<p>[FinAid</a> | Answering Your Questions | Student Loan Bankruptcy Exception](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>
<p>Stressed, have you ever had a car payment? Insurance payment? Etc. They are a royal pain in the you know what. They also add up very very quickly. </p>
<p>A little bit of debt is ok. It’s when you start creeping in to 30k+ just for undergrad that it begins to get crippling.</p>
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<p>For a humanities major no doubt. For an engineer, it’s manageable. You have to do the math. Someone on another thread had a rule of thumb of 50% of your first year’s salary. So for an engineer $30K is fine if you’re going to make $60K. Few humanities majors are going to make $60K out of school, but more like $40K. That would make it hard.</p>
<p>Few anything (including engineers) will make $60K right out of school. And engineers would be lucky to make $40K. I am thinking humanities would be more like $30K.</p>