Student Debt in the U.S.

[Shindig]

5 minutes ago, No Mulligans said:

Paying off that loan is the equivalent of getting a 3.5% return guaranteed.  The closest you can get to a guaranteed return is holding a Treasury Bill to maturity, currently a 10 year Treasury Bill yields only 2.02%.

Depending on income level, that might be a lower guaranteed return -- he pays 3.5% interest, but if some of that reduces taxes he'd pay without the debt, he has a lower effective rate.  A similar calculation happens when people debate paying down a mortgage early. 

It also doesn't have to be compared to a guaranteed return for alternate uses of the money:  I think it would be a mistake, for example, if someone were to hurriedly paying down debt (beyond the required payments;  I'm not advocating not paying) at that low a rate, while not maximizing tax-advantaged retirement accounts.

[Dan42nepa]

And why are the costs so hi? Salaries? Unions? Books that cost hundreds that they change every year. Big schools make millions from sports but does that help tuition? I attended college while i worked and my company paid alot towards it. Maybe they dont do that any longer.. Free tuition 15 an hour minimum wage.. someone has to pay for it.

[mcanadiens]

7 minutes ago, Dan42nepa said:

And why are the costs so hi? Salaries? Unions? Books that cost hundreds that they change every year. Big schools make millions from sports but does that help tuition? I attended college while i worked and my company paid alot towards it. Maybe they dont do that any longer.. Free tuition 15 an hour minimum wage.. someone has to pay for it.

Real simple. Demand for college is very high.

Every kid, no matter how academically inept, is supposed to go to college. It doesn't matter that they barely passed high school. It doesn't matter that they have no idea what they want to study. They need to go. Every adult they've ever talked to has told them so.

If everyone wants your product, you can name your price. 

[dkolo]

48 minutes ago, mcanadiens said:

Real simple. Demand for college is very high.

Every kid, no matter how academically inept, is supposed to go to college. It doesn't matter that they barely passed high school. It doesn't matter that they have no idea what they want to study. They need to go. Every adult they've ever talked to has told them so.

If everyone wants your product, you can name your price. 

It's not strictly demand; it's because colleges don't compete on price but on quality of life and academics, both of which create an arms race effect that's fueled by the supply of money from lenders who supply it knowing they have zero risk on their loans. 

[saevel25]

1 hour ago, Dan42nepa said:

And why are the costs so hi? Salaries? Unions? Books that cost hundreds that they change every year. Big schools make millions from sports but does that help tuition? I attended college while i worked and my company paid alot towards it. Maybe they dont do that any longer.. Free tuition 15 an hour minimum wage.. someone has to pay for it.

Unless you are a power 5 school most colleges run in the red for sports. A lot of colleges had to drop to a division that didn't require the school to offer scholarships. Dayton is like that, they are division I in basketball but division III in football.

Not many companies will higher a high school graduate and pay for their college. They will help pay for an advanced degree or continuing education in some instances. 

It's a combination of demand and the supply of money. Enrollment is up 30% since 1980. Yet tuition is up 600%. Since 1994 tuition is up 300% and federal spending on student loans is up 300%. 

Colleges keep raising money because the equation for student loans is based on how much it costs to go to that college versus how much your family makes. So if tuition increases than the amount of student loan payments increase as well because now a family making $75K a year gets more student loans because tuition increased. 

A big issue as well is that jobs that use to be a high school graduate could get and then they would train in the workplace now requires college degrees because it's a way to stay competitive when hiring people. By requiring all of these jobs to have college degrees they devalue the college education. All they are doing is using the college degree as a way to weed out prospects on a resume. 

[14ledo81]

I disagree completely with the government paying for college.  What about those who are not intelligent enough to make it through a 4 year school (or any kind of school), they should pay for those that do?

"If everyone has a bachelors degree, nobody has a bachelors degree"

 

[mdl]

5 hours ago, David in FL said:

At $402 per credit hour, a student working a part time job at $10 an hour can pretty much pay for their entire college education without any debt at all.  That doesn't even take into account education savings and planing that could have/should have happened in advance.

I think the OP question is a complicated one, but this is pretty much a crazy statement.  Even the basic math, without actually thinking through the problem, doesn't work.  $10/hr, 20 hrs/week = $10k/year pre-tax, so let's say ~$8k/year optimistically post tax.  At $402 per credit hour, then your schooling is 32 * $402 = $12,864/year.  So you need $4,864 * 4 = $19,456 in loans for your schooling before spending a single cent on books, computers, other school supplies/costs, and living expenses.  And this is a bald minimum.  What if your parents don't happen to live in a town that houses the 0 to 1 halfway decent state university campuses (i.e., describing all but a small handful of states)?  Now, not only do you have to pay for housing, but there's an issue of whether you're ever going to visit home, which, if you do, cuts down the number of weeks you can work, and thus cuts your income. What if your parents do happen to live in the tiny university town housing your state's one decent state university campus, but they aren't able/willing to let you live at home for free and pay all of your food, clothing, and transportation costs?

