Misrepresented student loan debt.....

[The Walk of the Penguin Mich]

Despite all the horror stories we hear about the Starbucks barista with $100K in student loans, the numbers say that she is an outlier in the graph.  In 2010, 92% of students graduated from college with less than $50K in student loan debt, 76% less than $20K.


www.nytimes.com/2014/06/24/upshot/the-reality-of-student-debt-is-different-from-the-cliches.html?_r=0

[haapai]

For an analysis of this NYT article, click on this article from Slate.

I'm a little miffed that someone is claiming that student loans aren't a big deal because the payments aren't sucking up a larger percentage of borrowers' income than they did 30 years ago.  Excuse me, the number of borrowers has doubled and the repayment period has been stretched.  Claiming that this is no big deal is bullcrap.  We've fundamentally changed the nature of young adulthood. 

[Deleted]

Jun 24, 2014 18:27:21 GMT -5 haapai said:

For an analysis of this NYT article, click on this article from Slate.

I'm a little miffed that someone is claiming that student loans aren't a big deal because the payments aren't sucking up a larger percentage of borrowers' income than they did 30 years ago.  Excuse me, the number of borrowers has doubled and the repayment period has been stretched.  Claiming that this is no big deal is bullcrap.  We've fundamentally changed the nature of young adulthood. 

Stretching repayment terms has been the norm for every type of consumer debt.  Car loans, mortgages, student loans.  The problem as I see it is there isn't much room left to stretch unless we start passing them to the children.

[Deleted]

I thought I heard multigenerational mortgages are becoming popular in some parts of Europe? 

[phil5185]

multigenerational mortgages

You run into diminishing returns -

$100k, 5%

30 yrs  - $537/m
40 yrs  - $482/m
50 yrs  - $454/m
60 yrs -  $439/m
70 yrs -  $430/m
IO ------ $417/m

Going from 60 yrs to 70 yrs cuts the payment by only $9 - but takes 10 extra yrs.
I like the IO loans for rental houses, no prepayment of principle, let the market GIVE you equity - just pay interest until you sell it.

[Bonny]

OK I'll bite.

These are COLLEGE students who should be able to do basic math on the cost/benefit of going into debt to increase their income.

I'm a first generation college graduate in my family who didn't have very much support or encouragement. When I made the decision to change my educational focus from a STEM to undecided to liberal arts I knew my income wouldn't be high therefore I didn't take out any students loans and worked instead. I almost didn't graduate because I was making plenty of money in my "part-time" job and didn't really need the college degree in my field. I finished because I thought it might come in handy some day (and it did).

This may come across as elitist but if someone is unable to do the basic homework into probable salaries and the cost of acquiring the education are they really college material?

And for those of you who did take on student debt is there anything like the mortgage disclosure "Reg Z" which details how much you'll be paying over the life of the loan?

[NomoreDramaQ1015]

And for those of you who did take on student debt is there anything like the mortgage disclosure "Reg Z" which details how much you'll be paying over the life of the loan

I don't know about private loans but I was beat over the head with information for my federal loans.  I received quarterly statements about this is how much I took out, here is the interest, here is what your payments will be if you decide to pay now, here is how much of that payment will go to interest etc.

They also made it clear many times over I'd have to D-I-E or be a vegetable for the rest of my life for these things to be discharged.

At the end I received a statement showing the total, what my current interest rate was and what I'd end up paying over the course of the loan.  Not only that they calculated out my payments and what I'd owe over the life of the loan at several different interest rates up to the capped 8% on fed loans.

And at any time you can go to the financial aid office and ask them for help with your paperwork. Or call your loan provider directly. They want to be paid back so I've found my provider will bend over backwards to help me understand the paperwork and make sure I can afford the payments.

You shouldn't be totally clueless as to what you'll owe. The figure on paper was pretty close to the one in my head when I graduated. I was only off by the minimal interest my unsub staffords had collected in that time period.

[DVM gone riding]

Jun 25, 2014 9:25:13 GMT -5 Bonny said:

OK I'll bite.

These are COLLEGE students who should be able to do basic math on the cost/benefit of going into debt to increase their income.

