College loans - article in Rolling Stone

[flyingiguana]

http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815?fb_action_ids=10151611192431938&fb_action_types=og.likes&fb_source=other_multiline&action_object_map=

 

The first page of the article is somewhat dull.  It gets better on the 2nd page.

 

"Talk to any of the 38 million Americans who have outstanding student-loan debt, and he or she is likely to tell you a story about how a single moment in a financial-aid office at the age of 18 or 19 – an age when most people can barely do a load of laundry without help – ended up ruining his or her life. "I was 19 years old," says 24-year-old Lyndsay Green, a graduate of the University of Alabama, in a typical story. "I didn't understand what was going on, but my mother was there. She had signed, and now it was my turn. So I did." Six years later, she says, "I am nearly $45,000 in debt. . . . If I had known what I was doing, I would never have gone to college."

 

[AlmiraGulch]

I'm over 40 and have a ridiculous amount of student loan debt, still.  I graduated undergrad at 21, and grad school just 3 years ago.  Most of what I owe now accumulated as a result of years of forebearance or deferment because I simply wasn't making enough money to pay what I owed and still live.  I also took on some additional while in grad school, but I fully expect to die with school loan debt.  I'm unable to pay for my children's college educations because of my own lingering school debt, and I've never been in default. 

 

For me, this excerpt is telling:

 

But conservatives most of all should hate the current system for any number of reasons – for being a massive hidden tax, for being a market-defying subsidy artificially keeping ineffective and poor-performing institutions in business, and for being an example of arbitrary government power seizing not just money borrowed plus interest, but billions in additional fees and penalties from ordinary people.

Progressives should hate the predatory tactics of lenders and the sleazy way universities rely upon loan-shark collection methods to keep themselves in fancy new waterfalls, swimming pools and tenure-track jobs.

But nobody hates it enough, except for the people actually trying to pay the bills with increasingly worthless degrees. Instead, the credit keeps flowing and the debt bubble keeps expanding, thanks to leaders like John Boehner (whose daughter reportedly works at Sallie Mae's student-collections firm, General Revenue Corp.) and Dianne Feinstein (who introduced legislation to increase limits on Pell grants while her husband was heavily invested in for-profit colleges).

 

[Jen in NY]

Yes... I printed this article out and read it twice. Putting aside the personal anecdotes told by undergrads who have taken on massive amounts of debt (which were heartbreaking to me), the parts that were even more interesting had to do with the apparent collusion between the colleges and the loan companies to keep the price of college inflated. Where can we go from here??

 

There has *got* to be a serious sea change coming.

 

My niece could be a case study for this article... she just moved in yesterday, knowing that by the end of her adventure she will be ~100,000 in debt with a Biology degree. Her career aspiration is to be a big cat wildlife rehabilitator. I fear for her future. Maybe she will luck out, get lost, and find herself in the career center this week. I really, really hope something works out for her.

 

I think sometimes people think they are doing the right thing in going to college on loans without doing the research on the economic viability of their plan. It's hard enough when you *do* have a viable plan. :( That may be a separate topic, though.

[katilac]

Y she just moved in yesterday, knowing that by the end of her adventure she will be ~100,000 in debt with a Biology degree. Her career aspiration is to be a big cat wildlife rehabilitator.

Wow, that's painful just to read!

[mommymilkies]

It's not just government loans. Most colleges here rely on private student loans. I will say I'm glad for the loans, though, personally. My parents refused to pay a dime and their income was too high for me to qualify for aid. I couldn't have gone to college even with my high GPA and ACT scores. Later as a single mom, student loans and the pell grant got me out of a miserable life working night shift at a hazardous job 70+ hours a week and barely affording rent. I just wish there was more realistic career counseling for high school and college students and less stigma on jobs like plumbing.

 

Dh is a college professor and so many of his students say they want to be doctors. But probably 75%+ change their mind after a few years because they had no idea of the work required for it. They just assumed it was a prestigious and high paying job. They didn't realize the hard work, $100k+ in debt and long years before they made much more than minimum wage.

[elegantlion]

I'll read the article later. I'm pondering how much student loan debt I want now, at age 46. 

 

However, I didn't go to school strictly because I didn't want debt. Guess what I still ended up in a different kind of debt, topped out of jobs I could well advance in but couldn't because I didn't hold that magic piece of paper with a BA/BS on it. I missed the opportunities to do what I really wanted to do with my life because I wanted to avoid the debt. 

 

I think there is a balance, or should be. There needs to be awareness of how much debt you're willing to take, what your earnings will be (at graduation level, not experienced been there 10 years level), and what you are comfortable with. 

 

Looking back, I could have attended college for half (at least) of what I'm paying now (which is still an affordable state school), graduated with some debt and probably had it paid off by now. I could have been working/worked in an industry of my choosing, not the one where I could get a job. 

 

The other side of the coin is that people who don't attend college usually end up in lower paying jobs and can't cycle out of them. With that you may have to take on consumer debt to make ends meet, paying higher interest rates for cars or mortgages (if you can get one) if you've slipped up with your credit, and not really being able to even apply for jobs that would get you out of this cycle. At least with a degree you have more options, even if you're in the same situations. There are many long range costs that happen when you don't attend college. 

