Too Poor to Retire and Too Young to Die

[Ravin]

But...one of the main reasons tuition rates are so high is because the government is subsidizing these school already via loans.  Everyone thinks it's just the for-profit schools that are predatory in this way, but even non-profit schools take advantage of what students are able to pay because of loans.  They just have to reinvest the money in different ways than a for-profit school, but often times the "profit" shows up in the same sort of ways.  Just subsidizing the schools from the other end of the spectrum would not solve the problem, in that the government would be spending the same (if not more money) to subsidize universities which then have no financial incentive to maintain a reasonable/reasonable budget.

 

Also, students are saddling themselves with debt.  Schools are not doing this to people.  It's not passive or forced on people.

 

If you aren't wealthy and want to go into the law profession, there is generally  no alternative to taking loans. Should only independently wealthy people become attorneys?

 

Tuition rates have skyrocketed largely because of slashed funding to the universities from the states. It has shifted the cost of maintaining the institutions somewhat from the states to individuals and the Federal government (through grant and loan programs).

 

At the same time, salaries in academia have become ridiculously low for anyone except some University presidents, with the expanded practice of doing away with tenured faculty positions in favor of poorly paid adjuncts. Often, research professors literally have to fund their own salaries through grants as well--no grant money, no position. And disciplines where there is no grant money to be had (often liberal arts/humanities disciplines) get cut to the bone or eliminated entirely.

 

Expecting universities to do the things they are supposed to do (educate people and conduct research across many disciplines) without the funding which makes doing those things possible is ridiculous. The schools need to be subsidized one way or another--they are institutions of learning, not businesses. Expecting them to be run them like businesses is part of the problem.

 

The idea that universities have no financial incentive to maintain a reasonable budget doesn't eliminate the need to fund them in the first place.

 

To bring this back around, the choice between taking on student debt, or facing a working career that will never provide any kind of security or ability to save for retirement, has become a catch-22 for many people. Often hindsight is 20/20.

 

With 20/20 hindsight, I'd have stayed in the Navy a couple more years and gotten the post-9/11 GI bill (which I fell 1 month short of qualifying for), and would most likely have had no student loan debt from undergrad; I would then have felt more freedom to look at career options that didn't involve taking on yet more loans in hopes of one day being able to get out from under the ones I already had. Or heck, I'd have stayed in 20 years and be retired right now, with the income security to go to school without the huge debt burden or freedom to focus on raising my family. When I got out of the service I had NO IDEA how insecure our financial position would be for so long--just when things started looking up, the recession hit and knocked us back down. Maybe I'd have chosen a different undergraduate major, knowing we'd need me to work full time instead of stay home with the kids and homeschooling them.

 

Larger societal trends and forces have made life a lot less secure and more precarious than a generation ago for many of us. Often, that can amplify the consequences of less than ideal decisions made decades ago when we were young and clueless and thought retirement was forever and ever from now.

[LucyStoner]

I would also say, here, that you and Katie are talking about two different things.

Thank you. That there are some highly paid, by all metrics, affluent professionals qualifying for this program does not mean that I think that the program should not exist for people like public defenders, lawyers who are employed by non-profit legal assistance groups and young prosecutors. I have friends in all of those fields. I also have friends who are earning WAY more than $100,000 and qualify for the program by maximizing payroll deductions, filing separately from their high income spouse and other legal loop de loops.

 

I want this program for the assistant AGs pulling down $65K a year and the attorneys working for a domestic violence shelter for $60K a year. I don't think it will continue to be there for them if there are not changes. It's also not just there for MDs and JDs- it's there for social workers, teachers, speech language pathologists and managers of government and charitable sector services. And lots of other people.

 

Paying off 1/4 of a million dollar debt loads with minimal controls for checking assets and not encouraging people to borrow less isn't sustainable.

 

It doesn't become sustainable because we like the idea of free education for all.

 

It doesn't become sustainable because it benefits ourselves or our friends.

 

These numbers do not lie. As enrollment in this program climbed, the portion of overall student debt carried by people in the program skyrocketed.

 

This does zero to contain the costs that the schools charge, it actually makes it easier to raise their tuition and fees. It's reasonable to assume it is actually helping push up the cost of tuition.

