LizzyBee Posted November 2, 2011 Share Posted November 2, 2011 http://www.economist.com/node/21534792 IN LATE 1965, President Lyndon Johnson stood in the modest gymnasium of what had once been the tiny teaching college he attended in Texas and announced a programme to promote education. It was an initiative that exemplified the “Great Society” agenda of his administration: social advancement financed by a little hard cash, lots of leverage and potentially vast implicit government commitments. Those commitments are now coming due. Critics allege a viciously wasteful circle: the size of the loan pool expands to enable students to pay ever higher fees to schools whose costs expand because money is coming their way. That was just about sustainable in the good times, a lot harder when there are fewer jobs to be had. I have a senior this year, so we are in the process of figuring out how to get through college with minimal debt Quote Link to comment Share on other sites More sharing options...
speedmom4 Posted November 2, 2011 Share Posted November 2, 2011 There was also a great article in Time magazine called I Owe U. It was very enlightening. It makes me sad to think of all those kids just trying to get started in life but are already in a deep hole. I have a high school junior and we are hoping she will have little to no college debt. Thanks for sharing, Elise in NC Quote Link to comment Share on other sites More sharing options...
creekland Posted November 2, 2011 Share Posted November 2, 2011 I have a senior this year, so we are in the process of figuring out how to get through college with minimal debt Minimal debt is a good thing IMO. Beware of for profit schools as those are the main feeder into debt default. In general, an average debt from a 4 year school is supposedly around $20,000 - $25,000 and this works out to payments of $400 - $500 per month for a 5 year payoff. To me, that's not a bad investment if one can realistically expect a job when one graduates. More than that I'm leery of. Less is great. So, one wants to realistically get a job... consider the field a student wants to go into (knowing many may change their minds) and check with people currently in the field - preferably with hiring duties - and ask there where the better places to get an education are. Everyone we've talked with has been really open with their thoughts and keyed us into some schools we weren't aware of. They also mentioned schools to stay away from. Then, hop on a site like collegeboard and see if the student stats match any of these schools. Go further and look at not only the cost, but also the average indebtedness of graduates. Look into possibilities of both merit and need-based aid. Here's some stats I compiled in a short period of time off a recent thread on the high school board... ------- (still my post, but cross posted now) ------- I just looked up one of our least expensive state schools. The tuition and fees alone run $8856 per year. HOWEVER, I also looked up the average indebtedness after 4 years and it's $24,165 which, incidentally enough, is only slightly less than the $26,202 listed for a Top 50 private LAC my son is considering going to (pending finances like all of his other applications). The tuition and fees alone at the LAC is listed at $39,560. I looked up "a" Texas state school (quite possibly not the same one you mention) and tuition and fees at it are $8232. The average indebtedness is $21,667. It is a little bit less expensive for the average student. A lower level Liberal Arts College that many nearby students go to lists a sticker cost of $15,880 (tuition and fees again), yet an average indebtedness of $28,851. This one looks less expensive and gives a much lower level of education, but many people think it's a better bargain (still private, but lower cost than a top 50 school). Huge difference in sticker cost - not so huge of a difference in final debt. NOTE though - this doesn't say if the parents took out any loans for the school. I know we didn't for my oldest. I don't expect to for middle son either. This is why my advice to people is always to apply and compare... unless one knows a school doesn't give out merit or need-based aid and that's what one needs to make it affordable. -------------------------------- Another option that can work for some include starting at community college. Beware that this doesn't always work. In many fields community college courses aren't considered "as good" as their four year counterparts (pre-med is a biggie here --> med schools don't like to see it). In other fields it's perfectly acceptable (especially if transferring to a state school afterward) and can save a bit. In my experience, being willing to go to a school away from home (12 hours for oldest) can bring nice financial offers. I've seen the same happen with kids at the school where I work. Many colleges want to create a diverse campus and geographical diversity is just as important as other types. Kids insisting on staying within a couple of hours of home often don't get as much as they are overrepresented. Overall, there are many factors to consider, but count me among those who don't want to see their kids graduate with oodles of debt bogging them down. Quote Link to comment Share on other sites More sharing options...
arliemaria Posted November 2, 2011 Share Posted November 2, 2011 My husband is an attorney and we have a big amount of loans. Our loans are consolidated and we are enrolled in IBR (Income Based Repayment). This article makes it sound like everyone will be on the IBR standards like the 20 year max repayment timeline and the 10% payment standard, although IBR is based not only on income, but family size. Quote Link to comment Share on other sites More sharing options...