 

I've never really regretted not attending college, but at this stage of my life, I'm pigeonholed into it. If I want to have a chance of supporting myself and my son I'll have to have a BA/BS, even if it's just a entry on a resume. 

 

My concern is when does the cost of the education exceed the value of degree. I remember the article on the girl who spent 100k on a gender studies degree. When you step back, does anyone think that's a good idea? 

 

I sat down with my advisor a few weeks ago. She had automatically put me into the most expensive options for online freshman classes, the ones with the highest additional fees. I had to be what I felt was overly assertive to change and pick my own schedule. Yesterday I tested out of the developmental math class she was so adamant I needed. The idea of paying close to 1000.00 for a class I felt I could test out of was a big factor. There were a lot of kids who didn't, and  the class does not count towards graduation. What chance does a passive 18 year old have against an advisor who seems to know what they're doing? Even after one day on campus, I can see how kids get caught up in wanting to do things without concern for the cost involved. And the jobs they offer on campus don't even pay minimum wage. 

 

I do think tuition is a problem, textbooks another, but there are ways around 100k in debt for a quality education. 

 

 

[Jen in NY]

It's not just government loans. Most colleges here rely on private student loans. I will say I'm glad for the loans, though, personally. I couldn't have gone to college even with my high GPA and ACT scores. I just wish there was more realistic career counseling for high school and college students and less stigma on jobs like plumbing.

This. I am really glad for student loans, too. My kids will probably all have a small amount in loans. But for sure they will also understand how they work... how they can never, never get out of paying them back ... and how realistic their career goals/future salary expectations are.

 

I agree with you... I am starting to think that my son should apprentice with a plumber or carpenter as part of his high school education. Right now the girls have some direction, but he's not so sure of what he likes and doesn't like. It would be great for him to learn a practical skill as he thinks more about it.

[AlmiraGulch]

I would never have been able to attend college without loans, and I would never have made the income that I make now without college, so I don't sit around griping about it. It is what it is.  

 

My problem is with the system itself.  Like Jen in NY said, it's the collusion between the lenders, the schools, and even the federal government that makes me cringe. Where all of those institutions stand to continue to rake in exorbitant amounts of money with no controls, there is no incentive to reign in these loans.  I do think that the amounts should be limited, so that those "for-profit" schools, in particular, many (not all) of which offer useless degrees, will be forced out of business, or forced to lower prices, which would in turn result in lower prices for other schools.  Or, at the very least, it could reign in the perpetual price increases.

[regentrude]

My niece could be a case study for this article... she just moved in yesterday, knowing that by the end of her adventure she will be ~100,000 in debt with a Biology degree. Her career aspiration is to be a big cat wildlife rehabilitator.

 

Ouch! that is just completely crazy. Even if she gets her dream job, she should know that those jobs are notoriously poorly paid and will not enable her to repay 100k in debt.

I wonder why parents do not sit down with their children and have a good hard look at reality.

 

I think it is extremely important that the young people set the amount of loans they take out into relation with the starting salaries they can realistically expect. It is one thing to borrow 50k for an engineering degree that gets you a starting salary of 60k right out of college - you'll pay back your loans in a few years - and another to go into massive debt for a degree that is unlikely to let you recoup your investment. What is a sensible amount for one degree may be utterly ridiculous for another.

 

And let's face it: you can get a college education for far less than 100k. Nobody has to pay an expensive private institution; CC and then transfer to a public university in state is far cheaper. I am not quite sure what parents and their students are thinking that they go into this massive debt.

[Barbara H]

Yes, students and parents should seriously think it through before taking on student loan debt. Students should understand what it will cost them per month to pay off their debt. Please look carefully at loan calculators and talk through your options. Be especially cautious about Parent Plus loans.

 

That said, I think it is also worth noting that the average student loan debt for students who take out loans is around $26,000 for an undergraduate degree. This is not that different than the average auto loan. Cars are an asset that lose value as soon as you drive them off the lot. On the other hand, research demonstrates again and again that people with a college degree earn much more on average than high school graduates. Education remains a good investment for students who plan to work hard and take their education seriously. That's the not the same thing as saying "sure go to NYU and go $120,000 in debt for an art degree."

[flyingiguana]

And the other side of the coin is all the adjunct faculty who aren't getting paid very well.

 

Where is all that money that used to be in the system? More govt support for the state schools, so everyone had a better option if they couldn't afford the fancy schools?

[8filltheheart]

It is crazy. FWIW, our ds was able to graduate with his chemE degree with very little debt, only $7000 (and most of that was from his last semester when his dd was born prematurely.) In state tuition in TN, add in the HOPE scholarship that all TN graduates are eligible for with a low ACT score, and it is definitely a no-brainer that the low debt is worth it.

 

Flip-side......in state tuition in VA is ridiculously high. We know someone who was offered a full-ride at Mary Washington University and turned it down and is paying full-tuition at UVA.......foolish, foolish decision. They will graduate with $90,000 in debt for a humanities degree.

 

We will not sign for student loans. Period. We won't do it. So, the kids have no option but to apply multiple places and attend the place that is affordable w/o much debt for them and only what we can afford to pay (which isn't that much) out of our pockets.