Edited February 8, 2016 by LucyStoner

[Ravin]

Thank you.  That there are some highly paid, by all metrics, affluent professionals qualifying for this program does not mean that I think that the program should not exist for people like public defenders, lawyers who are employed by non-profit legal assistance groups and young prosecutors.  I have friends in all of those fields.  I also have friends who are earning WAY more than $100,000 and qualify for the program by maximizing payroll deductions, filing separately from their high income spouse and other legal loop de loops.  

 

I want this program for the assistant AGs pulling down $65K a year and the attorneys working for a domestic violence shelter for $60K a year.  I don't think it will continue to be there for them if there are not changes.  It's also not just there for MDs and JDs- it's there for social workers, teachers, speech language pathologists and managers of government and charitable sector services.  And lots of other people.  

 

Paying off 1/4 of a million dollar debt loads with minimal controls for checking assets and encouraging people to borrow less isn't sustainable.

 

It doesn't become sustainable because we like the idea of free education for all.  

 

It doesn't become sustainable because it benefits ourselves or our friends.  

 

These numbers do not lie.  As enrollment in this program climbed, the portion of overall student debt carried by people in the program skyrocketed.   

 

This does zero to contain the costs that the schools charge, it actually makes it easier to raise their tuition and fees.  It's reasonable to assume it is actually helping push up the cost of tuition.  

 

If I was in a position making over $100K/year and my spouse made half again more, I can't say I wouldn't still go for the program if I continued to qualify for it. If such is the case, maybe it does need a bit of tightening up--but the reality is, when you're that professional, you're probably looking at how you're going to get your kids through college while dealing with your own student debt. And if you're making $800/month student loan payments, you're not contributing to the economy by spending what would otherwise be disposable income.

 

There certainly were controls/limits on what I was allowed to borrow--in some cases, those controls meant I actually had to borrow MORE--specifically, in order to keep a vehicle functioning through school, when I had no way of buying a replacement. What I could do was borrow PLUS loans to pay for repairs to the existing vehicle--which over time added up to more than replacing the darn thing would have cost. We made do those years with just one working vehicle--but it was expensive to keep it working. We were also living on my PLUS loans--my husband, as an English grad student, does not have access to the large loans I did as a JD student. So there is a connection between what you can qualify for and what they expect you to be able to pay back eventually.

 

We had exactly zero assets except that aging vehicle. And we still don't, and probably won't for a couple more years (I do have a new car, but also a new car loan to go with it). IBR will make it possible to probably qualify for a mortgage for a house sooner rather than later, for instance.

 

Those AG's and community service attorneys do not have lower debt loads than the person with the higher salary.

 

If I could have borrowed less and gotten through school, believe me, I would have. Life as a student with a family does not make for living high on the hog. More like hand to mouth.

 

Edited February 8, 2016 by Ravin

[EmseB]

If you aren't wealthy and want to go into the law profession, there is generally  no alternative to taking loans. Should only independently wealthy people become attorneys?

 

Tuition rates have skyrocketed largely because of slashed funding to the universities from the states. It has shifted the cost of maintaining the institutions somewhat from the states to individuals and the Federal government (through grant and loan programs).

 

At the same time, salaries in academia have become ridiculously low for anyone except some University presidents, with the expanded practice of doing away with tenured faculty positions in favor of poorly paid adjuncts. Often, research professors literally have to fund their own salaries through grants as well--no grant money, no position. And disciplines where there is no grant money to be had (often liberal arts/humanities disciplines) get cut to the bone or eliminated entirely.

 

Expecting universities to do the things they are supposed to do (educate people and conduct research across many disciplines) without the funding which makes doing those things possible is ridiculous. The schools need to be subsidized one way or another--they are institutions of learning, not businesses. Expecting them to be run them like businesses is part of the problem.

 

The idea that universities have no financial incentive to maintain a reasonable budget doesn't eliminate the need to fund them in the first place.

 

To bring this back around, the choice between taking on student debt, or facing a working career that will never provide any kind of security or ability to save for retirement, has become a catch-22 for many people. Often hindsight is 20/20.

