Student Loan Bubble

Join the military, then education is free (they actually pay you pretty good money, on top, for housing now if you serve 4 years active duty). Get a job. Go to State school. Work hard in high school and get a scholarship.

Use good judgement. Plan how much you can manage in student loans, and build a timeline of how long it will take you to pay them off. Minimize the amount you take out in student loans. Make sure the career field you are getting into is one that you will both enjoy, and will help support the finance of your student loan :up:

All that said, I think student loans are an absolute bitch. Unless you are going to be a doctor or a lawyer or a scientist or an engineer, go to a state school. Take advantage of every educational opportunity, you are paying a great price for it. Have fun, you're most likely in your late teens and early 20s.

Finally, get your ass to working, full time, as soon as you finish your degree. You probably should be trying to work part time too while you are going to school.

 

To further complicate matters, there aren't jobs available for a lot of these kids coming out of college with huge debts. Non sequitur ... I paid off my student loan last year and it caused my credit to drop. Yup, my credit score dropped fairly significantly when I paid off a loan. The reason was that it was my longest line of credit.

 

As someone with about $65K in student loan debt, it's pretty tough. I'm an engineer and making enough to pay them off, but I'm definitely going to be doing things like buying a house later because it's that much tougher to save.

One thing I don't understand is why you're not able to refinance them like any other loan.

 

u have manged to hit my nerves with this BN.....

my original SL debt was 114,000 big ones giving me a nice 800 dollar a month payment soon after i finished my training. i couldn't buy a house, had to rent.
it was and still is to a degree a tight noose just like today for these new graduates....

i have managed to dwindle it down thru some juggling but i cant imagine having 150 plus in loans in this day and age - especially those who want to study medicine in an environment where the gov't is squeezing reimbursements - but that is a whole nother thing!

yes the govt will come up with some forgiveness plan when the shit hits the fan - but in order to qaulify u will probably have to fulfill certain criteria - which undoubtedly will eliminate the vast majority of borrowers.

 

even if u are going into the STEM fields - the state schools are more than adequate to get urself educated.

i am telling my kids now - the students at SUNY stonybrook take the same bar exams/medical boards/CPA tests as the ones who went to NYU and columbia.

 

The universities whose absurdly inflated tuition rates have been supported by all this easy money are going to have to be surtaxed to finance any massive forgiveness program. If I were king.

 

I graduated law school in 2013. I didn't have much debt because I had a large scholarship. That being said, I started paying back my loans last month. I just got a job today. So I'm glad I won't have to worry about paying them off.

Took me almost nine months. Not good.

 

forgiving the loans is certainly not a realistic option. correct me if I am wrong, but unlike a mortgage, a student loan can't be walked away from, correct? that bitch haunts you until it is paid off. so it isn't as if the defaults are going to cripple banks, unless I am mistaken.

if that is the case, people not being able to buy houses or have kids is unfortunate, but nowhere near the disaster that the mortgage crisis was.

I went JetsVilma's route -- served in the military and got my college paid for for that very reason -- the idea of debt for college scared the shit out of me. beyond the money you get for college, you also qualify for so much financial aid that tuition and fees is practically free afterwards, on top of the cash you get for the G.I. Bill.

is the military fun? fuck no. but 4 years of discipline is far better than 10-20 years of scratching and clawing to pay off a loan. plus you get additional benefits -- like a VA loan so you can buy a house with 0 down. but that is each individual's choice for how they want the next 4-20 years of their life to proceed after high school.

I preferred to pay the price up front and benefit later. some people want to go into debt to avoid a more financially sound strategy and hope to pay it off in the future. the idea of forgiving that debt simply because they now are in financial trouble is ridiculous when they had other options that they simply chose not to pursue. it isn't the governments or the banks job to save people from themselves.

they weren't preyed upon by banks with the loans; they chose to rather than save for college and attend when they could afford it to go into debt to attend. sure, there is possibly a larger social issue of the idea that everyone needs to go to college, and directly from high school, rather than more practical avenues to achieve your college degree, but, again, we choose to agree or disagree with those concepts.

college loans should be strictly for high priced degrees that can't be achieved otherwise, like a medical degree. if you are going into debt for a business or psychology degree from your local state school, you already failed at business and should have your head examined.

 

We should publicly finance education from cradle to grave. It would greatly benefit both our social and economic well being.

 

I am sure the publicly funded education at the college level would just be amazing; I mean, we do such a good job with it at every level below it.

you may as well do away with college if you create a public version of it run by the government.

 

I'm going to stick to the planning part of this: Im in New York State. I just did a quick Google search on SUNY Albany, and I was surprised their tuition for average undergraduate program for one semester all room and board included was $20k. That is a lot. I also did a search on SUNY Geneseo one semester, no room and board, is only $2935 (that's manageable).

Some people are smart with their money, some people are not. Some people work hard, some people do not. You want to spend a fortune to become a doctor or a layer or go after that Masters realize there is a price to be paid. To me much more is gained on the job then in the classroom, not saying school is not very important or beneficial.