I'm a first generation college graduate in my family who didn't have very much support or encouragement. When I made the decision to change my educational focus from a STEM to undecided to liberal arts I knew my income wouldn't be high therefore I didn't take out any students loans and worked instead. I almost didn't graduate because I was making plenty of money in my "part-time" job and didn't really need the college degree in my field. I finished because I thought it might come in handy some day (and it did).

This may come across as elitist but if someone is unable to do the basic homework into probable salaries and the cost of acquiring the education are they really college material?

And for those of you who did take on student debt is there anything like the mortgage disclosure "Reg Z" which details how much you'll be paying over the life of the loan?

Yes at an accredited four year univ you take an hour class at the beginning of getting loans and take an online thing and sign several papers at the end. Since I have an advanced degree I had to do it twice for the exit. YOu also sign off the "repayment" schedule that clearly shows if you extend your loans (only an option over I think 30k) how much extra interest you will pay

[Bonny]

Thanks DVM gone riding.

I'm sooooo fed up with these stories of "victimhood" in the student loan "crisis". I keep thinking, you have to have basic reading comprehension and math skills to be accepted into college...

[NomoreDramaQ1015]

I get tired of the victimhood too Bonny. I want to say "Seriously what part of DIE didn't you people understand when you signed your promissory note?" Anything that says you need to be buried six feet under before you can get out of it should make you pause to think before you sign the dotted line.

[Deleted]

Jun 25, 2014 9:29:52 GMT -5 NomoreDramaQ1015 said:

And for those of you who did take on student debt is there anything like the mortgage disclosure "Reg Z" which details how much you'll be paying over the life of the loan

I don't know about private loans but I was beat over the head with information for my federal loans.  I received quarterly statements about this is how much I took out, here is the interest, here is what your payments will be if you decide to pay now, here is how much of that payment will go to interest etc.

They also made it clear many times over I'd have to D-I-E or be a vegetable for the rest of my life for these things to be discharged.

At the end I received a statement showing the total, what my current interest rate was and what I'd end up paying over the course of the loan.  Not only that they calculated out my payments and what I'd owe over the life of the loan at several different interest rates up to the capped 8% on fed loans.

And at any time you can go to the financial aid office and ask them for help with your paperwork. Or call your loan provider directly. They want to be paid back so I've found my provider will bend over backwards to help me understand the paperwork and make sure I can afford the payments.

You shouldn't be totally clueless as to what you'll owe. The figure on paper was pretty close to the one in my head when I graduated. I was only off by the minimal interest my unsub staffords had collected in that time period.

DD had to go through an online presentation that explained all of that stuff before she could receive her first federal loan.  I handled the private loan but that's because I've committed to helping her pay it back.

[Formerly SK]

The comments on the NYT article really slammed the methodology of the survey.  I'm not putting much belief in its conclusions.

I get tired of the victimhood too Bonny. I want to say "Seriously what part of DIE didn't you people understand when you signed your promissory note?" Anything that says you need to be buried six feet under before you can get out of it should make you pause to think before you sign the dotted line.

I agree with this and I think by and large institutions do a good job of warning kids what the ramifications are.  I think the core problem is that many kids don't understand personal finance.  They think a $400 payment for ten years is no big deal, but they don't understand that making 25-30K/yr, with taxes, rent, health insurance, etc is really tough to begin with and that having a $400 payment is really actually painful.  They also don't consider that in 5ish years they may want to have a kid or buy a house.  Or that they may marry someone with higher student loans and suddenly the combined SL payment is crippling.  All they see is that they really want to go to X school for X degree because they luuuurve it and they figure "everyone has SL debt" so what's the big deal.  The fact that they may be living with mom/dad for years after graduation doesn't seem to enter their subconscious. 

I don't think it's fair, though, to call these kids stupid or to compare them to how we were when we were that age.  These are kids who probably haven't worked much because the economy has been in the toilet during their teen years and getting a job was impossible.  That, or things were great because their teen years were during the bubble when mom/dad was using home equity to pay for everything.  Kids need to be exposed to personal finance issues well before they turn 18 so they understand the gravity of their college decision.  Otherwise, it's all theory and fantasy numbers.   

[tskeeter]

Jun 24, 2014 18:27:21 GMT -5 haapai said:

For an analysis of this NYT article, click on this article from Slate.