 

With 20/20 hindsight, I'd have stayed in the Navy a couple more years and gotten the post-9/11 GI bill (which I fell 1 month short of qualifying for), and would most likely have had no student loan debt from undergrad; I would then have felt more freedom to look at career options that didn't involve taking on yet more loans in hopes of one day being able to get out from under the ones I already had. Or heck, I'd have stayed in 20 years and be retired right now, with the income security to go to school without the huge debt burden or freedom to focus on raising my family. When I got out of the service I had NO IDEA how insecure our financial position would be for so long--just when things started looking up, the recession hit and knocked us back down. Maybe I'd have chosen a different undergraduate major, knowing we'd need me to work full time instead of stay home with the kids and homeschooling them.

 

Larger societal trends and forces have made life a lot less secure and more precarious than a generation ago for many of us. Often, that can amplify the consequences of less than ideal decisions made decades ago when we were young and clueless and thought retirement was forever and ever from now.

 

 

I wholeheartedly disagree with the bolded.  Perhaps a reasonable or responsible financial plan would make tuition more affordable for everyone.  Perhaps it would eliminate the need for some funding sources.  The answer isn't just to keep throwing money in misguided directions in order to "fund" them.

 

I guess I'm not sure how having hundreds of thousands in debt with no plan to pay it off (other than forcing those debts onto others) is making life more secure.  Sure, for an individual it's great.  Over the aggregate, it seems unsustainable at best.  Who benefits?  The banks and the universities.  Who gets the shaft?  People saddling themselves with huge debt, and those that end up ultimately paying it off.  That doesn't seem like a great system, even if it means having a few more people in public positions.

 

I did do a very non-traditional route through school while homeschooling and relying on one income without taking out loans.  It has involved a lot of sacrifice for our family, it took a very long time, and we are by no means independently wealthy, nor did I have a 9/11 GI Bill.  If I were to get my Master's it would be a similar situation, pay-as-I-go, relying on one income for our family while I homeschooled and provided care for the kids while studying.  So it's not like I don't know where you're coming from.  I just can't agree that I would take out 100s of thousands in loans with the intention of making others pay them off would make my family better off in the long or short run.  I would only go into a professional degree or a master's degree with a plan to pay my debts.  I'm sorry if that sounds sanctimonious, but it is amazing to me, reading your circumstances, how close they are to my own.

[Ravin]

I wholeheartedly disagree with the bolded.  Perhaps a reasonable or responsible financial plan would make tuition more affordable for everyone.  Perhaps it would eliminate the need for some funding sources.  The answer isn't just to keep throwing money in misguided directions in order to "fund" them.

 

I guess I'm not sure how having hundreds of thousands in debt with no plan to pay it off (other than forcing those debts onto others) is making life more secure.  Sure, for an individual it's great.  Over the aggregate, it seems unsustainable at best.  Who benefits?  The banks and the universities.  Who gets the shaft?  People saddling themselves with huge debt, and those that end up ultimately paying it off.  That doesn't seem like a great system, even if it means having a few more people in public positions.

 

I did do a very non-traditional route through school while homeschooling and relying on one income without taking out loans.  It has involved a lot of sacrifice for our family, it took a very long time, and we are by no means independently wealthy, nor did I have a 9/11 GI Bill.  If I were to get my Master's it would be a similar situation, pay-as-I-go, relying on one income for our family while I homeschooled and provided care for the kids while studying.  So it's not like I don't know where you're coming from.  I just can't agree that I would take out 100s of thousands in loans with the intention of making others pay them off would make my family better off in the long or short run.  I would only go into a professional degree or a master's degree with a plan to pay my debts.  I'm sorry if that sounds sanctimonious, but it is amazing to me, reading your circumstances, how close they are to my own.

 

The "one income" our family had before I started school was my retail job at Walmart. DH had already gone back to school. The plan for paying off the student debt is the Loan Forgiveness Program. This isn't "forcing the debts on others" any more than the GI bill was, or actual taxes to subsidize universities are "forcing the cost of higher education on others." The entire society benefits from having institutions of higher education whether everyone intellectually capable of doing so attends them or not.

 

Let me rephrase that bolded statement and hopefully be clearer: The need to control the cost of universities does not eliminate the need to have (and thus pay for having) universities. States have slashed and slashed and slashed funding for universities. No strategy for saving money can make up for that, and many of the strategies universities have resorted to are less than desirable from the stable-institution standpoint, such as replacing tenured faculty with poorly paid adjuncts. That leaves charging more for tuition and fees, which makes attendance less affordable. Universities are not supposed to just be job-training. They're not even mostly supposed to be job training, with the exception of academia and professional jobs such as law, medicine, and engineering.