I don't think too many Navy sailors were killed in Afghan or Iraq. I don't even think too many Navy sailors landed on Afghan or Iraq. I don't think many Airmen were killed or US Coast Guardsman. Yes, many brave front line infantry Marines and Soldiers were killed. Maybe, we don't sign up for front line infantry or even branch of service with the Marines or Army.

The power of research and planning. It's the 21st century. Internet is practically free. Endless amounts of knowledge at your fingertips.

 

Without government funding you would do away with a huge portion of them today.

 

This is obviously a serious issue for individuals who are saddled with debt, and going to community college and state schools can go a long way to reducing potential debt. From the point of view of the economy, however, there is a fundamental difference between this kind of debt and the collapse of the mortgage securities market. In the mortgage case it was the lenders that were left on the hook for the debt when the market collapsed - that's why it spilled into the financial services industry, and with the resultant tightening of credit into so many other industries. In the student loan situation it is the borrowers who are on the hook, and the law gives lenders (including the government) broad powers to collect the money; for example, it cannot be shed via bankruptcy. This has indirect effects on the economy, but nothing like the direct effects the housing crisis had.

People like to focus on expensive research universities as the big problem, but that's actually not the case. Student default rates are far higher for students at for-profit schools. Indeed, those schools couldn't exist without these loans - the University of Phoenix, for example, gets around 90% of its revenue from government programs, mostly from student loans. It's no coincidence that graduation rates at for-profit schools are also far lower than they are at nonprofit schools. The fact is that most of these schools are basically scams that literally prey on the uneducated and provide little or no value. Of course, that doesn't change the fact that plenty of nonprofit private schools provide questionable returns on investment, again suggesting looking into community colleges and state schools. What is certainly true is that students who plan on going to graduate school or into a field with formal licensing (like accountaincy) are likely to lose very little in attending a state school.

Simply forgiving loans isn't going to change the fundamental problems with the system. I could see linking loan interest rates to graduation rates and loan default rates, making it much tougher for terrible schools (whose graduates will find it much harder to pay back the loans) to attract students. There is also a natural market correction going on - for-profit enrollments have been dropping precipitously in the last few years, as nonprofits have entered the online market and people have seen what a scam for-profit schools usually are (enrollment at the University of Phoenix has dropped 60% in the past three years).

Don't be surprised if the Cardinals are playing a stadium called something other than University of Phoenix Stadium in a few years.

 

That $20,000 figure is the annual (two semesters) cost, not the one semester cost. The entry in the last column under "Annual costs" just doubles the figures for 12+ credits per semester.

http://www.albany.edu/studentaccounts/AY_13-14_UG_RATES_.pdf

And by the way, that's another way to save money - take 18 credits per semester, not 15, and finish in 3 1/2 years, not 4. With high school college-level courses you can do it in 3 years. Not as much fun, but perhaps more fun than being deployed in Afghanistan.

 

the self-dependent middle class is being fazed out anyways, and the situation you are presenting is exactly the system being instituted by our current two term political party -- creating more people who will be dependent on other government programs to keep them from starving but unable to climb to a level of self-dependence.

sucks, but we voted for it.

 

It's quite possible that there will be the long-term damaging effects of this debt, but I'm going to stick to my belief that they will not be of the scale that you are predicting. As a baby boomer, I can tell you that I have absolutely no expectation that my kids will be taking care of me as I grow old, and none of my friends do either - we're saving for that ourselves. It's realistic to wonder if boomers will be able to maintain their lifestyles in retirement, but Medicare, Social Security, and Medicaid make it unlikely that they will fall into poverty, and if they do I don't think it's going to be their childrens' student loans that will be the reason. If people are paying off government debt rather than spending that just means there will less of a government deficit, which has positive effects on the economy.

As someone who has been in the nonprofit education business for almost 35 years, I can tell you that your impression that universities can get away with whatever they want to do is seriously off the mark. Universities that take any federal money are subject to much closer government scrutiny than the vast majority of companies are. I don't know what you consider "frivolous" spending, but it certainly can't compare to the kinds of perks senior corporate executives get. It certainly is not happening at public universities - most public schools have had their funding slashed for the past twenty years, and they have no control over setting tuition (that is determined by state legislatures). I see no reason why the free market shouldn't prevail (as much as is possible in a somewhat oligarchic system) - if a school charges too much tuition it will lose students, and it will then have to reduce tuition (at least in a relative sense) to survive. If they increase acceptance rates instead the quality goes down, the school becomes less desirable, and they have to reduce tuition to survive. As I said in my earlier post, I have no problem with loan rates being linked to things like graduation rates and student default rates, which again is a way of letting market forces work more directly. As I said earlier, I also think public education is usually a much better investment than private education, which also cuts down on the potential for inappropriate spending.

There are strong forces out there that will certainly have a large effect on higher education. The positives that drew people to academia (collegiality, academic freedom, respect and even admiration from students, primary control over the education process, input on broad policies of the university, tenure) are disappearing, while the negatives (an incredibly difficult entry process, relatively low pay, "publish or perish" to get tenure) are not. I have had a very successful and very enjoyable career as an academic, but I have great doubt that I would pursue it if I was 35 years younger.