.... Posted November 2, 2011 Share Posted November 2, 2011 My husband is an attorney and we have a big amount of loans. Our loans are consolidated and we are enrolled in IBR (Income Based Repayment). This article makes it sound like everyone will be on the IBR standards like the 20 year max repayment timeline and the 10% payment standard, although IBR is based not only on income, but family size. Yeah, my husband went to med school. We have something like $175,000 in student loans. :glare: My sister is an attorney and has that exact same amount. Quote Link to comment Share on other sites More sharing options...
mommaduck Posted November 2, 2011 Share Posted November 2, 2011 Could someone explain "for profit" vs other schools? The way I see it, they are all for profit and expensive. Quote Link to comment Share on other sites More sharing options...
arliemaria Posted November 2, 2011 Share Posted November 2, 2011 Yeah, my husband went to med school. We have something like $175,000 in student loans. :glare: My sister is an attorney and has that exact same amount. What is your repayment goal? We have a little over 100k. We are living in a rental which we like, but we don't want to buy a home until we have our "first mortgage" paid off. My sister-in-law is doing a MD/PhD program and I know she is well over the 100k mark, probably a lot closer to 200k and her husband is an electrical engineer, but I don't know his loan amount. Quote Link to comment Share on other sites More sharing options...
Julie in Austin Posted November 2, 2011 Share Posted November 2, 2011 Could someone explain "for profit" vs other schools? The way I see it, they are all for profit and expensive. No, there is a *huge* difference. If you have time, watch the NOVA special on for profit schools. It is called College, Inc. Quote Link to comment Share on other sites More sharing options...
Brigitte Posted November 2, 2011 Share Posted November 2, 2011 A friend of mine compared what the final cost (and what they would need to finance) would be between a private college and a public university. It turned out that given the amount of aid and scholarships given by the private university it was cheaper, much cheaper, than the public university. Quote Link to comment Share on other sites More sharing options...
.... Posted November 2, 2011 Share Posted November 2, 2011 What is your repayment goal? We have a little over 100k. We are living in a rental which we like, but we don't want to buy a home until we have our "first mortgage" paid off. My sister-in-law is doing a MD/PhD program and I know she is well over the 100k mark, probably a lot closer to 200k and her husband is an electrical engineer, but I don't know his loan amount. I don't know if we'll ever pay it off early. :glare: We have a 15 yr payment plan for our house, so that's at least one good thing. We follow the Dave Ramsey plan. I've gotten rid of a LOT of his debt (my husband was a debt fiend :D) and I raised his credit score 200 points. I've really lost all hope with the student loans, tho. Quote Link to comment Share on other sites More sharing options...
creekland Posted November 2, 2011 Share Posted November 2, 2011 A friend of mine compared what the final cost (and what they would need to finance) would be between a private college and a public university. It turned out that given the amount of aid and scholarships given by the private university it was cheaper, much cheaper, than the public university. This happens more often than many would think mainly because state schools are generally not the best with aid. It's not 100% however. IME it's worth it to apply to both types and see what happens. Just don't get hung up on a "dream school." Quote Link to comment Share on other sites More sharing options...
ForeverFamily Posted November 2, 2011 Share Posted November 2, 2011 Yeah, my husband went to med school. We have something like $175,000 in student loans. :glare: My sister is an attorney and has that exact same amount. We are right there with you. We own a house with out actually owning a house! We are can currently do IBR but as soon as my DH gets are "Real" job we no longer qualify for that. Our payment will probably be about $3,000 a month. It hurts! And the worst thing is although we are doing IBR right now our principle is still growing!:confused: The scary thing is that a lot of my DH classmates are only paying the bare min. payment at the moment because they plan on the government forgiving their loans after 25 (don't know exact time). So there loan is really growing. But the even scarier thing is that the documentation required to have their loan forgiven after 25yr hasn't been figured out yet. So they are basing a huge debt on a plan the government hasn't figured out detials about! It is like they are playing a game that they don't know the rules to yet! Sounds a bit risky to me. I have to add one more thing. How is it that this article can say "The administration says these changes will have no cost to taxpayers." How would it not cost taxpayers anything?! The money has to come from some where. If they really wanted to help students out, make it so the interest isn't compounding! And figure out a way to get a handle on the ever growing tuition rates! Sorry, you can probably tell I get a wee bit fired up about the topic of student loans!:D I'll stop now! Quote Link to comment Share on other sites More sharing options...