 

Dismantling our universities would be a Very Bad Idea. They are one of the few things we have going for us when you look at the stage of international competition--there are reasons why so many people come from other parts of the world to study here.

 

There are other ways that attending university and law school and going into a public service career after could be made more affordable, I'm sure. But this is the system we have, so I took advantage of it. It seemed like a good idea at the time, and it still does.

 

If they drastically change the Loan Forgiveness Program without grandfathering in those who took on those loans and launched public service careers with the expectation of a way out at the end in place, I'm pretty much screwed, as are a lot of other people who have used it as a way of leveraging themselves into the middle class. 

 

Of all the things to carry a debt load for, education is one of the few worthwhile, in my opinion. Had there been a way to do it without the debt, that would have been great. I'd have happily signed up for a Teach for America type grant program for law school, with a requirement of X years of public service at the end. The loan forgiveness program amounts to the same thing, except it's being called "loans" instead of "grants," I have to pay a monthly fee for the privilege of participation during my period of service, and the cost isn't laid at the feet of the public fisc until the period of service is completed.

[LucyStoner]

If I was in a position making over $100K/year and my spouse made half again more, I can't say I wouldn't still go for the program if I continued to qualify for it. If such is the case, maybe it does need a bit of tightening up--but the reality is, when you're that professional, you're probably looking at how you're going to get your kids through college while dealing with your own student debt. And if you're making $800/month student loan payments, you're not contributing to the economy by spending what would otherwise be disposable income.

 

There certainly were controls/limits on what I was allowed to borrow--in some cases, those controls meant I actually had to borrow MORE--specifically, in order to keep a vehicle functioning through school, when I had no way of buying a replacement. What I could do was borrow PLUS loans to pay for repairs to the existing vehicle--which over time added up to more than replacing the darn thing would have cost. We made do those years with just one working vehicle--but it was expensive to keep it working. We were also living on my PLUS loans--my husband, as an English grad student, does not have access to the large loans I did as a JD student. So there is a connection between what you can qualify for and what they expect you to be able to pay back eventually.

 

We had exactly zero assets except that aging vehicle. And we still don't, and probably won't for a couple more years (I do have a new car, but also a new car loan to go with it). IBR will make it possible to probably qualify for a mortgage for a house sooner rather than later, for instance.

 

Those AG's and community service attorneys do not have lower debt loads than the person with the higher salary.

 

If I could have borrowed less and gotten through school, believe me, I would have. Life as a student with a family does not make for living high on the hog. More like hand to mouth.

Ravin, my husband and I are both persuing ongoing education with two special needs sons to care for. I know what it's like for us as students and parents living on a modest income from his job and my very PT contract work.

 

Your chosen field of the law is where public service IBR dollars should go. I'm definitely not here to critique you or your loan amounts or argue that you shouldn't qualify for IBR or the shorter 10 year payment term.

 

Debt piles up. Sh!t happens. I will admit that I do find it very odd of you to dish out judgement over $50k of credit card debt when you have first hand experience in how debt of all kinds piles up- if not a graduate or professional school student, one's car troubles very well may end up on home equity lines of credit, unsecured credit cards or "buy here pay here" cars at usury level rates.

 

What I have been trying to communicate is that the program has loopholes which are endangering the entire program from being there for future graduates at all. While I hope current participants who are in income reducing public service are grandfathered in, there's nothing to ensure they will be.

 

The examples I raised strike me as arguably a huge subsidy to a small, select group of people who are privileged enough to go to graduate or professional school. Less than five percent of the population is able to earn a professional or doctorate degree. Adding those people together with all other graduate degree holders, it's still only a bit more than 10% of the overall population. Graduate and professional school students are more likely to be white and from higher income backgrounds than those who can't go to college or past an undergrad degree. They are more likely to have attended private or high quality public schools as kids. They are more likely to have parents with advanced educations. It is inequitable to me to spend that kind of money to boost a small number of fairly fortunate graduates (no matter how much situational poverty they deal with while students) while the dire needs of people in serious poverty go unmet. One way to address that stark and rather troubling disparity is to tighten up the definition of public service so it doesn't create these loopholes for truly affluent people. If someone forgoes earning potential to meet community needs that makes it far more reasonable to grant such a massive personal subsidy. The regular 20 year IBR would still be there, perhaps with reforms, for people not in public service. It's a matter of looking at the big picture of everyone's needs and not what is best for just a small number.

