Parents crushed by student loans taken out for their kids

[MillCreek]

http://seattletimes.com/html/nationworld/2019663175_studentdebt12.html

I have been reading a great deal about the problem of kids coming out of college with crushing student debt.  This article also shows the parents struggling with the debt as well.  My youngest daughter is in her senior year at college now.  Fortunately, her mom and I have not taken out any loans, but each of us write a $ 14,000 check every September to pay for our share of her tuition.  My daughter funds the rest with scholarships, grants, working and a small student loan.  The total bill per year at her school is just under $ 50 K per year.  She should come out with a loan balance in the low five figures.

Her mom and I both worked our way through the UW by working 20 hours a week at a local hospital some 30 years ago.  I wonder if kids can even work their way entirely through school any more.

[AZRedhawk44]

It's Obama's stash of Free Money that is causing the problem.

Federally guaranteed loans (what are Staffords at now?  I got mine at the unsubsidized max of $2500/freshman, $3500/soph, $5500 each year for junior/senior years) make it easy for schools to increase their tuition to gobble up free money.

Except the money isn't free on the back side of the equation. 

Do away with fed school loans, and tuition will go down.  Same thing with tax rebates for solar panel installations.  Those will drop in price, about equal to their tax subsidy value.

[Jamisjockey]

It's Obama's stash of Free Money that is causing the problem.

Federally guaranteed loans (what are Staffords at now?  I got mine at the unsubsidized max of $2500/freshman, $3500/soph, $5500 each year for junior/senior years) make it easy for schools to increase their tuition to gobble up free money.

Except the money isn't free on the back side of the equation. 

Do away with fed school loans, and tuition will go down.  Same thing with tax rebates for solar panel installations.  Those will drop in price, about equal to their tax subsidy value.

QFFT.



Increased demand for your product (college degree) means that you can charge more.  Tuition goes up, more people need big ass loans to go to college.

Also, we've spent decades beating into our children that they must go to college.  You never hear Obama on TV telling kids to start their own business or get qualified at trade school.
And that they can be anything they want to be.  Biggest societal fallacy we have.  Every kid is a doctor, basketball player, or astronaut.
Too many college grads at inflated costs creates surplus of qualified candidates for positions. This drives value of labor down for those markets.  Now you have a double edged bubble. 

[HankB]

It's hard when people with medical, engineering, or other useful degrees graduate with a heavy loan burden, but even worse is the case of  students who take out loans to finance a degree in something useless . . . women's studies, Medieval French poetry, or some variation of basketweaving.

Good luck making loan payments when your job involves asking people "Will you have fries with that?"

[AZRedhawk44]

It's hard when people with medical, engineering, or other useful degrees graduate with a heavy loan burden, but even worse is the case of  students who take out loans to finance a degree in something useless . . . women's studies, Medieval French poetry, or some variation of basketweaving.

Good luck making loan payments when your job involves asking people "Will you have fries with that?"

I have one of those degrees.  Asian Studies.  Ayup.  I wove baskets in scuba gear, listening to the sound of one hand clapping.

You know what though?  It's a BA.  Just having a BA gets your foot in the door.  I then realized it was a dumb degree and extended my education through self study and professional certifications, and have a pretty nice income now.  I'm 7 months away from being done with nearly $30,000 in school loan debt.

I have little empathy for loan whiners.  I have had none of the amazing trips around the world that many of my peers have had.  There's so many Occupy-types that seem to have great stories about Amsterdam, Australia or Thailand vacations, but can't afford their student loan payments and want "forgiveness."

[MillCreek]

My daughter is going to graduate with a BFA degree in commercial illustration, and she tells us that her job prospects are going to be pretty good when she finishes. The downside is that she will likely end up working in New York City, Atlanta, Chicago, Houston or Los Angeles.  It will be interesting to see where she ends up.

[lysander6]

No one forced their signature.

Lewrockwell has been running a bunch on articles on why the online universe will crush the brick and mortar diploma mills.

[Boomhauer]

My daughter is going to graduate with a BFA degree in commercial illustration, and she tells us that her job prospects are going to be pretty good when she finishes

Is that something she's actually researched and made sure of or is that what "she's been told". People love to lie about job prospects...

Could her degree be gotten cheaper at a college elsewhere? The vast majority of your employers aren't going to give a *expletive deleted* where a generic BA came from so long as it's an accredited school. My college cost a hell of a lot less, so I was able to cover most of the cost myself or with grants. The money I do have in student loans, roughly 8k at this point, I pay every month. My parents didn't sign for them, nor did they cosign for them. I did.