My point is that with a $10/hr job and a state university level of tuition, you still need $20k in loans, and that's before accounting for books, computers, and living expenses.  That's gonna add up to a HIGH minimum debt for a self-financed state university education.

And this isn't to mention that working 20 hrs a week at some random job will put a serious damper on your education.  As a computer science undergrad I would have either learned much less or been fired a bunch of times trying to hold down a 20 hr/week job along with all those nights in the computer lab until 4-6am.  

[saevel25]

54 minutes ago, 14ledo81 said:

I disagree completely with the government paying for college.  What about those who are not intelligent enough to make it through a 4 year school (or any kind of school), they should pay for those that do?

"If everyone has a bachelors degree, nobody has a bachelors degree"

 

Yet they get paid anyways if they happen to be from a low income family. It happens already. 

[billchao]

8 hours ago, jbishop15 said:

College should be paid for by the government, like in many other countries. Education is too important, not only for getting a job, but for creating a better populace.

I agree.

1 hour ago, 14ledo81 said:

I disagree completely with the government paying for college.  What about those who are not intelligent enough to make it through a 4 year school (or any kind of school), they should pay for those that do?

"If everyone has a bachelors degree, nobody has a bachelors degree"

 

Yes. Same reason that people with no kids should pay taxes for public education.

[newtogolf]

I'd like my home, my cars and my private golf club membership paid for by the government too.

Here's the problem, the government in their infinite wisdom decided to guarantee all student loans, just like they did home mortgages (cause that worked out so well).  Colleges and Universities knew their tuition was guaranteed so they jacked up the costs.

The problem is compounded because there are too many students in college that are there for partying and socializing not an education.  Not everyone needs a college education, especially not at the ridiculous rates colleges are charging today.

No one forced them to go to college or take out a loan, I worked full time and paid for my own education so I wouldn't have huge student loans.  I put money away for my children to help them pay for their education.  There's also the military as a means to offsetting the costs of college if you really can't afford to go.  For four years of service you can offset a substantial amount of the costs.

I'm tired of paying for the irresponsibility of others who make poor life choices and then whine that they can't afford to pay their student loans because they have to drive a new BMW.

[Lihu]

Addressing the large cost and why it is so high now.

There are too many tenured professors who don't actually add value to a school's educational programs, administration is too big, recruitment budgets for sports, etc. no actual value to a young person's actual advanced learning.

If you get rid of the fluff, you might have a chance of having less defaulting of loans.

[InTheRough]

31 minutes ago, newtogolf said:

Here's the problem, the government in their infinite wisdom decided to guarantee all student loans, just like they did home mortgages (cause that worked out so well).  Colleges and Universities knew their tuition was guaranteed so they jacked up the costs.

The problem is compounded because there are too many students in college that are there for partying and socializing not an education.  Not everyone needs a college education, especially not at the ridiculous rates colleges are charging today.

Agreed.  this is an issue with roots in the governments policies which is why the govt needs to step in and stop this issue from turning into as big a mess as the housing bubble crisis.  I don't think the answer is for them to simply just forgive all debts but something definitely has to be done.

 

33 minutes ago, newtogolf said:

No one forced them to go to college or take out a loan, I worked full time and paid for my own education so I wouldn't have huge student loans.  I put money away for my children to help them pay for their education.  There's also the military as a means to offsetting the costs of college if you really can't afford to go.  For four years of service you can offset a substantial amount of the costs.

I'm tired of paying for the irresponsibility of others who make poor life choices and then whine that they can't afford to pay their student loans because they have to drive a new BMW.

This is such an asinine comment.  The kids coming out of school can't even afford to move out of their parents house because there are limited jobs available--for any major-- and the jobs that are available are paying less then 30k a year(all of which require at least a Bachelor's degree so not going to school isn't an option).   This whole "I worked to put myself through college so they all have to do is pick themselves up by their bootstraps and work hard" line is nonsense.  A full-time job at the salary available to a high school graduate barely scratches the surface of the cost of a 4 year degree.

This  is not directed at anyone in particular but since @newtogolf mentioned irresponsibility of others...No millennial voted in any of the politicians that made these policies that put them in the position that they are in now (in the overwhelming majority of professions not having a college degree is a financial death sentence so to even have the chance of a stable financial future requires many to take out those student loans) and now the older generations who are responsible for the current student loan  and job market situation are calling them irresponsible and lazy because they have a lot of debt and cant find a job.  This is the reason that there are so many frustrated millennials out there.

[newtogolf]

5 minutes ago, InTheRough said:

Agreed.  this is an issue with roots in the governments policies which is why the govt needs to step in and stop this issue from turning into as big a mess as the housing bubble crisis.  I don't think the answer is for them to simply just forgive all debts but something definitely has to be done.

 

This is such an asinine comment.  The kids coming out of school can't even afford to move out of their parents house because there are limited jobs available--for any major-- and the jobs that are available are paying less then 30k a year(all of which require at least a Bachelor's degree so not going to school isn't an option).   This whole "I worked to put myself through college so they all have to do is pick themselves up by their bootstraps and work hard" line is nonsense.  A full-time job at the salary available to a high school graduate barely scratches the surface of the cost of a 4 year degree.