 

Yes, these professional school graduates drawing high salaries will be juggling their own child's education and other costs. But why do they deserve a bigger boost that helps them do that over, say, the high school graduate parents who are sending the first generation in their family to college at all or kids coming out of foster care? I will be a professional school graduate by the time we send the boys to college. So will my husband in not too long. And I realize that we will be in a much stronger position to help our sons than if we just had 2 year certificates or 4 year degrees. How fortunate for us. What a privelege that will be. Barring some personal disaster, there are others who need it more than us- a married couple both with advanced educations who as children got good public educations which made that possible.

 

I would love to see a system with very low interest loans for graduate students, loan forgiveness for people in public service who fall into (some generous) income and asset limits, loan forgiveness for people who face serious unexpected hardships (currently this is almost impossible to obtain), and more importantly much lower tuition in the first place. Tuition increases have been higher than health insurance increases in many instances. Tuition increases are far out pacing inflation. Loaning more and more money to keep up with rising tuition is not the long term solution to that very real problem.

Edited February 9, 2016 by LucyStoner

[Ravin]

. I will admit that I do find it very odd of you to dish out judgement over $50k of credit card debt when you have first hand experience in how debt of all kinds piles up- if not a graduate or professional school student, one's car troubles very well may end up on home equity lines of credit, unsecured credit cards or "buy here pay here" cars at usury level rates.

 

The examples I raised strike me as arguably a huge subsidy to a small, select group of people who are privileged enough to go to graduate or professional school. Less than five percent of the population is able to earn a professional or doctorate degree. Adding those people together with all other graduate degree holders, it's still only a bit more than 10% of the overall population. Graduate and professional school students are more likely to be white and from higher income backgrounds than those who can't go to college or past an undergrad degree. They are more likely to have attended private or high quality public schools as kids. They are more likely to have parents with advanced educations. It is inequitable to me to spend that kind of money to boost a small number of fairly fortunate graduates (no matter how much situational poverty they deal with while students) while the dire needs of people in serious poverty go unmet. One way to address that stark and rather troubling disparity is to tighten up the definition of public service so it doesn't create these loopholes for truly affluent people. If someone forgoes earning potential to meet community needs that makes it far more reasonable to grant such a massive personal subsidy. The regular 20 year IBR would still be there, perhaps with reforms, for people not in public service. It's a matter of looking at the big picture of everyone's needs and not what is best for just a small number.

 

Yes, these professional school graduates drawing high salaries will be juggling their own child's education and other costs. But why do they deserve a bigger boost that helps them do that over, say, the high school graduate parents who are sending the first generation in their family to college at all or kids coming out of foster care? I will be a professional school graduate by the time we send the boys to college. So will my husband in not too long. And I realize that we will be in a much stronger position to help our sons than if we just had 2 year certificates or 4 year degrees. How fortunate for us. What a privelege that will be. Barring some personal disaster, there are others who need it more than us- a married couple both with advanced educations who as children got good public educations which made that possible.

 

I would love to see a system with very low interest loans for graduate students, loan forgiveness for people in public service who fall into (some generous) income and asset limits, loan forgiveness for people who face serious unexpected hardships (currently this is almost impossible to obtain), and more importantly much lower tuition in the first place. Tuition increases have been higher than health insurance increases in many instances. Tuition increases are far out pacing inflation. Loaning more and more money to keep up with rising tuition is not the long term solution to that very real problem.

 

See, the people that fit that "typical/more likely" demographic aren't the ones, at least at my law school, who were racking up the big loan balances. It was people like me, and like single moms and POC, and veterans, and those from working class backgrounds whose families aren't all law school graduates expecting that kid to follow in their footsteps. People who had spouses working FT or parents with money to pay for their schooling weren't racking up big student loan balances. I was in the Public Defender Clinic with a young woman who definitely has a passion for the work--and who is from a wealthy family, which mean she has a trust fund and school is paid for, and she can pursue a career in public service because she has actual wealth in a trust fund to keep her in the upper middle class at least. Even many of the second career people had spouses working and supporting their families, so I'm sure weren't racking up the loans the way I did.