[katilac]

<snip>

I agree with you... I am starting to think that my son should apprentice with a plumber or carpenter as part of his high school education. Right now the girls have some direction, but he's not so sure of what he likes and doesn't like. It would be great for him to learn a practical skill as he thinks more about it.

Just FYI, it's rare for a someone under 18 to get an apprenticeship in the trades, simply b/c there is so much of the work they are not allowed to do (rightly so, as it can get pretty dangerous). Now, in plumbing, there are generally a fair amount of, shall we say, NOT master plumbers, lol, who might be more relaxed about their hiring, but I wouldn't recommend that route!

 

You are also generally required to have your high school diploma to get an apprenticeship, at least around here. GEDs are not accepted, but if you have that hs diploma, there is some definite opportunity to get in on training programs, particularly in the shipyard industry. My nephew is 23, and is a licensed electrician. You start off as a helper, and, if you do well, they will pay for your classes (which are not required, but I don't know anyone who has passed the test without them). It's a great chance for hard workers (you have to work full-time and go to class at night).

 

So, if your kids have an interest in trades/apprenticeships, make sure you check out the requirements beforehand. A lot of people around here go for that GED, and then find themselves locked out of the best routes to a good job without a degree.

[mommymilkies]

You can't do trades with a GED there? That's the first I've heard that one!

[Jane in NC]

Forgive my stupidity.  In the article, the author writes:

 

 

In 2010, for instance, the Obama White House projected the default recovery rate for all forms of federal Stafford loans (one of the most common federally backed loans for undergraduates and graduates) to be above 122 percent. The most recent White House projection was slightly less aggressive, predicting a recovery rate of between 104 percent and 109 percent for Stafford loans.

 

What does this mean, i.e. "default recovery rate"?  I am assuming it means that if the loan was for say $10000 then the recovered amount is $12200, principal plus some interest. Is that how others interpret this?  Considering that many Stafford loans are unsubsidized with the interest meter running while the student is still in school, is it a surprise that the recovery rate exceeds the amount loaned? Credit card loans can be discharged in bankruptcy court whereas student loans cannot.  Again, is it really surprising that the recovery rate would be quite different?

 

As others have noted, the average student loan amount is about $26K.  I sometimes feel that these articles focus on anomalies, either the students who accrued massive debt for degrees that would lead to minimally paying jobs or on students who defaulted because of health issues or family problems. It is not that I lack sympathy.  In many cases, $26K is an investment in future higher earnings.

 

We made saving for college a priority.  Admittedly we are fortunate in our circumstances but I also know that not everyone shares our priorities.  That said, the cheapest college is not necessarily the best--nor is the most expensive.  Students and their parents need to find a good fit both academically and financially.

[ktgrok]

My DH graduated with 100,000 in debt. Much of it in private loans. The only school in driving distance (he was helping take care of his mom) that offered his degree was a private one. It has been a good choice, as his income is FINALLY starting to reach what we need to start paying that off. But...we will NEVER pay it all off. He's had it in defferment since he graduated a few years ago, and now owes over 145,000! Just from interest!  It's insane. And the private loans don't have the income sensitive repayment, so we were not able to pay on them. Finally, his new job should allow us to do that. (we are already paying on the public ones). It's crazy. 

[Pegasus]

 

As others have noted, the average student loan amount is about $26K.

 

I believe that this value is misleading. It is the average student debt at graduation, generally primarily the direct student loans.  It does NOT take into account additional PLUS loans that the parents have taken out, and many of those parents have expectations for the students to pay this balance off as well. 

 

[Wheres Toto]

$26K doesn't seem like that much actually.   My oldest is attending a state school at resident rates and if she was commuting, the cost full-time would be around $11,000 per year.    $26K seems like enough for two years of CC and two years of state university (assuming it's all paid for with loans, no cash or scholarships).

 

She does have loans but we are paying them for her (and her father will eventually getting around to paying back his required half).

[Jane in NC]

I believe that this value is misleading. It is the average student debt at graduation, generally primarily the direct student loans.  It does NOT take into account additional PLUS loans that the parents have taken out, and many of those parents have expectations for the students to pay this balance off as well. 

 

 

Parents sometimes step up to help with loans, but I have never heard of parents expecting their children to pay for loans assumed in the parents' name, i.e. the PLUS loans.  I suppose it could depend upon the career of the graduate and circumstances of the parents though.

 

Some parents tap home equity for tuition.  So yes that $26K average may be misleading.

[In The Great White North]

 

 

That said, I think it is also worth noting that the average student loan debt for students who take out loans is around $26,000 for an undergraduate degree.

 

That $26,000 is incredibly misleading.  Oddly close to the limit for Federal Financial Aid too.

 

From   http://projectonstudentdebt.org/files/pub/classof2011.pdf

 

 

DATA LIMITATIONS

There are several reasons why CDS data provide an incomplete picture of the debt levels of 

graduating seniors. Although the CDS questions ask colleges to report cumulative debt from both 

federal and private (non-federal) student loans, colleges may not be aware of all the private loans 

their students carry. The CDS questions also instruct colleges to exclude transfer students and the 

debt those students carried in. In addition, because the survey is voluntary and not audited, colleges may actually have a disincentive for honest and full reporting. 

