Armed Polite Society
Main Forums => The Roundtable => Topic started by: MillCreek on May 28, 2010, 08:07:28 PM
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This article was published in today's (5/28/10) NYT. It goes to show that a degree from a prestigious school is no guarantee of success and return on investment can be iffy at best. Although I feel sympathy for Ms. Munna, I think she should have known what she was getting into. I worked my way through undergrad, grad and professional school and paid my own way without loans or scholarships. I also note that what sort of job prospects did she think that a degree in religious and women's studies would produce? She would have been better off taking that money and studying engineering, teaching, nursing or something that would have produced a job.
May 28, 2010
Placing the Blame as Students Are Buried in Debt
By RON LIEBER
Like many middle-class families, Cortney Munna and her mother began the college selection process with a grim determination. They would do whatever they could to get Cortney into the best possible college, and they maintained a blind faith that the investment would be worth it.
Today, however, Ms. Munna, a 26-year-old graduate of New York University, has nearly $100,000 in student loan debt from her four years in college, and affording the full monthly payments would be a struggle. For much of the time since her 2005 graduation, she’s been enrolled in night school, which allows her to defer loan payments.
This is not a long-term solution, because the interest on the loans continues to pile up. So in an eerie echo of the mortgage crisis, tens of thousands of people like Ms. Munna are facing a reckoning. They and their families made borrowing decisions based more on emotion than reason, much as subprime borrowers assumed the value of their houses would always go up.
Meanwhile, universities like N.Y.U. enrolled students without asking many questions about whether they could afford a $50,000 annual tuition bill. Then the colleges introduced the students to lenders who underwrote big loans without any idea of what the students might earn someday — just like the mortgage lenders who didn’t ask borrowers to verify their incomes.
Ms. Munna does not want to walk away from her loans in the same way many mortgage holders are. It would be difficult in any event because federal bankruptcy law makes it nearly impossible to discharge student loan debts. But unless she manages to improve her income quickly, she doesn’t have a lot of good options for digging out.
It is utterly depressing that there are so many people like her facing decades of payments, limited capacity to buy a home and a debt burden that can repel potential life partners. For starters, it’s a shared failure of parenting and loan underwriting.
But perhaps the biggest share lies with colleges and universities because they have the most knowledge of the financial aid process. And I would argue that they had an obligation to counsel students like Ms. Munna, who got in too far over their heads.
How many people are like her? According to the College Board’s Trends in Student Aid study, 10 percent of people who graduated in 2007-8 with student loans had borrowed $40,000 or more. The median debt for bachelor’s degree recipients who borrowed while attending private, nonprofit colleges was $22,380.
The Project on Student Debt, a research and advocacy organization in Oakland, Calif., used federal data to estimate that 206,000 people graduated from college (including many from for-profit universities) with more than $40,000 in student loan debt in that same period. That’s a ninefold increase over the number of people in 1996, using 2008 dollars.
The Family
No one forces borrowers to take out these loans, and Ms. Munna and her mother, Cathryn, have spent the years since her graduation trying to understand where they went wrong. Ms. Munna’s father died when she was 13, after a series of illnesses.
She started college at age 17 and borrowed as much money as she could under the federal loan program. To make up the difference between her grants and work study money and the total cost of attending, her mother co-signed two private loans with Sallie Mae totaling about $20,000.
When they applied for a third loan, however, Sallie Mae rejected the application, citing Cathryn’s credit history. She had returned to college herself to finish her bachelor’s degree and was also borrowing money. N.Y.U. suggested a federal Plus loan for parents, but that would have required immediate payments, something the mother couldn’t afford. So before Cortney’s junior year, N.Y.U. recommended that she apply for a private student loan on her own with Citibank.
Over the course of the next two years, starting when she was still a teenager, she borrowed about $40,000 from Citibank without thinking much about how she would pay it back. How could her mother have let her run up that debt, and why didn’t she try to make her daughter transfer to, say, the best school in the much cheaper state university system in New York? “All I could see was college, and a good college and how proud I was of her,” Cathryn said. “All we needed to do was get this education and get the good job. This is the thing that eats away at me, the naïveté on my part.”
But Cortney resists the idea that this is a tale of bad parenting. “To me, it would be an uncharitable reading,” she said. “My mother has tried her best, and I don’t blame her for anything in this.”
The Lender
Sallie Mae gets a pass here, in my view. A responsible grownup co-signed for its loans to the Munnas, and the company eventually cut them off.
But what was Citi thinking, handing over $40,000 to an undergraduate who had already amassed debt well into the five figures? This was, in effect, a “no doc” or at least a “low doc” subprime mortgage loan.