 

My law school however did a very good job of recruiting a diverse student body--diverse in terms of race, previous career background (at least a third of students were coming into law out of a previous career), family financial background, etc. It's a highly competitive but very reasonably priced (for law school) state school. 

 

I think you overinflate the idea of what the middle class can afford. A middle class family, even many professionals, may not be able to afford a big price tag for school. One guy who worked in public service whose daughter also went into law referred to her student loan payment as her "Lexis payment." She went into the private sector, so IBR wasn't on the table. When she had her loans paid off, she could afford a car payment for a Lexis for the same monthly slice of her income. There are threads of frustration on the high school and college boards about people boggling at the price tag of college and scrambling to figure out how they're going to afford it, even when they've planned ahead.

 

That kid coming out of foster care can go to school on grants, at least for undergrad. And the IBR program will be available for them should they go to grad school. And the one with parents with just a high school education--that's me again. My parents each did attend some college courses, but my mom didn't get her associates until I was grown, and my dad never actually completed a degree. I have one aunt who became an attorney, and she's sitting comfortably in the upper middle class in retirement, but she went to law school in the 80's and joined her husband's small firm when she finally passed the bar. She didn't get to that position of comfort until she was in her 40's.

 

 

 

You keep talking about me "judging" and "dishing out judgment" over the woman in the article's $50K credit card loan balance. As I have said repeatedly, I wasn't judging her, or anyone. The main source of my comments about it was that It simply boggles my mind how someone even gets ACCESS to that much unsecured credit in the first place. IME, you have to have money to get access to money, with certain specific exceptions--student loans for the most part don't have qualification for them based on your credit rating. If they did, most people who need them wouldn't be able to get them. Car loans at least have the car as collateral. It suggests that at some point in this woman's life course, she was considerably more affluent than I have ever been. Someone mentioned that she was divorced twice, and that's probably where a lot of that comes from.

 

I wasn't judging her, just expressing my realization of the impact those credit cards probably have on her budget.

 

 

As to the last part I bolded, I completely agree. Where I suspect we disagree is that I think the solution is to go back to adequate direct government funding of the universities, supported by taxes--like they were through most of the 20th century.

[TranquilMind]

Good question?

 

We don't want to be cold hearted with my folks. Not at all. But the rubber has met the road. We can either continue saving for retirement and help our own children get out of college with minimal student loan debt, or we can subsidize the elders. It doesn't have to be an either or and especially for mom when dad is gone because again, she has a home with my brother or with me. However, she is determined that some how we owe her some sort of subsidy so that she can continue to live independently despite their ridiculous lack of planning and profoundly poor money management.

 

We do not believe we should be responsible for her to live independently in that house. Now my sister in France thinks we should. She is about $80,000 in debt for her undergrad at a Christian university and currently working on her PH.D, but thinks that some how though she is exempting herself from responsibility, our brother and I should support her. I don't get her logic. She thinks that a lot of student loan debt is okay...and of course she's in France and basically thumbing her nose at the bank and not paying on it. They'll never recover it because she is now a permanent resident of France. So I guess her philosophy is "game the system". But, we don't take that approach when teaching our sons about loans. Essentially it boils down to we have a choice to help our kids or help mom and dad. We feel our kids get first priority. And again, mom does not have to be in this boat. She is choosing it.

 

That said, things don't have to be this grim for the elder population no matter how they came to fall on hard times if the spending priorities of the powers that be were different. We could be a nation that helps because we value human life at all stages. But we aren't. We are an oligarchy - the United Corporations of America - and helping the needy is not a profitable pursuit for the oligarchy.

Can mom maybe take in another elderly woman and stay there, if she outlives your father?  Maybe she can recreate "Goldengirls"?  Seriously, it could work, especially as fewer seniors have means. 

 

I do agree that we are responsible to make sure we do everything possible so we aren't a financial burden on the kids, and our responsibility to launch our own kids has to come first, but I'd turn heaven and earth over to help my mom.