 

If all they are reporting is the Federal Financial Aid (not private student loans or any parent loans), they're just reporting the tip of the iceberg.  The 

 

Kiplinger's 8 Top Colleges with the lowest Student Graduating Debt certainly doesn't.  Williams' financial aid pages even go so far as to recommend home equity loans for parents instead of PLUS loans.  Home equity loans are not going to show up as student debt, even if that is what they were for.

 

http://www.kiplinger.com/slideshow/college/T014-S001-8-top-private-colleges-with-the-lowest-student-gra/index.html

 

 

[katilac]

Parents sometimes step up to help with loans, but I have never heard of parents expecting their children to pay for loans assumed in the parents' name, i.e. the PLUS loans.  I suppose it could depend upon the career of the graduate and circumstances of the parents though.

 

Some parents tap home equity for tuition.  So yes that $26K average may be misleading.

I have rarely heard of parents NOT expecting it, lol. Okay, maybe not rarely, but it is quite, quite common for students around here to be expected to pay off any and all loans related to college.

[Jane in NC]

I have rarely heard of parents NOT expecting it, lol. Okay, maybe not rarely, but it is quite, quite common for students around here to be expected to pay off any and all loans related to college.

 

Interesting.  Admittedly I don't have intimate conversations with most people on how they finance their kids' college educations so my sample consists of a few close friends and family members.  I am not sure that I know anyone who has taken out a PLUS loan.  In my world, it is not unusual for grandparents to give a hand with college costs. Family culture?

[Dana]

Interesting. Admittedly I don't have intimate conversations with most people on how they finance their kids' college educations so my sample consists of a few close friends and family members. I am not sure that I know anyone who has taken out a PLUS loan. In my world, it is not unusual for grandparents to give a hand with college costs. Family culture?

My folks have set up a college fund for my son. I don't know if there'll be much there to help him, but I'm thrilled that they're thinking of it.

 

We aren't saving for his college. Instead, we're saving for retirement. It is an either/or proposition. Dh's parents didn't help with his college. He had to pay his share and their share every year. He's the only one out of his siblings with even a high school diploma.

 

Definitely family culture.

[Barbara H]

That $26,000 is incredibly misleading.  Oddly close to the limit for Federal Financial Aid too.

 

From   http://projectonstudentdebt.org/files/pub/classof2011.pdf

 

 

If all they are reporting is the Federal Financial Aid (not private student loans or any parent loans), they're just reporting the tip of the iceberg.  The 

 

Just to clarify that number in case it is helpful. The figure includes debt taken out by students and required to be repaid by students. That does not include Parent PLUS loans which legally are not the student's responsibility to pay back (and that's part of why they are scary!) Families should not go into Parent PLUS loans with the idea that it is the student's obligation to pay them back or that the student can afford to on top of federal loans.

 

The $26,000 is the average of students who OWE money. One third of students do not take out student loans. Only one in ten borrowers owes over $40,000. I'm mentioning that not to say student loans aren't a real worry because they should be. But, I hate for anyone to think that it is an all or nothing proposition. There are different types of loans and different amounts of debt.

 

[Ravin]

I'm racking up lots of student loans. The only reason I decided to go back to school was that I knew up front that 10 years in to my career I can have the balance of my loans forgiven.

[Dana]

I'm racking up lots of student loans. The only reason I decided to go back to school was that I knew up front that 10 years in to my career I can have the balance of my loans forgiven.

As a heads up, this can be risky to count on.

I got my MAT and knew that loans could be forgiven when I was teaching. Student teaching was enough to tell me that I'd work fast food again before setting foot in a high school. And thus I ended at the cc with no loan forgiveness but a lot less antidepressants!

[TranquilMind]

http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815?fb_action_ids=10151611192431938&fb_action_types=og.likes&fb_source=other_multiline&action_object_map=

 

The first page of the article is somewhat dull.  It gets better on the 2nd page.

 

"Talk to any of the 38 million Americans who have outstanding student-loan debt, and he or she is likely to tell you a story about how a single moment in a financial-aid office at the age of 18 or 19 – an age when most people can barely do a load of laundry without help – ended up ruining his or her life. "I was 19 years old," says 24-year-old Lyndsay Green, a graduate of the University of Alabama, in a typical story. "I didn't understand what was going on, but my mother was there. She had signed, and now it was my turn. So I did." Six years later, she says, "I am nearly $45,000 in debt. . . . If I had known what I was doing, I would never have gone to college."

The debt load that young people are carrying today is scary.  I just had my driveway done, and the company owner and I were comparing prices.  He and I attended the same university.  He paid $24 per credit hour, and I paid $10 (yes, that is TEN dollars), because my Dad was a disabled vet.    Anyway, my kid is in three college classes (still in high school) today.  Her cost is $1400 per credit hour, just 20+ years later.  HOW IS THIS POSSIBLE?

[TranquilMind]

That $26,000 is incredibly misleading.  Oddly close to the limit for Federal Financial Aid too.

