<p>Simply amazing. The radio show Marketplace had a slightly different take - that Americans were paying down their credit cards more than in the past (hence a more accurate title might be that credit card debt slips below student loan debt), but $830 billion dollars is thousands of dollars for every person in the 18-30 age bracket.</p>
<p>Think long and hard before going off to that expensive private or OOS public if you're financing it with loans!</p>
<p>Unfortunately, the same mentality that led to high consumer debt causes high student loan debt. I want it, therefore I am going to get it … and I will borrow to get it. I have seen too many students who are at the $57,500 undergrad Stafford loan limit without a degree to show for it to be surprised by this article. And I work at a relatively inexpensive public school. Students borrow the annual max … go to school part time or drop classes (or fail them) … and loans add up faster than the credits do.</p>
<p>“unfortunately, the same mentality that led to high consumer debt causes high student loan debt. I want it, therefore I am going to get it.”</p>
<p>I don’t fully agree with this statement. The cost of college even the lower level states has risen so rapidly that many/most lower income families are unable to pay other than through borrowing, often heavy borrowing. As for consumer debt, many lower income families are in the same situation. High housing costs, even for lousy neighborhoods, lack of public transportation, high insurance rates all require substantial borrowing. For many families, even for the basics, food, housing, trans and education, the only option is debt with the hope that education will bring a new job, a better job, that may eventually bail a whole family out. Just one person in a low income family making 50 or 60K a year with benefits has a tremendous impact on an entire family. For many people the only way to get there is to borrow - often considerable amounts.</p>
<p>My father was pursuing his PhD on a student visa when I was born. His funding didn’t waive tuition; he still had to pay, albeit at the in-state rate. Adjusted for inflation, his stipend–before tuition was deducted–was slightly more than $18,000 a year, yet he supported himself, my mom, and me for four years on that stipend, defended his dissertation, and started his first job in academe with zero debt. My parents were even able to buy a brand-new (at the time) Toyota Corolla with A/C without taking a car loan because they couldn’t tolerate seeing me sweat in their old, A/C-less car.</p>
<p>According to your post, it is not possible that my parents were able to do that. I must be telling a lie. Oh wait, having a high marginal propensity to save and forgoing luxuries does wonders for your checkbook.</p>
<p>speedo, I don’t know how things work up in PA, but down here in GA, if you graduated from high school with a 3.0 GPA, you’re eligible for the HOPE Scholarship, which waives tuition and required fees at all public universities in the state. To maintain the scholarship, you have to keep a 3.0 GPA as a college student. Moreover, at my alma mater, Georgia Tech, we have a need-based financial aid programme that “makes it possible…to attend Georgia Tech without the burden of student loan debt” and is “intended to assist Georgia students whose families have an annual income of less than $33,300.”</p>
<p>So if you’re really low-income, Georgia Tech has a way for you attend without taking on student loan debt.</p>
<p>This is pretty upsetting; at my high school, information on how to AVOID debt isn’t given…no college information is given, unless you are an IB candidate. We weren’t told about community college, or about in-state schools that pay full tuition…</p>
<p>I couldn’t imagine being $50,000 in debt; I still owe $1,000 on a $5,500 loan—never again!</p>
<p>So yes, I agree—find out everything you can about ALL your options.</p>
<p>Here in Pa, the financials for low income families has deteriorated pretty rapidly. Costs rising faster than inflation, stagnant wages, lower per student state support and access to high and easy credit are largely to blame. Penn State main campus is not financially accessible to most low income students. Actual cost of living/attending is over 25K but state aid and pells at 0 EFC only covers around 9K. That gap 20 years ago was only a few thousand, and ten years ago perhaps less than 10K. At 16K and rising rapidly, sure a few hard working dedicated souls like Fab’s dad can make it, but most others probably fail or end up with large debt. </p>
<p>The point I was making in reference to #2, is that at low income levels high debt is almost unavoidable. At higher income levels that high debt may be avoidable, and in many cases is the product of foolish decisions. The student who has an EFC of 20K and chooses to attend a private where they pay 35K or more as opposed to a state school is a very different animal than most high debt low incomes.</p>
<p>I see. I was not aware that tuition at Penn State’s main campus is already over $15,000 a year. Tuition at Georgia Tech this Fall will be $8,716 a year for those who are in-state but do not have the HOPE scholarship. I add that in-state students who entered before this year could benefit from “fixed for four,” where the rate their freshman year would last them four years or until graduation, whichever came first. (I always maintained the HOPE scholarship, but had I lost it, my parents would “only” have had to pay $4,496 a year, my freshman year rate.) Due to budget problems, “fixed for four” was axed this year and likely won’t be coming back.</p>
<p>At least at my school, if your family is truly low-income (<$33,300) a year, as long as you get into Georgia Tech with a high school GPA >= 3.0, you don’t have to worry about student debt. There might be some families who are sandwiched between the Tech Promise cutoff and the middle-class where room and board isn’t too big of a deal, but I do not know how many students fit that sandwich region.</p>
<p>A lot of states have had to cut down on programs like the one fabrizio is mentioning, even states that used to be as generous as Georgia (which is by no means all of them). Foreclosures have especially hit state budgets hard; I know that in Virginia, much of education funding came from property taxes whose receipts have fallen as fewer and fewer people actually own houses to pay taxes on. It’s not always possible for even a commuter student at an in-state public to avoid debt, especially if the family’s finances aren’t very good (lots of medical bills, sudden unemployment).</p>
<p>I absolutely understand about the rising costs of college, and I understand that not all students have the option of a community college or low cost 4 year college within commuting distance. However, I am in the financial aid business and I see more than a few families who ignore the less expensive alternatives available to them. On CC, there are lots of students with more affordable options who choose to take on massive debt. It is these cases I refer to when I say that there is a mentality of “I want it, therefore I am going to get it … and I will borrow to get it.” I have stated in other posts that my perfect financial aid world would include some way to help those without affordable alternatives; I am not so hardened that I do not understand reality. But those who choose to borrow that much when they do not have to do so just don’t have my sympathy.</p>
<p>That’s also a major issue. You can even see that here, when a kid starts asking for help on how to dragoon their parents into taking out a Parent PLUS loan for NYU. I’m not sure if it’s the “dream school” mentality, or prestige-obsession (earlier today, I saw someone offhandedly dismiss Virginia Tech (!) as a “lesser” school!), or if it’s just plain ignorance. I know college websites tend to (in my view, deliberately) create the false perception that everyone can afford college if they just work hard enough, but there’s a certain element of willful self-delusion that can be pretty frustrating to deal with. I’m not sure what percentage of the student loan debt is caused by people like this, but I bet it’s at least a lot.</p>
<p>The article also compares credit card debt to college loan debt. Credit card debt can be discharged through bankruptcy or negotiated down or simply not paid. No such luck with college loans. This debt will follow you throughout your life, short of dying no real way out of this one. Orginally it could be discharged or negotiated just like credit cards but that changed over time. College loans were initially designed to make up small differences between cost and ability to pay. They are now part of most finaid packages and 5,5000 in loans is pretty much standard for freshman in most finaid packages. The recent increase in Stafford ceilings did little for students but provided colleges with the ability to raise tuition another 2,000 a year. Over time one of the best ways to reduce college cost may be to cut back on loan ceilings and reward colleges that lower their average student debt. I suspect high ceilings, low rates and easy access have lost their effectiveness and are really just driving cost.</p>