I'm a little miffed that someone is claiming that student loans aren't a big deal because the payments aren't sucking up a larger percentage of borrowers' income than they did 30 years ago.  Excuse me, the number of borrowers has doubled and the repayment period has been stretched.  Claiming that this is no big deal is bullcrap.  We've fundamentally changed the nature of young adulthood. 

Hmm, the number of borrowers has doubled.  Why?  Is one of the fundamental changes to youth that the education system pushes nearly every kid to the college track?  So aggressively that something like 70% of the kids at the local community college and 40% of the kids at the local branch of the state university are in remedial programs because they aren't prepared to do college level work?  And so aggressively that an accounting professor friend became so frustrated with the capabilities of her students that she quit teaching?

Maybe the problem with student loans is as much who is borrowing money for a college eudcation (less capable students with a more limited future earning potential) as it is how much they are borrowing.  

[alabamagal]

Jun 25, 2014 9:46:23 GMT -5 Bonny said:

Thanks DVM gone riding.

I'm sooooo fed up with these stories of "victimhood" in the student loan "crisis". I keep thinking, you have to have basic reading comprehension and math skills to be accepted into college...

Only very basic in some schools......

At the local 2 year school near us, for freshman admission you have to have 2.0 gpa in core courses in high school.  If your SAT score is below 400 math or below 430 verbal you have to take a placement exam, and possibly remedial classes.  Pretty low admissions standards.    That is the minimum requirement in our state, and you can get admitted to several schools with those grades/SAT.

[alabamagal]

DS2 and I just completed the latest version of Federal Student Loan counseling, he had to retake it because he is changing schools.

You no longer just have to read through something, it is online and you have to answer questions.

DS2 should graduate with ~$25k in loans, but it will be from top level school in our state, ~25 ranked undergraduate business schools in the country.  He had high gpa in first 2 years, and hopefully will keep his grades up.

[greeniis10]

"In this day and age - can anyone really claim "ignorance" about this stuff?"

No, no excuse.  But just a few short years ago remember how many adults took on adjustable rate mortgages with "no idea" that the rate was going to change?!

And as for Bonny's point about "being college material" and being able to understand this prior to signing, again I agree.  But is any student/child evaluated effectively to determine "college material" anymore?  Pretty sure most every student and child is now told that college is not an option. 

I still believe in trade and vocational schools as just as valuable an option, personally.

[NomoreDramaQ1015]

Kids need to be exposed to personal finance issues well before they turn 18 so they understand the gravity of their college decision.

I must be exceptional or something because I never worked in high school and didn't have a ton of experience handling finances before college.

Yet I was able to figure out that the word "die" is pretty serious and I was looking at some big numbers. When I had questions I'd call the loan provider, the financial aid department of the school or consult with my grandmother who is very financially savvy.

I don't buy into the notion that an 18 year old can't grasp these are real numbers, not when most institutions bend over backwards to explain it to you and you get a packet of information a mile thick when you apply for aid on how it works and repayment terms.

I think it's they don't WANT to. It's very easy to live in denial for four years. All you have to do is never open your mail. I had a binder bursting at the seams by my second year of college containing all the information that my student loan provider sent me.

And that can apply to anyone of any age. My BFF is considering a $120k profit art school because she "loves to draw". Uhh. .anyone with half a brain should be able to realize that is a shitload of money. I'm sure somewhere deep down she grasps this is financial suicide but she argued with me for an hour over why IWCC at a fraction of the cost is unacceptable.

[greeniis10]

Jun 25, 2014 10:52:10 GMT -5 @tbird said:

Jun 25, 2014 10:43:16 GMT -5 greeniis10 said:

"In this day and age - can anyone really claim "ignorance" about this stuff?"

No, no excuse.  But just a few short years ago remember how many adults took on adjustable rate mortgages with "no idea" that the rate was going to change?!

And as for Bonny's point about "being college material" and being able to understand this prior to signing, again I agree.  But is any student/child evaluated effectively to determine "college material" anymore?  Pretty sure most every student and child is now told that college is not an option. 

I still believe in trade and vocational schools as just as valuable an option, personally.

However - we roundly trounced them in super YM style!

However - for the past 10 years - I'd have been better off in an adjustable rate mortgage. But I took the fixed

I think ARMs were wrong for a vast majority of people, especially those who did not understand how they worked.  That's certainly not true in your case.  Sorry an ARM would've been better for you, though!  If only we could fortell the future...

