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The $555,000 Student-Loan Burden

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Re: The $555,000 Student-Loan Burden

#11

Post by petewarden »

sokoloff wrote: post #3
TNO wrote: post #2

"Dr. Bisutti says she loves her work, but regrets taking out so many student loans. She admits that she made mistakes in missing payments, deferring her loans and not being completely thorough with some of the paperwork, but was surprised at how quickly the debt spiraled." ... "After completing her fellowship in 2007, Dr. Bisutti juggled other debts, including her credit-card balance, and was having trouble making he…

Be VERY careful what you wish for. The fact that student loans are not dischargable directly contributes to increasing their availability and reducing the interest rate charged. (By dramatically reducing the risk of default.) Otherwise, why wouldn't someone just run up $300K, declare bankruptcy the day they graduate, suffer credit-wise for 7 years and celebrate their 30th birthday completely debt-free without ever pa…

> contributes to increasing their availability

Increased availability is not always good. This is a clear case where getting the loans was a terrible financial decision, since she's only earning enough to pay off a tiny fraction of the principal. We should be decreasing availability to people who have no realistic possibility of paying off the loans, especially when they don't even have the option of bankruptcy.

The idea that making loans available to people with marginal prospects of paying them back is always helping them is bogus. It removes pressure on colleges to trim their costs to help poor students, as well as encouraging people who financially won't benefit from a degree to pursue one anyway.

I'm saying this as someone who got mired in debt going through college and spent years climbing out of that hole. Things worked out for me in the end, but the loans were so easily available that I didn't consider the alternatives. Now I'm so allergic to debt I don't even want a mortgage.

Re: The $555,000 Student-Loan Burden

#12

Post by sriram_sun »

I am from India, but live in Denver now. Around $100/semester for 4 years. If I started a year before, I would've paid ~$100 for all 4 years combined. The private colleges are more expensive. Of course there is a downside. Professors don't care, assignments are usually copied straight out of a book. If you are a "senior," the first (un)lucky freshman who walks by might be bestowed honor of copying the assignment straight from some other "Master copy". Came here for my Master's. Managed to graduate without any loans. Was lucky enough to live within my TA/RA salary. The H1-B phase was the most miserable though. Life's better now.

Re: The $555,000 Student-Loan Burden

#13

Post by zach »

Why even provide this benefit to private student loan providers -- letting them avoid dischargement just like government loans which have lifetime maximums and other safeguards? I think it's pretty clear the results have been catastrophic.

Re: The $555,000 Student-Loan Burden

#14

Post by DrJokepu »

elai wrote: post #9
warfangle wrote: post #7

This is making me think twice about taking out student loans to go back and get a BS next spring. I truly doubt that I would be able to, cognitively, work and study at the same time - one of the two would suffer.

Go to another country/state where education is a significantly cheaper? Europe maybe?

Education in Europe is only cheap if you're a European Union citizen. As an overseas citizen, you won't be eligible to any government subsidy. In the UK, that would mean about $20K per year for an undergraduate course, which is still not very expensive compared to some US universities, but not as cheap as the Home/EU fee (which is around $4800 a year).

Education for Home/EU students from disadvantaged backgrounds is free, of course.

Re: The $555,000 Student-Loan Burden

#16

Post by sili »

Part of the problems is that people who take out these loans are the least educated in personal finance and how to manage money. Unless you have a good parent or counselor guidance behind you, it is very easy to make mistakes that can cost you alot down the road. Maybe it should be a requirement as part of high school curriculum to teach students about personal finance.

Re: The $555,000 Student-Loan Burden

#17

Post by elblanco »

I can't even imagine paying that kind of money for an education. To make that up would take most of your career for most people when one of the points of an education is to increase your average salary over not having bothered. If the delta between those two doesn't work out for most of your career, you may as well not bother.

The interesting bit is that, at least in the U.S., one can go to decent schools relatively cheaply. In-state tuition at state schools is anywhere from 1:4 to 1:12 ratios with private and out-of-state schools (that is to say, a person could get an entire B.x. and M.x. at a public school for about the same cost as a semester or year at a private institute).

Re: The $555,000 Student-Loan Burden

#18

Post by elblanco »

DrJokepu wrote: post #14
elai wrote: post #9

Earlier quoted context omitted.

Go to another country/state where education is a significantly cheaper? Europe maybe?

Education in Europe is only cheap if you're a European Union citizen. As an overseas citizen, you won't be eligible to any government subsidy. In the UK, that would mean about $20K per year for an undergraduate course, which is still not very expensive compared to some US universities, but not as cheap as the Home/EU fee (which is around $4800 a year). Education for Home/EU students from disadvantaged backgrounds is…

I can echo that having been invited to study abroad a couple times during my education -- and unfortunately having to decline due to the very large financial burden it would have created with minimal payoff outside of the "cool" factor of studying at a well known European school.

Re: The $555,000 Student-Loan Burden

#19

Post by Rubenb »

elai wrote: post #9
warfangle wrote: post #7

This is making me think twice about taking out student loans to go back and get a BS next spring. I truly doubt that I would be able to, cognitively, work and study at the same time - one of the two would suffer.

Go to another country/state where education is a significantly cheaper? Europe maybe?

In Belgium the standard fee is about €530 a year, not including housing and books. If you come from a low income family you pay significantly less and have the option of cheap housing.

Re: The $555,000 Student-Loan Burden

#20

Post by arpan888 »

This is what happens when the government interferes with the free market! The supply of virtually unlimited, guaranteed federal loans has created a moral hazard. Loan companies don't care to hand out risky loans because they have the backing of the federal government. Since students have access to so much "free" money, they are entering colleges in droves, effectively bidding up tuition prices for the rest of us. Without such a supply, loan companies would be much more stringent (tuition would come down) and some students would not be able to enter college. While this may sound bad, its not because certain college degrees are becoming worthless anyway and some students have no business of earning degrees in human resources management from the University of Phoenix.
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