 

From   http://projectonstudentdebt.org/files/pub/classof2011.pdf

 

 

If all they are reporting is the Federal Financial Aid (not private student loans or any parent loans), they're just reporting the tip of the iceberg.  The 

 

Kiplinger's 8 Top Colleges with the lowest Student Graduating Debt certainly doesn't.  Williams' financial aid pages even go so far as to recommend home equity loans for parents instead of PLUS loans.  Home equity loans are not going to show up as student debt, even if that is what they were for.

 

http://www.kiplinger.com/slideshow/college/T014-S001-8-top-private-colleges-with-the-lowest-student-gra/index.html

Yeah, I suspect there is a lot of data manipulation in the $26,000.  Most kids who borrow have far more than that. 

[creekland]

Yes, students and parents should seriously think it through before taking on student loan debt. Students should understand what it will cost them per month to pay off their debt. Please look carefully at loan calculators and talk through your options. Be especially cautious about Parent Plus loans.

 

That said, I think it is also worth noting that the average student loan debt for students who take out loans is around $26,000 for an undergraduate degree. This is not that different than the average auto loan. Cars are an asset that lose value as soon as you drive them off the lot. On the other hand, research demonstrates again and again that people with a college degree earn much more on average than high school graduates. Education remains a good investment for students who plan to work hard and take their education seriously. That's the not the same thing as saying "sure go to NYU and go $120,000 in debt for an art degree."

 

Just to clarify that number in case it is helpful. The figure includes debt taken out by students and required to be repaid by students. That does not include Parent PLUS loans which legally are not the student's responsibility to pay back (and that's part of why they are scary!) Families should not go into Parent PLUS loans with the idea that it is the student's obligation to pay them back or that the student can afford to on top of federal loans.

 

The $26,000 is the average of students who OWE money. One third of students do not take out student loans. Only one in ten borrowers owes over $40,000. I'm mentioning that not to say student loans aren't a real worry because they should be. But, I hate for anyone to think that it is an all or nothing proposition. There are different types of loans and different amounts of debt.

I fully expect that the loan debt is more accurate than people think.  We live in a frugal area and many opt for state schools or inexpensive private schools.  That's the norm in our area.  Then too, some end up with no debt due to savings or just being able to afford it.  Perhaps all the areas like ours bring down the average of those who feel the sky is the limit for a dream school.

 

We do get some who dismiss the high debt warnings (usually to for profit schools with their sales pitches :glare: ), but it's definitely not the average student.  A couple I know who dismissed the warnings also came to their senses before actually following that path or after the first year.

 

I'm of the camp that believes < 50K of debt is a good investment in a decent education...  Both hubby and I had college debt - easily paid off within 5 years of graduation by the increase in salary the degree provided.  The key is looking to see that the $$ are put into a school + degree that make it a good investment.  School A is not equal to School B and Degree A is not equal to Degree B simply based upon labels.

 

Naturally, the "it worked for me and here's how" stories never make the news.  It's far more sensational to find the outliers who have tons of debt for a questionable-value degree.  However, those stories can be good in alerting people to the dangers of massive debt.  They're just bad if they make people scared of decent investment debt.  It is really worth it to spend time investigating options to fit the student and the individual finances.

[creekland]

Yeah, I suspect there is a lot of data manipulation in the $26,000.  Most kids who borrow have far more than that. 

 

Source?  The 26K would be accurate in my circle and there aren't many parents doing massive Parent Plus loans either.  Parents are contributing, but not via massive loans on their part.  Maybe we just live in a more frugal area.  Our NMF super high stats valedictorian turned down an acceptance to Stanford last year for one of multiple free ride + perks offers due to not wanting to pay to go to Stanford...  That's more the norm here (not always super stats, but going with the financially best offer for a good school).

[Jane in NC]

Source?  The 26K would be accurate in my circle and there aren't many parents doing massive Parent Plus loans either.  Parents are contributing, but not via massive loans on their part.  Maybe we just live in a more frugal area.  Our NMF super high stats valedictorian turned down an acceptance to Stanford last year for one of multiple free ride + perks offers due to not wanting to pay to go to Stanford...  That's more the norm here (not always super stats, but going with the financially best offer for a good school).

 

Here in NC, the state unis remain excellent values for in-state residents.  Students whose families have some college savings should not be exceeding that average debt figure--particularly if the student is contributing summer earnings and has a work study.

 

But I see a different picture among my New England friends.  Many of their in-state unis are more expensive--or there are few choices in some of the geographically small states.  It also seems that many of my New England friends have family cultures involving the Ivies, Seven Sisters or some of the top notch engineering/tech schools, all of which are going to cost at least $50K a year. 

 

I can't help but wonder if average student loan debt varies with geography.  Pragmatic Midwesterners may be less inclined to see the value of an Ivy education whereas NYC banking families can't imagine their kid going any other route.  Or is that just the stereotype?

[In The Great White North]

 

 

But I see a different picture among my New England friends.  Many of their in-state unis are more expensive--or there are few choices in some of the geographically small states.  It also seems that many of my New England friends have family cultures involving the Ivies, Seven Sisters or some of the top notch engineering/tech schools, all of which are going to cost at least $50K a year. 