[NomoreDramaQ1015]

I have no idea how my friend found this school.   She didn't give me a name but I am wondering if it's the one that is advertised on TV all the time.  Institute of Arts isn't it? 

No majors in our high schools. She said she wanted to draw because she likes doing it and can't think of anything else to do but needs out of Wal-mart.

She rattled off the sales pitch the guy gave her about how successful everyone who goes there is, they "help you with job placement" and how "everyone who graduates from here has a job" yada yada. Oh and by the way tuition is $40k a year.

I instantly responded it sounds like a for profit. If it's too good to be true it usually is.

I said IWCC has an excellent art department you can get a degree from in 2 years and only costs $150/credit hour.

What I really wanted to say was you're going to be stuck at Wal-mart forever with $120k in student loans, two kids and a boyfriend who barely makes above minimum wage. If you're going to spend $40k+ a year do it in something that will have a better ROI than drawing pictures.

[NomoreDramaQ1015]

I had to pick my jaw up off the floor when she gave me the tuition quote.

Supposedly according to the guy she talked to "everyone has a job upon graduation".

Nice spin dude. How many of them are actually employed drawing pictures full time and paying back that $120k vs how many are stuck at Wal-mart struggling with the debt load?

The whole conversation stank. I said the guy sounds like a used car salesman. Not the kind of person I'd trust to give me educational advice.

[movingforward]

When I was in Ireland I started talking with a person from the US (probably mid 20's) who was accepted into the veterinary program in Dublin.  I couldn't resist asking how much that was going to cost her.  She said 60K per year and that doesn't include living expenses (Dublin isn't cheap so not sure how much more that will cost).  She stated that she knows she will be paying on student loans forever but it is all about the "experience."  She should earn a good living as vet but I am sure she could have gotten a degree in the US for a butt load less than what she is going to pay for this "experience."

[haapai]

I'd like to point out that it doesn't take a great sales pitch or jaw-dropping naivete to take on debt for an education that you will not use.  Nursing and teaching are often touted as practical and in-demand careers but they have stunning burnout/dropout rates.  A lot of people don't last two years in those professions. 

It used to be easier to recover from such a mistake. 

[NomoreDramaQ1015]

Only 3 yrs?

Is it a bachelor degree?

I am not sure if it is a bachelor's or not. I think she said it's a 3 year program.

She could get her AA for $150/credit hour at IWCC. Or get her bachelor's at UNO for $8k a year since she's a resident of Nebraska and wouldn't have to live on campus.

It's the $40k that blew me out of the water. We're not the cultural wasteland TT makes the Midwest out to be, we have a decent art community but we don't have the type of scene where you're going to be able to recoup that cost and be able to actually live. I reminded her the term "starving artist" exists for a reason.

[movingforward]

Jun 25, 2014 12:46:52 GMT -5 @tbird said:

Jun 25, 2014 12:21:30 GMT -5 movingforward said:

When I was in Ireland I started talking with a person from the US (probably mid 20's) who was accepted into the veterinary program in Dublin.  I couldn't resist asking how much that was going to cost her.  She said 60K per year and that doesn't include living expenses (Dublin isn't cheap so not sure how much more that will cost).  She stated that she knows she will be paying on student loans forever but it is all about the "experience."  She should earn a good living as vet but I am sure she could have gotten a degree in the US for a butt load less than what she is going to pay for this "experience."

How many years for the program?

And, what's a vet education in the us cost? Any difference in years to train?

It doesn't sound that outrageous to me, frankly, for what she's getting....with the abroad experience

I think she said it is 4 yr program.  I am little iffy on what the 4th year entailed (sounded like internship) so 60K x 4 = 240K and that does not include any living expenses.  So if she borrows another 30K per year to live on you are talking about 360K in student loans.  I am not completely sure what vet school in the US costs.  Maybe someone else knows.  I just know that being debt by 360K would probably make me want to shoot myself

[NomoreDramaQ1015]

I don't know the exact figures but I have heard that vets in the US graduate with as much debt as medical students but they don't make near the type of money.

It's also just as competitive. University of Iowa only accepts 2-3 people a year into their veterinary program. They have a laundry list of hoops you need to jump thru to even have a chance. A friend of mine wanted my advice on zoo internships because they expect you to have at least 2 years animal husbandry experience before you can apply.