Another factor is this...students will sign up for a bunch of classes until they get their financial aid money (excess that is meant for school supplies and such is paid out cash to the student) then they will drop the class and spend the money on partying. They don't care they are saddling their parents with debt or squandering money.

People will also take out private student loans with banks and credit card companies. These often have joys like interest rates in the zipcode of 25-30%.

Also, the way college is chosen is completely illogical. I chose my college completely for business reasons, even though I was getting a useless LA degree. I chose a college that was in my hometown, so I wasn't having to cover a rediculous housing bill each semester, the school was pretty damn cheap as far as 4 year colleges go, and the profs were good and treated me right (I hardly had to put up with any leftist bullshit...on the opposing end, one of my college profs was big into guns  and another CCWed). I did not choose a college based on "feeling" i.e., favorite sports teams or a "party school". I went to class then went to work each day or studied. No time for partying bullshit, time was *expletive deleted* MONEY.

I do wish I had never fallen for the "you gotta go to college" bullshit. I wish I had gone straight into the trades. My college degree got me stuck in a mediocre career field where I hate virtually all of my coworkers and supervisors because they are some of the stupidest dipshits around. I am thankful, however, that I did not do what my father wanted me to do and go to law school.



It is interesting to note that the students who blithly take out loans and squander money  are often the ones who will get a mediocere job after graduating, meet someone else who also has similar income, and get married, taking out loans for $50-70k for a "perfect wedding".

[tokugawa]

Karl Denninger over at "the market ticker" has written extensively on this subject.

 If you want charts, numbers, expected returns on investment of a college education, go over there and search around. There are a host of unicorn shooters who have come to the same conclusion.

 I know of no other major commodity that has outstripped the rise in cost of a four year school.

 It is astounding, really. as the basics of a good education have not changed in any significant way.

 but when your victims (students)  have no recourse to bankruptcy court, why not stick it to them good and hard.
 Yes, folks, it's another new and shiny FEDGOV  debtslave program!

 Yes, I know, they (students) should know what their signing- at age 18, educated by our moronic public school system, with no advice ever given them of financial matters and a society that has indoctrinated them about the compelling need for college at any cost.. yeah in theory, they should know better-but they don't and they are in large part getting screwed by the system

[Balog]

The societal insistence on college education for all is stupid. The societal pressure to take on massive debt burdens to pay for that useless piece of paper is insane.

[brimic]

Student loans are about the only loans given out based on the inability to pay them back.

You never hear Obama on TV telling kids to start their own business or get qualified at trade school.
And that they can be anything they want to be.  Biggest societal fallacy we have.  Every kid is a doctor, basketball player, or astronaut. 

...or humanities/ victim studies professor...
Trade schools don't have any specializations in indoctrination or community organizing.

[zahc]

I agree it's insane, but like any good bubble, you can't ignore it. I know that I would not have the job I have now (which is meh but pays the bills well) if I didn't have the education I have.

There's no doubt that I got my job interview over other candidates purely because of the education on my resume. When I interviewed, I was not asked a single technical question, just BS questions about overcoming obstacles and contributing to the core value matrix. I actually AM qualified and smart, but there's no reason they would know that based on the pieces of paper I have (they don't even make them out of parchment anymore...typical). I could be a much worse candidate and still have those degrees. Conversely, I could be a much better candidate and not even be considered because I don't have a degree.

In my case, I was able to get my degrees essentially free due between scholarships, grants and assistantships. My education didn't cost me much besides the 6 or so years of lost earning potential.

I hope the bubble is well and popped before my kid gets to college-age. I am NOT saving any money for his education.

[MillCreek]

Is that something she's actually researched and made sure of or is that what "she's been told". People love to lie about job prospects...

Actually, she, her mother and I jointly did a due diligence and the job prospects are actually quite good, and her college has a good track record of appropriate job placement.  She is doing 'commercial illustration' and will probably end up working for an ad agency, packaging company, book art, signs, posters or the like.  So think of it as applied art in a business setting. Her job prospects look a lot better than mine when I had my shiny new masters' in chemistry way back at the height of the recession in the early 1980's. 

[MillCreek]

Karl Denninger over at "the market ticker" has written extensively on this subject.

 If you want charts, numbers, expected returns on investment of a college education, go over there and search around. There are a host of unicorn shooters who have come to the same conclusion.

 I know of no other major commodity that has outstripped the rise in cost of a four year school.

