<p>I personally don’t think it’s essential to graduate debt free. I came out of school with a little over $20,000 in debt, and that was 30 years ago. When I advise a cheaper alternative is when a student is asking about a large amount of debt, especially for a school where I can’t see a discernible benefit. If a student is borrowing the Stafford limit ($27,000?), I think that’s pretty reasonable and often unavoidable. Much more than that can become problematic and start having a significant impact on your life choices.</p>
<p>It’s not essential to do much of anything. It’s just easier, the less debt one has. It also depends on what the student’s job prospects are and if the family can help with transitional expenses and if things don’t work out right away. The more debt there is, the more issues can arise. I have a friend who has had horrible financial stresses due to cosigning large loans for her daughter who has not been able to find gainful employment. The family is also having financial issues outside of school loans, so they are bombarded on all sides. It would have been a lot more relief with out the student loans on the agenda.</p>
<p>Replies so far have assumed that the student graduates from college and begins to repay whatever debt accumulated. The even worse scenario is that the student and family run out of borrowing power before graduation and the accumulated debt must still be paid.</p>
<p>beth’s mom…The problem is defining what constitutes a “discernable benefit”. I’ve seen WAY too many posters on CC advising others to borrow ridiculous amounts to attend School A over School B because it’s ranked X number of spots higher in USNWR. Seriously?? With as much gamesmanship goes into those rankings, they’re not necessarily a true reflection of cost/benefit analysis. “Elites” and fancy LACs are too often overvalued here on CC and quality state Unis and publics are too often undervalued, usually to the financial detriment of the student and their family. Price doesn’t mean a direct correlation to quality nor to the level of future success of the student. On the other hand, incurring unnecessary and often unmanageable debt is MUCH more likely to directly lead to major issues post graduation. As cptofthehouse says, every situation is different but we rarely are privy to enough of the “family details” to know what level of debt is truly acceptable and manageable for them. You’d be hard-pressed convincing me that graduating debt free, especially from a solid state U flagship, is ever a bad idea.</p>
<p>^^ I agree, it’s preferable to graduate debt free. However, there is often little alternative. If the parents haven’t saved and the child doesn’t qualify for need or merit based money, debt is often the only way to put oneself through school. That’s certainly why I had debt - it was to go to school period, not to go to an elite school. My point is that debt is not necessarily bad or something to be afraid of. In an ideal world, students wouldn’t have to borrow to go to school (and in fact, my own child will graduate debt free - she’s going to an OOS public with a full tuition scholarship and we’re paying her room and board). But the post-secondary education system in this country is such that a lot of kids DO need to borrow, even to go to community college. And I would certainly advise my own children to incur $27,000 in debt to attend an Ivy vs. a free ride at the directional state U. Rarely is the issue so clear cut, though.</p>
<p>Very true beth’s mom. The Stafford limits (whether by design or happenstance) are usually enough to cover tuition at a local CC, and in some cases maybe even a directional U. That’s where the bias against these types of schools I spoke of earlier comes in to play. We’ve all read the posts with the “I’ve worked too hard to go to a CC/directional/state U/IS school” and it frustrates me to no end. In a perfect world everyone would live next door to an Ivy and COA would be $0, but the world never has and never will work that way. Families need to face the realities of their own particular situation and find the best education their family can afford. If that means going to the local CC, then so be it. Take the opportunity and make the most of it, but those that choose to borrow (note I didn’t say were forced to borrow) more than they can afford are starting off their post-grad lives in a hole they might not be able to dig out of.</p>
<p>For those kids whose families are already suffering a lot of financial duress,the difference between no loans and even just the Staffords, can mean a huge difference in quality of life. If your parents simply have no leeway to help you out after college and everything they eke out is at great cost to them, those loan payments that the student has to make can truly be painful.</p>
<p>Even people who take out loans for cars typically have a solid income that will make it possible to pay those loans back. Not that taking out $40K for a brand new car is a smart decision- just my opinion!</p>
<p>You have no idea what your future will be like when you graduate. Everyone likes to go through college thinking they’ll have their dream job and a decent income. You don’t want to think that all of these horror stories you hear about unemployment and debt might happen to you. But what if that does happen to you? </p>
<p>Not to mention, for a lot of us our starting salaries will probably not be anything fantastic. A lot of students have very unrealistic expectations about what they’ll be earning right out of college. Sure you will eventually see an increase in pay or maybe a promotion, but when you have bills to pay and loans to pay back, every month becomes a financial nightmare. Dealing with this for a few years while you settle into your new career might not seem like a big deal now, but wait until every cent of your paycheck is going towards some kind of payment, and then add the massive student loan debt to that.</p>
