<p>College Confidential members generally seem to have a better understanding--and greater fear--of crippling college loans than the typical students and parents do ... at least judging from what I see on CC when compared to all the news stories I read about young adults buried in debt. </p>
<p>This Bloomberg article by John Hechinger and Janet Lorin gives me some hope that colleges may soon be obligated to provide consistent financial aid letters and to offer prospective students information about debt vs. earning power:</p>
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After a decade of resistance from universities, Congress is poised to take on college prices amid a groundswell of anger about tuition outpacing inflation and family incomes, leaving borrowers with $1 trillion in debt. Politicians from both parties are seeking to compel colleges to tell students how much they could be expected to earn from their degrees, spell out fees and debt in plain English, reward schools that keep tuition affordable -- and punish those that dont.
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<p>I do worry that major-by-major "average earnings" can be misleading. This may not be as true for, say, accountants and engineers as it is for anthropology or philosophy majors, but it can be somewhat true for anyone. And "average earnings" are predicated on the expectation that the new grad gets a job in his or her own field in the first place.</p>
<p>But, even so, I'm happy to see this spotlight on the debt issue and am glad for the growing awareness that loans are not "scholarships," regardless of how alluring the bottom line on a financial aid award letter can seem to the inexperienced.</p>
<p>Do other CC members feel that change is in the wind or will all of our children be taking water aerobics classes in Sun City long before improvements are made? (Assuming, of course, that our children can afford to live in Sun City after they've paid off their college loans. ;) )</p>
<p>I agree that the avg earnings can be misleading.</p>
<p>A concern that some of us have is that too many parents agree to Plus Loans (with EZ qualifying) with the “family agreement” that the child will be the one who pays the big loan back. So, the loans get approved based on the parents’ credit score, but the parents are wrongly assuming that their child (maybe the first to go to college) will soon be earning “big bucks” and can “easily” pay all that money back.</p>
<p>The problem is that a lowish income family can be misled about how far a larger income for a single person really goes because that single person is paying a lot in taxes, isn’t getting any low-income benefits, etc.</p>
<p>I’ve no doubt some changes will be made, but I don’t see the current legislation heading in the right diretion. Students who borrow the maximum Stafford unsub/sub loans graduate (undergrad) with reasonable debt, regardless of field of study. The answer isn’t to punish colleges that are “too expensive” or to publish meaninless numbers about what one can expect to earn. Since the students with huge undergraduate debt are the students who take out large, private loans, it seems logical that the answer to the big loan problem is to minimize the availability of private loans.</p>
<p>I forget which poster advocates for the dismissal of student loans through bankruptcy. At first I thought that was nuts (and I wouldn’t support that for federal loans), but I bet you’d see a lot fewer kids in trouble and lenders getting very cautious if private loans could be discharged.</p>
<p>Not having my finger on the pulse of political movements and possibilities, I don’t know. However, I can tell you that the student loan situation is grave for some families. I just met a woman who owes over a quarter million dolllars in student loans. She borrowed for undergraduate and law school, and never was able to find a job sufficient to make a dent in what she owed and owes. AT this time, she is in her 40s age wise, married with kids and not employed. Can’t find work and her husband in underemployed. There is no room in the budget for any student loan payments and the effect interest has on that amount is terrifying. Just think what her interest only payments would have to be to stabilize this growing snowball that is heading towards disaster.</p>
<p>So what solutions does anyone have for situations like this where a person simply has not fulfilled the hopes and promises of making money to pay off student loans and they have reached a ridiculous point? </p>
<p>I don’t like the idea of changing the terms of these loans. I do believe that the borrowers should be held to the terms and need to pay back the money. But you can’t squeeze money out of stone, and the people are not rocks, and I fear the squeezes being put on them. Some of these folks can’t find jobs because of the black mark on their credit report that theise loans have caused. It is causing a circle of damage. </p>
<p>Perhaps some kind of employment possibilitly for those who truly cannot find a job, with the money going towards the loans.</p>
<p>Interest is a big part of the problem too. The profit from funding an education should come from that person becoming a functional member of society, not from making already high student loans obscene.</p>
<p>Even if there are regulations put into place, nothing is going to control what the parents are doing…except maybe if the Plus loans become harder to get…which they probably should be harder to get. Credit score and income SHOULD get considered.</p>
<p>Credit score is indirectly taken into account in that anyone behind in any payments for anything on the report is not eligible for PLUS. In some ways that is even more stringent than credit scores. The whole idea of making income an issue is that it then makes it a program for those that are more well to do. </p>
<p>I have PLUS payments I’ve been making since I pay on mine as soon as I can. It is a very stark reminder of what it feels to pay the loan and is and indicator if the person will be paying it back. It would also nip some of the problem in the bud as people will not be able to take out loans if they are not paying back the ones they have already. Another member here suggested this as well, and I think it is a good idea it will then get rid of the issue of people suddenly having huge amounts to pay, as they will be builiding up to it and stop when tt becomes clear the payments are onerous. Right now you can put off 4 years worth right up to 6 months after graduation, and then bang! you are hit with a huge monthly payment if you’ve been borrowing all of those years. By making the person immediately start paying on a 10 or 15 year basis as soon as the loan is taken, the impact and seriousness of the act is brought home.</p>