 

Add in the virtual non-existence of community colleges, let alone community colleges that offer college level courses that would be accepted by a four-year college.

[creekland]

I can't help but wonder if average student loan debt varies with geography.  Pragmatic Midwesterners may be less inclined to see the value of an Ivy education whereas NYC banking families can't imagine their kid going any other route.  Or is that just the stereotype?

 

It would be VERY interesting to see average debt based upon geography IMO.  Quite honestly, Ivies here are frowned upon as too elitist with possible exceptions of U Penn (it's in state after all), Brown, and Cornell.  The rare student who chooses an Ivy tends to have plans to live/work elsewhere after graduation.  Most other colleges (even top schools) don't produce that (local) attitude.  I've no idea why those do.  It's not an attitude I was brought up with but my school regularly sent students to Ivies.  Around here, someone applying for a (local) job with an Ivy education would be less likely to get an interview at many places.  The belief is that those with an elite education can't connect well with the local clientele and the local clientele pays the bills... it's a small-town area, so maybe many moons ago someone fit the stereotype and word spread - or maybe it's just perception.  It's probably similar to the perception those NYC banking families have about graduates from "other" schools being unable to do the job.

 

I'm not sure either of those would affect debt loads.  The big time banking families could likely be full pay.  Our small town families would likely qualify for massive grant aid.  Salaries are lower in small towns. 

 

I could see the middle class folks trying to keep up with the Jones' taking on more loans where big names are important though.  Maybe those folks make the difference.  There are few of those around here.  (We have middle class, but few feel the need to keep up with prestige.  As mentioned before, it's very common to choose a place to study based upon the best deal even if it means giving up dream school.)

[Barbara H]

The link that The Great White North posted earlier to the Project on Student Debt has the breakdown by state.

 

One of the really rough parts about this system is that we have such variations by state - in quality, in affordability, in admissions accessibility of state flagships, in distribution of community colleges. It is really tough to generalize from one state to another because people are not looking at the same set of choices for sure.

[creekland]

Our morning news just mentioned PA's data... Average student debt (of those with debt) is 29K+.  70% graduate with at least some debt (30% have none and don't get counted in the 29K+ data).  We rank #7.

 

29K is still roughly the cost of a new car, but the investment is better IMO (chosen carefully, of course).

[Sebastian (a lady)]

Our morning news just mentioned PA's data... Average student debt (of those with debt) is 29K+. 70% graduate with at least some debt (30% have none and don't get counted in the 29K+ data). We rank #7.

 

29K is still roughly the cost of a new car, but the investment is better IMO (chosen carefully, of course).

Did the reporting break down the no debt figures at all? I'd be curious how many had been high income and paying out of pocket, lower income with grants and scholarship but no debt, merit aid covering a lot and paying the rest without loans, or choosing options that were affordable (cc then transfer or affordable state school or working and commuting to school).

 

It seems there is a meaningful difference in the reasons a student has no debt. And that there is a difference between the debt the average student has and the average debt. To eliminate 30% of students off the top is interesting.

[regentrude]

 And that there is a difference between the debt the average student has and the average debt. To eliminate 30% of students off the top is interesting.

 

I like that they left out the students who carry no debt at all. Concerning those, the only relevant number is: it's 30 percent.

I think it actually is a more meaningful number to give the average debt of those that have any debt, instead of using the debt free students to lower the average over all students - which would create a lower number that would be not very relevant to all who need to take out loans.

[creekland]

This May 2013 article (and maps) was interesting to read:

 

http://www.theatlantic.com/business/archive/2013/05/these-2-maps-about-student-loans-explode-one-of-the-biggest-myths-about-student-loans/275868/

[creekland]

Did the reporting break down the no debt figures at all? I'd be curious how many had been high income and paying out of pocket, lower income with grants and scholarship but no debt, merit aid covering a lot and paying the rest without loans, or choosing options that were affordable (cc then transfer or affordable state school or working and commuting to school).

 

It seems there is a meaningful difference in the reasons a student has no debt. And that there is a difference between the debt the average student has and the average debt. To eliminate 30% of students off the top is interesting.

 

The morning news was the typical headline phrases rather than anything in depth.  I've been trying to find their source story, but so far, have been unsuccessful.  I did find the May '13 map from above which I found very interesting (along with the story that went with it).  But somewhere they were able to grab PA's rank (#7) and I suspect there was more of a breakdown than that.  I'll keep looking - maybe it'll be a link on the news' website...

 

I like that they left out the students who carry no debt at all. Concerning those, the only relevant number is: it's 30 percent.

I think it actually is a more meaningful number to give the average debt of those that have any debt, instead of using the debt free students to lower the average over all students - which would create a lower number that would be not very relevant to all who need to take out loans.

I agree that it's more meaningful eliminating those without debt.  People just have to realize they eliminate those or they'll think the number is artificially low.  To anyone reading, it's important to know it's NOT NORMAL to sign for high levels of debt for undergrad.  It happens, esp when someone feels they NEED dream college, but not everyone does it.  Many are more financially concerned and make decisions accordingly.  I did a bit of searching to find affordable options (and good fits) for my guys.  Both could have gone to more expensive schools - one of which would have cost us 33K more per year in loans.  No thank you!  No school is worth that for us.  We have no parent loans.  My guys have basic loans.  I'm ok with that investment into their future.