MaryCatherine Posted November 2, 2011 Share Posted November 2, 2011 No, there is a *huge* difference. If you have time, watch the NOVA special on for profit schools. It is called College, Inc. This is available on Netflix instant if you've got that. It's worth a viewing. Quote Link to comment Share on other sites More sharing options...
TravelingChris Posted November 2, 2011 Share Posted November 2, 2011 Dd has a full scholarship to a state school and we pay for her living expenses. She did end up getting a $300 extra stipend so we will use that for her spring semester books. I expect all my kids to get substantial scholarships or go to low cost schools (which could be private schools with scholarships, older dd got several scholarships that cut her costs to essentially the same amount- basically living expenses). Quote Link to comment Share on other sites More sharing options...
.... Posted November 2, 2011 Share Posted November 2, 2011 If they really wanted to help students out, make it so the interest isn't compounding! Yeah, we've been paying on it for years and the balance hasn't moved. Quote Link to comment Share on other sites More sharing options...
sandellie4 Posted November 3, 2011 Share Posted November 3, 2011 To echo a pp, I tell people (the ones who ask me, that is) they should consider applying to a variety of schools and see the aid packages before deciding. My oldest is going to one of the most expensive private colleges in the country (not an ivy league, a "hidden ivy" -- good grief!), but it's considerably less expensive than the state school would have been because the aid packages were so different. She was also willing (excited about!) going out of state, which I think helped too. She's not a genius, either, just has some talents that fit into what the college valued. Everyone told me to do this, to encourage her to apply all over the place, but I have to say I definitely had reservations about getting my daughter's hopes up for this one. She will have some debt, but less than average, and she'd have more if she were going to the local state college. We parents haven't taken out any additional loans in our names (although we made it clear from the outset that we wouldn't be doing that). Lots of hard choices, and it's hard to know what to do when your kid is scared and excited all at the same time (and has no real understanding of money yet, not much beyond buying her own clothes!). But the options were a lot better than they appeared when we sat down and were looking at all the sticker prices. It's all very confusing, and I think it's designed that way. One of our neighbors has a daughter who is a soph in college and already has $20,000 in debt. She is majoring in history. She received excellent aid the first year, but thereafter the aid was much less. That was one of the things we researched up front. It's important to look at not only how much aid the freshmen get. How much do students at the college get the next year and the next? Does the ratio of grant/scholarship shrink drastically compared with work study and/or loans? Sandy Quote Link to comment Share on other sites More sharing options...
elegantlion Posted November 3, 2011 Share Posted November 3, 2011 No, there is a *huge* difference. If you have time, watch the NOVA special on for profit schools. It is called College, Inc. Here's a link. the comments on the bottom of the page are interesting. http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/ Quote Link to comment Share on other sites More sharing options...
Lisbeth Posted November 3, 2011 Share Posted November 3, 2011 I'm thinking of Steve Jobs and Bill Gates...and thinking college has become a giant ripoff. Quote Link to comment Share on other sites More sharing options...
tex-mex Posted November 3, 2011 Share Posted November 3, 2011 I'm thinking of Steve Jobs and Bill Gates...and thinking college has become a giant ripoff. I would categorize both men to be more visionaries and entrepeneurs. And it would be very difficult (in today's economy) for new start ups for entrepeneurs to get a loan or angel investors for their idea like these two men did decades ago. Not every person is a visionary/mastermind. And for that, I say college is a good thing. Quote Link to comment Share on other sites More sharing options...
mommaduck Posted November 3, 2011 Share Posted November 3, 2011 Here's a link. the comments on the bottom of the page are interesting. http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/ ty! Quote Link to comment Share on other sites More sharing options...