<p>Much of this loan nonsense is just the fault of the student/family. It is not the fault of the college and government and banks. </p>
<p>Everyone has an understanding of what they can afford and consistently go to schools they can’t afford. They are the only ones to blame if they believe going to a much more expensive school and taking $100,000+ in debt is a good choice for their lives. It’s simple economics. Loans are reasonable to an extent but not the the extent that so many families take it-- and for WHAT? To please their child and let him/her go to their “dream” school that they have a false love for because they found it on the internet and think it’s cool?</p>
<p>Sorry to be harsh but I just don’t understand how/why people make these choices. There are ALWAYS other options. Kids need to get over their egos about going to particular schools and parents need to stop giving into their kids’ “dream schools” if it’s not a good financial decision. The whole idea of dream schools is nonsense and kids have a good/successful experience pretty much anywhere.</p>
<p>I am with Pancaked. It is not government job to regulate (private) student loans. I wish the government would get out of parent-plus loan business too. </p>
<p>On this forum we have no problem to tell upper middle class kids, whose parents cannot afford or refuse to pay much or anything for college, to go either merit route or go to school they can afford, such as community college. Somehow it is not PC to extend this sentiment to students from families with lower income.</p>
<p>If everyone only went to school they could afford, the higher education probably would have been cheaper. In addition the brightest of the brightest would have still ended up in “better” institutions, regardless of their families financial situation because of either the college need-based policies or merit-based scholarships.</p>
<p>I do wish the congress would amend the bankruptcy law a little bit to allow for situations when people are hit with unexpected grave illnesses or become unable to work due to illness. I’ve read many stories of people who had this happened to them and those are the people I have sympathy for.</p>
<p>"Credit score is indirectly taken into account in that anyone behind in any payments for anything on the report is not eligible for PLUS. In some ways that is even more stringent than credit scores. The whole idea of making income an issue is that it then makes it a program for those that are more well to do. "</p>
<p>Well, it shouldn’t be a program where well-intentioned very-low-income parents without late payments should be able to borrow $100k when they have no means to pay it back. This just encourages the “shh, we’re really expecting our child to pay the money back” syndrome. If that’s what the feds intend, then make it co-signed loans, not Parent Plus.</p>
<p>Lerkin! Yes, you are the one who brought up the idea that those who take out the loans should start payment on them, and I think that is an idea that could make a big dent in the problem.</p>
<p>I don’t agree that we do not say to low income folks that they cannot afford educaton. They hear it more than anyone else.</p>
<p>I am certainly concerned about student debt, but I don’t see the proposals as being helpful. Families are already clueless, and they will be misled by the “averages.” I would advocate better education for students and parents concerning how financing college costs really works - from a very early age. If families stop paying more than they can afford, colleges will be forced to control costs - economics, you know. </p>
<p>I’m with kelsmom - I think education is the answer. Education in all areas of fiscal responsibility, not just educational debt. We’re also a nation where the average credit card debt is $11,000. We’re a nation of people who, on average, live beyond our means.</p>
<p>If we were required to take a REAL microeconomics course throughout school that taught fiscal responsibility, including how educational debt worked in the 11th grade, perhaps there would be fewer people borrowing beyond their means.</p>
<p>But no, I don’t advocate for universal debt relief, as some graduates want. If you make a promise to pay something back, you should pay it back. We don’t need to teach people that money is magical and can just come from anywhere. And student loan debt is not dischargeable in bankruptcy because there’s no collateral - you’re essentially getting it free, if you do that. Although I do agree that if it does become dischargeable in bankruptcy, banks will be even more cautious about who they lend to, which is a good thing.</p>
<p>While the gov’t may not have a role in private student loans, it does have a role in fed student loans…including Parent Plus. </p>
<p>There is a wink-wink flaw in the Plus approval system when it’s allowing good credit low income folks to borrow large amounts when they cannot show the means to pay the money back.</p>
<p>I understand the mentality some people have that it’s the borrowers fault. And sometimes it is. $300,000 for an English degree is bad. </p>
<p>We sometimes forget though, that in America the punishment is supposed to fit the crime.</p>
<p>Is it really fair to punish a person who, when they were 18-22, took out too many loans by making them unable to live until their 50s or 60s? I know a lot more now about loans than I did back when I took them out. Not to mention that when you’re starting a program in one year, and suddenly the economy transforms over the four or five or six years you’re in school, that’s not your fault.</p>
<p>It’s unfair to constantly push on kids this idea that everyone needs to go to college, next to “study what you love and the money will follow” next to the relative youth and inexperience of the borrower. I know when I took loans out years ago I thought, like everyone else, I’d have a job in some field making a living. </p>
<p>I agree that people with private debts made their beds and have to sleep in it, but when it comes to education, I think the government and the nation needs to give these kids a pass. It does us as a nation no good to screw over an entire generation just because of a principle.</p>
<p>It does no better to have an entire generation screw over the whole nation because they are self absorbed and can’t read what they must before signing a legally binding document.</p>
<p>are you following the news? The last time I checked US government was deeply in debt and looking for new sources of revenues. Where do you think the money should come from to pay for these people’s mistakes? </p>
<p>You are right about making the bed and sleeping in it. You should have stopped right there instead of asking everyone to share the proverbial bed.</p>