The local state college my S attended is now a little more than $14,500/year tuition/fees only for 30 credits. Upper level classes are more expensive, and a year of upper level credits (30) totals $16,900. Add in books/supplies & commuting costs (no public transportation options around here), and it’s north of $65,000 for a commuter student … more, because tuition has risen every year … and this is not one of the most expensive public schools in my state.
Another thing to consider when reading about the debt someone says they have: They are not always talking about what they borrowed. Often, they are talking about what they owe. Balances balloon over time. I made all of my grad students who had borrowed federal loans attend a repayment meeting, and they were required to download their federal loan information from the federal website prior to the meeting. Some of them were in shock when they saw what their current loan totals were. They didn’t borrow that much … but they owed that much.
It’s hard, because loans can be necessary. I have seen students from poor backgrounds who borrowed and repaid. I have seen students from middle and upper middle classes borrow and repay. And I have seen students drop out with no degree and a lot of debt that they struggle to repay. I have also seen students borrow with little thought to the long term ramifications of debt, who don’t prioritize repayment. I have seen a couple of my graduates default, even when I reached out to them to try to help them get on track with a manageable repayment plan. Bottom line is that painting borrowers with a single brush just doesn’t work.
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I know plenty of MFAs who have repaid their loans. They do manage to find gainful employment, believe it or not. Some of the grads I know make A LOT of money.
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And they all believe that they will be in that group. The one in the article apparently is not.
Most of mine took loans, my 25 and 26 year olds get paid well and paid them off aggressively. My 22 year old is going to have a lot due to grad school, but will have her dpt and there are a lot of jobs available here, one of my 20 year olds wants to be an actuary and isn’t planning on grad school. I’m guessing her twin won’t have loans, unless he doesn’t graduate in time, because he commutes. All have worked part time during the school year and full time summers since they were 14. All undergraduate degrees are from public universities, merit for the OOS ones. The 4 who went away have crazy work ethics, the 1 commuting, not so much. I won’t co-sign a loan for him, he’s not the best with money either (I don’t know why).
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I don’t understand why these student loans (esp. private loans) are not capped based on the student’s projected income. With the amount of regulation on other types of lending in this country, why are student loans so freely given when the risk is too great?
Of course, I know the answer, but it’s something that everyone looking at private student loans should ask themselves. If the companies weren’t making money from these loan deals or it was too risky to them, they wouldn’t lend it to you. Student loans are consumer beware.
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Loans students can get in their name only…are the federally funded Direct Loans. And there is a cap.
Freshmen $5500
Sophomore $6500
Junior $7500
Senior $7500.
It’s anything above that amount that requires either parents taking out the loans or cosigning them. I’m not sure how you would limit these…based on career salary outcomes since there is NO guarantee someone will actually get a job in the field in which they major. Sample of one…I have a kid who was an engineering major in undergrad who will never work as an engineer. Loved the coursework…hated the idea of the work (and was well informed as DH is an engineer).
This happens. Plus job markets change and careers that were lucrative in the past could be less so by the time students graduate.
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You could limit them the same way that mortgage loan balances are limited with qualifying income. Of course, it would be a projection as you described, but otherwise, the lack of regulation is exactly what is causing this student loan debt crisis to begin with. Private loans and graduate school loans are not subject to these or any other limits.
My daughter has a friend who majored in accounting, so should have been able to pay any loans.
Graduated. Got job. On track.
Got married. On track. (I think parents paid for most of wedding)
Covid hit. A little off track.
Didn’t pass CPA exam. Off track.
Got Pregnant.
Took more CPA tests. Had to ask for an exception because didn’t complete series on time. Off Track.
Husband had a suicide attempt 2 weeks before she had the baby. REALLY off track.
Things happen even to engineers, accounts, teachers, wall street traders…and it is often those majoring in art, theater, English who need the loans the most as they aren’t getting high paying internships or department scholarships like the engineers are to help with college costs.
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Private loans are subject to the provisions of the lenders. This usually means the loan owner must be a qualified borrower.
Parent Plus Loans are another story…but these are not “private loans” per se. Is that what you are talking about?
Grad plus loans…very similar to parent plus in that they can be awarded up to the cost of attendance for grad programs.
But I do have an issue.
Are you suggesting only people who will have high salaries immediately after graduation should get these types of loans? We need teachers, and social workers, and musicians and other artists, and architects, etc…as much as we need IB, IT, engineers, etc.
And for the record, many doctors make less than $70,000 a year for at least three years after they graduate from medical school. Should they be excluded from loans also?
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I am saying that the loan totals should be tied to the projected income for that degree.
For example, I have a graduate degree in education. The total principal of that degree was equal to 1/2 of my projected first year salary, which did turn out to be my first year salary. I could pay it off and I did. I did need a cosigner because I wasn’t working at the time I was a student, but I did pay it off.
I linked to a video above that had a rule of thumb that was more generous than the one I used, but it’s simply that- guidance. The student loan companies follow no such regulation, unlike in other lending industries, and therein lies the problem.
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Biology is a very common STEM major, but bachelor’s degree jobs are not that well paid, and the health professional school commonly targeted typically means lots of loans, so taking a lot of avoidable undergraduate debt for biology is not a good idea.
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The direct loans limits are low probably because it is hard to assume that a student aiming for a higher income path will actually attain it. Suppose a student starts in CS and takes large loans based on expected income. But then the student decides to change to biology. Or there is a computing industry downturn when the student graduates.
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I want to be clear…we flatly refused to take or co-sign any loans for college for our kids. But we also didn’t need to.
Some families don’t have that luxury.
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