[creekland]

I've been trying to even find the story, but have been 100% unsuccessful so far.  I need to move on and get started with chores or the ponies might mutiny.  If anyone else cares to look (if they add it later) the story was on WGAL 8 out of Lancaster PA and it was on the morning news (5:30 - 7:00am) 8/23/13.  It was a short blurb rather than an in depth deal, but one still would think it could be found on their website at some point.  They were talking in conjunction with Obama being in Scranton...

[Candid]

I have two takes.

 

One on the size of the average debt: My opinion is that this is irrelevant in terms of personal decision making. Much smarter to not get too caught up in this. Your debt is what your debt is. My nephew is going to U Chicago this fall. They gave him about half of his full load, but that still means $30,000 to $35,000 per year. I don't think he is expecting to get any work study job. Nor do I expect my brother and his wife will kick in more than $10,000 per year and maybe as little as $0. Which means for him to graduate undergrad he will have a load of at least $100,000. I doubt he has any awareness of how that will hit him.

 

On the overall problem: the thing to do to fix the whole college loan/ college cost problem is to remove the inability of students to have bankruptcy remove the student loan debt. This would put onus on loan givers to begin to vet programs in terms of ability to repay loans. For instance, we might find that some for profit programs will continue to get loans while some Ivy League programs will see their loans dry up because of student inability to repay. Student loans aren't special. The risk of a college loan needs to be evenly applied to everyone involved not just the student taking out the loan as it is with all other loans.  

[Sebastian (a lady)]

I like that they left out the students who carry no debt at all. Concerning those, the only relevant number is: it's 30 percent.

I think it actually is a more meaningful number to give the average debt of those that have any debt, instead of using the debt free students to lower the average over all students - which would create a lower number that would be not very relevant to all who need to take out loans.

I think knowing both numbers is important. 

 

There is a strategy in advertising, where just the existence of a more expensive option makes other options seem more reasonable by comparison.  So for example, a coffee maker company had a $250 model that they only sold a small number of a year.  They introduced a $400 model and sales of the $250 model took off, even though nothing had changed about it except its price relative to the new model.  Consumers decided they were choosing a moderately priced coffee maker.

 

I think that the discussions of very high college loan amounts tend to act like that $400 coffee maker.  $150,000 in student debt (not even including what parents fronted in loans or out of pocket) would make $80,000 or $60,000 seem reasonable by comparison.  So it is useful to have that average debt of $25,000-29,000 out there instead of a high end anchor.

 

But,

 

Consider the different question of how much people spend on coffee.  If the only thing that is reported is how much people spend in coffeeshops (let's say 10 cups per month at $4.00 each for $40.00 per month and $$480 per year, which is much lower than some published estimates I found of up to $1000 per year) that makes stopping at Starbucks every Monday and Friday seem quite reasonable.  But if the reporting includes the cost spent by people who brew at home and take a travel mug, then the twice  Starbucks visit might look like more of a treat and less of a necessity.

 

Similarly, I think that reporting on college spending can mix together the high end of what some people have agreed to pay with average debt (for those who have debt) with average cost.  Furthermore, until recently discussions have focused on tuition without including room and board or fees (as if Starbucks had one price for coffee and then an extra $5 charge for the cup and $1 for the lid).  And I'm not sure if reports on average debt at graduation include students who took out loans, but then didn't complete school (dropped out after a year or two). 

 

I'm not saying that the average debt figure has no value.  But that it's important to consider what it is.  I think there have been too many news articles (especially in articles during the Occupy protests) that report those $100,000 figures as if that is what college costs for most students these days.  Both the average debt figure and a figure on average cost would be better markers.

[Jane in NC]

This May 2013 article (and maps) was interesting to read:

 

http://www.theatlantic.com/business/archive/2013/05/these-2-maps-about-student-loans-explode-one-of-the-biggest-myths-about-student-loans/275868/

 

The article quotes a report from the NY Fed which in general does an excellent job in reporting on consumer credit trends.  Frankly I found this article to be more meaningful than many of the anecdotal stories we usually see in the media.

 

Aggregate statistics do not pull heart strings though nor can they necessarily justify the right decision for our students.  I think though that many of us agree some debt can be prudent.  I think the wisest course is to look beyond our families and neighbors to find the best fit (academically and financially) for our kids. 

[ktgrok]

The morning news was the typical headline phrases rather than anything in depth.  I've been trying to find their source story, but so far, have been unsuccessful.  I did find the May '13 map from above which I found very interesting (along with the story that went with it).  But somewhere they were able to grab PA's rank (#7) and I suspect there was more of a breakdown than that.  I'll keep looking - maybe it'll be a link on the news' website...