[movingforward]

Jun 25, 2014 13:02:39 GMT -5 @tbird said:

I was thinking it may have been a much shorter time following a bs degree.

Hmm. Ill google up us vet stuff see how that goes..

I just looked up Texas A&M (which is supposed to have a great vet program) and it costs 37K - 44K per year including room and board.  This is in-state tuition.  Looks like the vet program is 4yrs of post graduate work. 

[justme]

Jun 25, 2014 12:11:50 GMT -5 NomoreDramaQ1015 said:

I had to pick my jaw up off the floor when she gave me the tuition quote.

Supposedly according to the guy she talked to "everyone has a job upon graduation".

Nice spin dude. How many of them are actually employed drawing pictures full time and paying back that $120k vs how many are stuck at Wal-mart struggling with the debt load?

The whole conversation stank. I said the guy sounds like a used car salesman. Not the kind of person I'd trust to give me educational advice.

There's a well known for profit school that's in my city (does art, film, graphic designs, music, etc) that does pretty well with it's students (there's a lot of video game companies in town plus several amusement parks) and posts high placement stats. Most of them are placements, but if you can't find a job suddenly you are on the staff teaching the new round of kids if you want.   Music is the worst for that school - there's just not a huge part of the industry here and they churn out way more kids that don't want to move than there are jobs here. 

[NomoreDramaQ1015]

Theatre is more where it is at here in Omaha. We have a sculptor/painter/drawer/photography scene here but it isn't one that is going to accomodate a $120k student loan burden. Most of the people at the summer arts festival have "real" jobs on top of their art. Or all they do is go from festival to festival across the country to sell their wares.

I don't know a lot of people who make a sole living on the arts here unless they are high up in the theatre world. I'm taking producers/choreographers/lighting design, the types of people where you're pretty much always assured a job since we have 4 major theatres and several smaller/Indy theatres that will always need tech people.

[NomoreDramaQ1015]

Jun 25, 2014 12:39:27 GMT -5 haapai said:

I'd like to point out that it doesn't take a great sales pitch or jaw-dropping naivete to take on debt for an education that you will not use.  Nursing and teaching are often touted as practical and in-demand careers but they have stunning burnout/dropout rates.  A lot of people don't last two years in those professions. 

It used to be easier to recover from such a mistake. 

True. You can't control everything in life and sometimes things happen.  I

I use my degree but decided I don't want to be a professor.  That's what I was dead set on at 18 and what most of my time in the workforce was geared towards.   Reinventing myself is a lot trickier than I thought it would be.

20/20 hindsight I can think of several ways I could have structured things to give me more options and probably reduce my SL burden even further, but that knowledge has come with experience.  I plan on hopefully passing that onto my kids so they can be in a better position at 18 than was.

That being said there is a difference between finding out nursing isn't for you and taking out $120k in loans to get an art degree because you "can't think of anything else to do".    It's the latter that tends to be the focus of sob stories concerning "evil" student loans and the "Crisis" we are facing because of it.

[bobosensei]

Jun 25, 2014 13:58:01 GMT -5 @tbird said:

content.yudu.com/A1x6zl/UCDCoursesPathways/resources/21.htm

university college dublin....seems it may be 5 yrs of training - but you don't go in with a bachelors - just 5 years?**

Seems odd - but I think I've head that they do medicine that way in europe.

so - for uofI - you would need 4 years undergrade ~ 16k/yr, plus 4 yr grad ~30k/yr

vs 5 yrs Ireland at 60k/yr....

Its a close call, especially if you add in 3 years of being a working professional under the ireland way.....

Note:** I may be wrong!!!!

You are correct.  I have a friend that did vet school in Dublin because she didnt get into any US schools and she didnt want to wait and reapply.  The first year or two were like repeating undergraduate work because and all her classmates were 18 and fresh out of high school.  Lucky my friend came from a rich family.  In addition to vet school at Dublin she got two undergrad degrees (at the same time) from two private universities.  Before she finished vet school she decided she didnt want to spend all day castrating and euthanizing animals so she went directly to business scool.  I think she worked a year before marrying a rich guy and getting pregnant.  No idea if she even works now, but her family must have spent 600-700k dollars on all her tuition and associated living expenses.