Amy in NH Posted November 3, 2011 Share Posted November 3, 2011 We are can currently do IBR but as soon as my DH gets are "Real" job we no longer qualify for that. Our payment will probably be about $3,000 a month. It hurts! And the worst thing is although we are doing IBR right now our principle is still growing!:confused: I don't think I understand where you get the $3,000/month payment. I just applied for IBR, and my understanding is that once you're in, you're in. You send in your tax information each year to determine your monthly payments for the next year, but they aren't going to kick you out of the program. And even a family of one would only pay $671 per month on a $70,000/yr income. Quote Link to comment Share on other sites More sharing options...
Cammie Posted November 3, 2011 Share Posted November 3, 2011 Private college with great scholarships; graduate school with one year completely financed by a government grant; law school again with 50% tuition scholarship - and still $100,000 school debt! We have a 30 year repayment plan, locked in an extremely low rate, pay about $600 per month. Will be paying long after my children have finished their own educations! Quote Link to comment Share on other sites More sharing options...
creekland Posted November 3, 2011 Share Posted November 3, 2011 I'm thinking of Steve Jobs and Bill Gates...and thinking college has become a giant ripoff. I balance these thoughts with the 6 adults I know IRL who have opted to go back to school because they hit ceilings in their jobs - seeing younger, less experienced, degreed people vault right over them. All 6 are sending their kids to college right after they finish high school (but they aren't going to get mega debt to do so). The 6 I know IRL in my circle of friends and could name if I wanted to. Steve Jobs and Bill Gates I only know via the media, etc. (I've never met them in person.) I do know some people IRL who have done well without degrees, but they are in jobs where no degree is required (farming, manufacturing, construction, delivery drivers). I wouldn't call them wealthy, but they have a satisfied life. The farmer was able to get a decent bit of money when he sold his farm at retirement. Quote Link to comment Share on other sites More sharing options...
Sandra in FL Posted November 3, 2011 Share Posted November 3, 2011 I would categorize both men to be more visionaries and entrepeneurs. And it would be very difficult (in today's economy) for new start ups for entrepeneurs to get a loan or angel investors for their idea like these two men did decades ago. Not every person is a visionary/mastermind. And for that, I say college is a good thing. I think that in some fields it's actually easier nowadays (because of the internet). For example, it's easier to get published - some authors go straight through Amazon bypassing a publisher. I believe Stephanie Meyers (Twilight) got published through some cheapo internet company. Or for (computer) software, it's very easy and cheap to do at home and market, distribute via internet. Quote Link to comment Share on other sites More sharing options...
Tigger Posted November 3, 2011 Share Posted November 3, 2011 In general, an average debt from a 4 year school is supposedly around $20,000 - $25,000 and this works out to payments of $400 - $500 per month for a 5 year payoff. To me, that's not a bad investment if one can realistically expect a job when one graduates. More than that I'm leery of. Less is great. One of the biggest problems isn't necessarily the debt-load, but the average starting salary in comparison to the debt-load. While the average debt for four years of college is $20-25,000, the average starting salary of a college grad is $27,000. A $400 a month payment will eat up 25% of take home pay, leaving little to no wiggle room for any additional debt if needed (example, car to get to work), leave little no no room for any savings, and odds are they wouldn't pay within 5-years, but would extend out for ten with very little change in the monthly payment, just paying more interest, with about $100 less for payment, but $4,000 more in interest over the life of repayment of the loan. Add to this, more students than not, do not graduate within the four years - many are in for five, adding to the debt-load upon graduation and keeping them from earning for another year! And that's just if they do their bachelor's....continuing on adds even more, with less and less return in terms of salary. One thing that saddens me is that when I graduated from college, the starting average salary was (20+ years ago) around $22-25,000 (~$10-12 and hour).....it just hasn't changed much in all these years.....the big change is the level of debt going into the workforce - when I graduated I had a total of $8,000 in debt after four years - I honestly cannot imagine having triple that debt for a similar salary level. Quote Link to comment Share on other sites More sharing options...
My3Boys Posted November 3, 2011 Share Posted November 3, 2011 Don't forget to figure in dorm and meal plan expenses. Also don't forget to figure in fees and expenses related to their major. When my middle ds went to our state university, his dorm/meal costs equaled half of his tuition! And he was in-state. Quote Link to comment Share on other sites More sharing options...
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