 

I agree that it's more meaningful eliminating those without debt.  People just have to realize they eliminate those or they'll think the number is artificially low.  To anyone reading, it's important to know it's NOT NORMAL to sign for high levels of debt for undergrad.  It happens, esp when someone feels they NEED dream college, but not everyone does it.  Many are more financially concerned and make decisions accordingly.  I did a bit of searching to find affordable options (and good fits) for my guys.  Both could have gone to more expensive schools - one of which would have cost us 33K more per year in loans.  No thank you!  No school is worth that for us.  We have no parent loans.  My guys have basic loans.  I'm ok with that investment into their future.

 

Sometimes which college you choose is limited by external factors. Many students either already have families of their own, or need to stay close to home for other reasons. My husband was caring for his mother off and on, and his grandmother, so "going away" to school wasn't an option. He was limited by what was close by. The community colleges and public university didn't have good IT departments, so he ended up at a private school. And 100,000 in loans. His salary is finally catching uip, but we still realize now that he would have been better off financially to have become a plumber. 

[Jane in NC]

 

I'm not saying that the average debt figure has no value.  But that it's important to consider what it is.  I think there have been too many news articles (especially in articles during the Occupy protests) that report those $100,000 figures as if that is what college costs for most students these days.  Both the average debt figure and a figure on average cost would be better markers.

 

This is why I found the government reporting site, IPEDS, to be so important in the course of my son's college search.  Initially we used IPEDS College Navigator to see how many students graduated from the academic areas in which my son was interested.  Then I looked at the average amount of financial aid given and what percentage of students received what kind of aid (government, institutional grants, etc.) 

 

Many of the high end schools have a number of students paying the full sticker price.  What we will never know is whether their parents have taken out PLUS loans or whether grandma created a trust to pay the tuition. 

 

The article also points out that college drop outs may be saddled with debt.  This is one of the findings that came out with respect to for-profit colleges whose students often have high default rates on loans. 

 

[creekland]

we still realize now that he would have been better off financially to have become a plumber. 

 

Maybe.  I know a couple of plumbers quite well IRL.  They were hard hit by the economic downturn too.  Now they are doing ok and before it they were doing ok, but it was as bad for them as it was for my self-employed engineer during the downturn and my engineer does "better" overall IF only considering the financial aspect.  (There is far more that goes into it all than finances though - one should also love their job IMO.)

 

I agree that so much debt makes me cringe though.  I'm glad he's been successful.

[Catherine]

My folks have set up a college fund for my son. I don't know if there'll be much there to help him, but I'm thrilled that they're thinking of it.

 

We aren't saving for his college. Instead, we're saving for retirement. It is an either/or proposition. Dh's parents didn't help with his college. He had to pay his share and their share every year. He's the only one out of his siblings with even a high school diploma.

 

Definitely family culture.

Yes.  Dh and I are the only college-educated people in our families, though my youngest sibling did go to college at 24 and almost finished his degree.  We had zero help (none was possible) so we borrowed, starting our married life a little over $120,000 in debt.  We had a child a few months later and I've not worked full time since.  Dh is an academic insetead of pursuing private practice, which would be more lucrative.  I am too.  But we managed to pay off our loans in less than 5 years-by living like paupers (really-I followed The Tightwad Gazette very closely!).  It was not an easy time, but it honestly was made easier by the fact that neither of us had ever lived well so we didn't even miss it.  Now, we would!

 

Our hope is to start our three kids off in life without educational debt.  We're pursuing a strategy of savings (very partial but growing for the youngers), merit aid, less expensive schools.  We hope to avoid borrowing ourselves too. 

 

It takes an entire generation to leave poverty behind, unless you are an enterpreneur and become very wealthy.  Going the educational route will not completely do it.

[Jane in NC]

More on the Project on Student Debt that In the Great White North linked earlier.  If you don't want to download the entire PDF, you can look at student debt on a state by state basis by clicking on the map on this page.

 

Very interesting!

[creekland]

More on the Project on Student Debt that In the Great White North linked earlier.  If you don't want to download the entire PDF, you can look at student debt on a state by state basis by clicking on the map on this page.

 

Very interesting!

Thanks Jane!  The link you posted worked for me to see the states, etc.  The other link came on, but then I couldn't do anything with it.  I think it was trying to pop up and we don't allow that on our computer.  With your link it tried to pop up, but I caught that it stopped it and made an exception. Mystery solved for me!

 

That data does appear to be the same WGAL used.  As I hovered over the states, I noticed that PA's proportion with debt (70%) was quite high.  Most states are lower (more graduating with NO debt0 - with lower average debt too (this, of course, only averaging those with debt).  I'm still thinking super high levels of debt are definitely not the norm even if they are the fodder for oodles of news reports every year.  Those news reports are perhaps doing their job of warning off future borrowers, but I could also see them being "bad" in having people think something to the effect of "well, 60K isn't high compared to..." when it IS quite high compared to the norm.

[Arcadia]

I just read this local  news article published on 9/4/2013 and the data is still interesting even though it is for the bay area part of California. There are 146 colleges listed including community colleges.

Cost and loan data for Bay Area public, private and for-profit colleges

 

From the article

"Stanford University

Grad Rate - 96%

Default Rate - 1.0%

Students on Loans - 18%

Average Net Price - $21,421

 

University of California - Berkeley (UCB)

Grad Rate - 90%

Default Rate - 2.6%

Students on Loans - 32%

Average Net Price - $16,178"