 

For the past few years, and probably for the next several more, law school has a pretty poor return on investment.  If you go to one of the top tier schools, graduate with a high GPA or honors and look for work in the same city as the school, you may do OK.  But right now, the job market for lawyers is generally in the toilet and will likely stay that way for a while.  I read in the law journals/websites about lots of people who graduate from a second or third-tier school, cannot find legal employment and have school debts of $ 200,000 and up. 

[Balog]

For the past few years, and probably for the next several more, law school has a pretty poor return on investment.  If you go to one of the top tier schools, graduate with a high GPA or honors and look for work in the same city as the school, you may do OK.  But right now, the job market for lawyers is generally in the toilet and will likely stay that way for a while.  I read in the law journals/websites about lots of people who graduate from a second or third-tier school, cannot find legal employment and have school debts of $ 200,000 and up. 

Ayup. Hence all the lawsuits about false reporting of job placement etc.

[MillCreek]

Ayup. Hence all the lawsuits about false reporting of job placement etc.

If the schools were forced to report their job placement as percentage of students placed in a job requiring a law degree and admission to the Bar, the numbers would plummet.  As it is, a law graduate who starts working at Starbucks as a barista is counted as employed for the job placement statistics. 

[RevDisk]

For the past few years, and probably for the next several more, law school has a pretty poor return on investment.  If you go to one of the top tier schools, graduate with a high GPA or honors and look for work in the same city as the school, you may do OK.  But right now, the job market for lawyers is generally in the toilet and will likely stay that way for a while.  I read in the law journals/websites about lots of people who graduate from a second or third-tier school, cannot find legal employment and have school debts of $ 200,000 and up. 

Some folks encouraged me to go to law school. I looked up the stats on how many people passed law school, and roughly how many legal positions tended to open up every year.

[roo_ster]

A college buddy of mine had one of the more business-oriented art-ish degrees.  He did the artwork for online and otherwise educational materials.  He saw the writing on the wall, though.  He decided to gear down his lifestyle, save 1/2 his take-home pay for a couple years, then spent two years getting a respiratory therapist credential...debt-free  He now makes more $$ and has steadier work.  And still plays at art on the side.

[Lee]

Scary stuff. I have two kids a year and a half from starting college. Not sure who's more worried about it- them or me. One thing for certain though, I won't be going into debt for them. We've been saving for a few years to help defer the costs a bit, but they are going to have to pull most of their own weight.

[Scout26]

Another improvement wrapped up in Obamacare:

All student loans are now issued by the Federal .gov.  No more private lenders.  

[brimic]

All student loans are now issued by the Federal .gov.  No more private lenders.

I can't see any potential problems or abuses that can come out of that.

As long as nothing extremely negative happens in my personal life between now and then, we'll have our house paid off well before my son is college aged  which will free up a considerable amount of capital.

[Boomhauer]

Another improvement wrapped up in Obamacare:

All student loans are now issued by the Federal .gov.  No more private lenders. 

As far as I understand, you can get student loans from banks/credit card companies still. They are not Federal stafford loans or the like, entirely private loans.

All of the Federal loans are now administered entirely by the fed .gov. used to be could be issued by private sector institutions but were still Federal Stafford loans.

[Hawkmoon]

Too many college grads at inflated costs creates surplus of qualified candidates for positions. This drives value of labor down for those markets.  Now you have a double edged bubble. 

Correction -- what we are producing is a surplus of UNqualified candidates who think they are qualified because they have been handed a piece of paper. In reality, the majority of college graduates today are hopelessly unqualified for any useful job of any kind, anywhere.

[MillCreek]

Scary stuff. I have two kids a year and a half from starting college. Not sure who's more worried about it- them or me. One thing for certain though, I won't be going into debt for them. We've been saving for a few years to help defer the costs a bit, but they are going to have to pull most of their own weight.

In order to make sure that the kids had skin in the game, their mom and I agreed to pay for up to 50% of their undergrad education and they could fund the remaining portion themselves, through loans, grants, scholarships or working.  It seems to have worked well so far.

[tokugawa]

What you are paying for, in many cases, as illustrated by zahc, is a piece of paper. A "credential". For an actual education, university's are on the way out. Nearly anything you want to learn can be found online, at next to no cost but your own effort, and this situation is growing more prevalent by the day. This represents an existential threat to the institutions.  But they hold the ring of power-the "credential". This serves as a shield for those hiring, as they can hide behind it if they make a poor choice. The "credential" is a CYA document, and is the last hope of academia retaining any importance.
 
  As far as I can see, a hell of a lot of "college education" consists of drinking, screwing, and "getting socialized and out on their own" type behavior. Waste writ large. Maybe I am just jealous as my late teens were spent in less comfortable surroundings with too few women!