This  is not directed at anyone in particular but since @newtogolf mentioned irresponsibility of others...No millennial voted in any of the politicians that made these policies that put them in the position that they are in now (in the overwhelming majority of professions not having a college degree is a financial death sentence so to even have the chance of a stable financial future requires many to take out those student loans) and now the older generations who are responsible for the current student loan  and job market situation are calling them irresponsible and lazy because they have a lot of debt and cant find a job.  This is the reason that there are so many frustrated millennials out there.

I didn't vote in the politicians that made these policies either.  As for asinine, there's this crazy concept I learned from my parents when I grew up.  If you can't afford something you don't buy it.

I worked two jobs when I had to, kids overall are entitled and lazy.  If you can't pay your bills on one job, get another, work weekends. 

Tomorrow we will have near a foot of snow here on Long Island and not one kid will knock on my door to make some money.  I bet a hard working college student / graduate could earn enough tomorrow to pay for at least one month of their student loan, but you're right let's coddle them some more.

[InTheRough]

4 minutes ago, newtogolf said:

I didn't vote in the politicians that made these policies either.  As for asinine, there's this crazy concept I learned from my parents when I grew up.  If you can't afford something you don't buy it.

I didn't say it was directed at you specifically.  Also what other option is there?  We're not talking about them going out and buying a house that they cannot afford, we are talking about loans for an education so they can earn a degree which is required for any entry level job out there.

 

7 minutes ago, newtogolf said:

I worked two jobs when I had to, kids overall are entitled and lazy.  If you can't pay your bills on one job, get another, work weekends. 

With what time?  My first job I worked 12 hour days minimum, sometimes 14 or 15 hrs as well as a lot of weekends.  I must be so lazy and entitled to want to actually sleep and eat instead of getting a second job.

14 minutes ago, newtogolf said:

Tomorrow we will have near a foot of snow here on Long Island and not one kid will knock on my door to make some money.  I bet a hard working college student / graduate could earn enough tomorrow to pay for at least one month of their student loan, but you're right let's coddle them some more.

So your answer to the billions of dollars in student loan debt that is financially crippling a generation is for everyone to grab a shovel?  Wake up dude.  This is a serious issue and it's not going to be solved by people brushing it off and using, "this generation is just a bunch of lazy kids" as an excuse.

[newtogolf]

10 minutes ago, InTheRough said:

I didn't say it was directed at you specifically.  Also what other option is there?  We're not talking about them going out and buying a house that they cannot afford, we are talking about loans for an education so they can earn a degree which is required for any entry level job out there.

 

With what time?  My first job I worked 12 hour days minimum, sometimes 14 or 15 hrs as well as a lot of weekends.  I must be so lazy and entitled to want to actually sleep and eat instead of getting a second job.

So your answer to the billions of dollars in student loan debt that is financially crippling a generation is for everyone to grab a shovel?  Wake up dude.  This is a serious issue and it's not going to be solved by people brushing it off and using, "this generation is just a bunch of lazy kids" as an excuse.

What I'm saying is people enter an obligation they should make good on it.  It may mean they don't drive a new car or get the latest iPhone, it's called sacrifice. 

What's the alternative?  Make all the financially responsible taxpayers bail them out because they were irresponsible?  I'm not saying every kid is, but there are a lot who have been raised in this age of participation trophies and shielded from the harsh realities of life who don't want to make any sacrifices and would just rather make someone else pay their debts.  The 2015-16 mantra seems to be, blame the rich, make them pay.

Going forward the government needs to get out of guaranteed student loans, colleges will have no choice but to lower tuition if no one can afford to go.  Those who do qualify for loans should be obligated to pay them back. 

We also need to reduce the number of VISA's to students from other countries and bridging them to work VISA's.  Our current POTUS just passed executive orders that allows these people to remain in the country longer because he believes we need more college educated foreign nationals taking the jobs of those who are already citizens.   

[14ledo81]

I would also like to mention that a college education is not required for every entry level job.  There has been a shortage of workers entering the trades for years.  Mechanical trades (HVAC, Plumbing, Electrical) have great apprenticeship programs and pay a good wage, with little to no student debt.

I have my own speculations on why less are entering the trades.  It just may have something to do with the reason no one will knock on your door tomorrow @newtogolf.....

 

[ScouseJohnny]

Quote

There are too many tenured professors who don't actually add value to a school's educational programs

Is there an "eyes out on stalks" emoticon I can use in response to this comment?

Nope, guess this'll have to do:

Faculty these days are fast becoming the red-headed stepchildren of the university. In many institutions, the teaching is principally delivered by non-tenure track peripatetic adjuncts, anyway, for $500 a credit hour.

If little Johnny wants to know why he's buying a house to go to college, where the money goes, and where the true crisis is founded, he'd do well to read this:

http://www.washingtonmonthly.com/magazine/septemberoctober_2011/features/administrators_ate_my_tuition031641.php?page=all