<p>And it doesn’t matter how “low” interests rates are. Using this financial aid calculator you can see that even with “just” a 6.8% interest rate if you take out $40,000 in student loans you will still have a $460/month loan payment. And you’re paying over $15,000 worth of interest. </p>
<p>[FinAid</a> | Calculators | Loan Calculator](<a href=“Your Guide for College Financial Aid - Finaid”>Loan Payment Calculator - Finaid)</p>
<p>You just never know what the future might hold. Student loans are a HUGE risk to take. Sadly many students put little thought into the consequences of these loans. Like said, a lot of people literally look at loans as free money. It’s true that a lot of people don’t have money saved up to go to school, but there are other alternatives than taking out a massive loan. I’m not saying that all student loans are bad, but when I hear people brag (yes, people sometimes brag about how much debt they’re in, it’s quite sad) about how they have $40, 50, sometimes even 60K or more worth of loans I just can’t help but to wonder, how can you not know what you’re getting yourself into?. </p>
<p>Of course if you’re able to get into one of the top schools or into a really fantastic program that might be a different story. Even then, though, you still hear the horror stories. It’s always better to at least try to be financially smart than to just take out a ton of loans just because you can.</p>
<p>A problem with student loans is that a graduating student often might need a reliable car. That loan payment could be a very nice car payment plus insurance and maintenance. to have to pay both leaves much less. </p>
<p>When you are done with school, it really is nauseating to have to continue to pay for it for another 10 years or even more. You will have other needs and wants, and being restricted by your past loans is not a good feeling. </p>
<p>Anyone remember what the payment would be for someone taking the basic full Stafford loans for all four years on an unsubsidized basis? There would be accrued interest added to the face amounts. On a standard 10 year schedule, even those loans are painful to repay. It’s not as though the interest rates are that terrific either.</p>
<p>I truly don’t have any regret about my career choice but, in my younger days, I had to pass up two opportunities to have my own business due to my student loan. My supposed partner went alone and he is now a multi-millionaire. That’s why it’s best not to be in debt. But, on the other hand, you’ve got to do what you need to do. Just do it in moderation.</p>
<p>Lots of good comments here.</p>
<p>The calculation of what a monthly loan payment would look like after college is a good way to put things in perspective. Starting salaries are still pretty low in many fields, and $400 or more a month on a modest income (assuming you even find a job!) for something you already “got” is a tough sell. My kids’ father has been paying off his student loans for most of his adult life (undergrad and grad school). It is a giant weight even with decent interest rates.</p>
<p>Wow! I never imagined I’d ever receive such a big response, but thank you for your answers. I see where everyone is coming from as far as the unforeseen future goes. I just wanted to clarify though, that I do understand why graduating debt free is a good thing. I was just wondering why it was often used as the only option when it comes to post-secondary education. In addition I agree with many of you that for the average American family, that 40k of more is a lot of debt and I definitely don’t think getting 100k plus in loans to go to an ivy is a good idea. </p>
<p>Overall I think the consensus may be that parents need to decide what they along can afford to contribute after graduation in the case that their child doesn’t get a job …</p>
<p>Still, I find it interesting that so many people are firmly against debt. It seems that many of you would never take out loans for 40k cars, but I know many people on a personal level that do… Granted they are all adults who make decent salaries.</p>
<p>I also think I may have been too simple minded in my analysis in that I thought - don’t go to college at all and make 30k a year for the rest of your life (an exaggeration) or go into a little debt and 50k for the rest of your life… It seems like the debt would pay for itself. Of course in both scenarios the goal would be to move up the corporate ladder and make more money, but I think you guys get my point.</p>
<p>President Obama remarked that it wasn’t that long ago that he paid off his student loans. That he married a someone who went into a high paying field made it possible for him to do a lot of the community organizing and going into politics. Paying a student loan, any loan, cuts into what you have left to use to invest in your life. </p>
<p>A problem with a student loan is that you have it around your neck at the time when you are vulnerable in the business world, trying to get yourself into a paying job and self sufficient. It’s not like a car where you have your choices. SOmeone who takes out a $40k loan for a car has the luxury of deciding to do so at a time when it is an option. You get hit with the repayment of your school loans at a times when it may hurt you terribly to do so.</p>
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<p>I thought the implied scenario was more along these lines: Pay $600 a month in loan repayments to go to expensive school versus much less in loan repayments (or zero) to go somewhere affordable when the end results (quality of education and job prospects) are likely to be more or less equivalent.</p>
<p>Well that situation definitely makes a big difference. I guess it’s assumed that those of us on CC aren’t really college vs. no college… It’s more of which college we’re going to.</p>