A Citi spokesman declined to comment, even though Ms. Munna was willing to sign a waiver giving Citi permission to talk about her loans. Perhaps the bank worried that once it approved one loan, cutting her off would have led her to drop out or transfer and have trouble paying back the loan.
Today, someone like Ms. Munna might not qualify for the $40,000 she borrowed. But as the economy rebounds, there is little doubt that plenty of lenders will step forward to roll the dice on desperate students, especially because the students generally can’t get rid of the debt in bankruptcy court.
The University
The financial aid office often has the best picture of what students like Ms. Munna are up against, because they see their families’ financial situation splayed out on the federal financial aid form. So why didn’t N.Y.U. tell Ms. Munna that she simply did not belong there once she’d passed, say, $60,000 in total debt?
“Had somebody called me and said, ‘Do you have a clue where this is all headed?’, it would have been a slap in the face, but a slap in the face that I needed,” said Cathryn Munna. “When financial aid told her that they could get her $2,000 more in loans, they should have been saying ‘You are in deep doo-doo, little girl.’ ”
That’s not a role that the university wants to take on, though. “I think that would be completely inappropriate,” said Randall Deike, the vice president of enrollment management for N.Y.U., who oversees admissions and financial aid. “Some families will do whatever it takes for their son or daughter to be not just at N.Y.U., but any first-choice college. I’m not sure that’s always the best decision, but it’s one that they really have to make themselves.”
The complications here go well beyond the propriety of suggesting that a student enroll elsewhere. Colleges don’t always know how much debt its students are taking on, which makes it hard to offer good counsel. (N.Y.U. does appear to have known about all of Ms. Munna’s loans, though.)
Then there’s a branding problem. Urging students to attend a cheaper college or leave altogether suggests a lack of confidence about the earning potential of alumni. Nobody wants to admit that. And once a university starts encouraging middle-class students to go elsewhere, it must fill its classes with more children of the wealthy and a much smaller number of low-income students to whom it can afford to offer enormous scholarships. That’s hardly an ideal outcome either.
Finally, universities exist to enroll students, not turn them away. “Aid administrators want to keep their jobs,” said Joan H. Crissman, interim president and chief executive of the National Association of Student Financial Aid Administrators. “If the administration finds out that you’re encouraging students to go to a cheaper school just because you don’t think they can handle the debt load, I don’t think that’s going to mesh very well.”
That doesn’t change the fact, however, that the financial aid office is still in the best position to see trouble coming and do something to stop it. University officials should take on this obligation, even if they aren’t willing to advise students to attend another college.
Instead, they might deputize a gang of M.B.A. candidates or alumni in the financial services industry to offer free financial planning to admitted students and their families. Mr. Deike also noted that the bigger problem here is one of financial literacy. Fine. He and N.Y.U. are in a great position to solve for that by making every financial aid recipient take a financial planning class. The students could even use their families as the case study.
The Options
The balance on Cortney Munna’s loans is about $97,000, including all of her federal loans and her private debt from Sallie Mae and Citibank. What are her options for digging out?
Her mother can’t help without selling her bed and breakfast, and then she’d have no home. She could take her daughter in, but there aren’t good ways for her to earn a living in Alexandria Bay, in upstate New York.
Cortney could move someplace cheaper than her current home city of San Francisco, but she worries about her job prospects, even with her N.Y.U. diploma.
She recently received a raise and now makes $22 an hour working for a photographer. It’s the highest salary she’s earned since graduating with an interdisciplinary degree in religious and women’s studies. After taxes, she takes home about $2,300 a month. Rent runs $750, and the full monthly payments on her student loans would be about $700 if they weren’t being deferred, which would not leave a lot left over.
She may finally be earning enough to barely scrape by while still making the payments for the first time since she graduated, at least until interest rates rise and the payments on her loans with variable rates spiral up. And while her job requires her to work nights and weekends sometimes, she probably should find a flexible second job to try to bring in a few extra hundred dollars a month.
Ms. Munna understands this tough love, buck up, buckle-down advice. But she also badly wants to call a do-over on the last decade. “I don’t want to spend the rest of my life slaving away to pay for an education I got for four years and would happily give back,” she said. “It feels wrong to me.”
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what was her degree in?
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what was her degree in?
An interdisciplinary degree in religious and women's studies. :facepalm:
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they have t shirts in the college bookstore that say"i've got a degree in sociology! would you like fries with that?"
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Now that robots and automation do most manual labor like farming and assembling, what do we do with all the spare people? Not everyone is cut out for college. Not everyone can be the next physicist or inventor. There never used to be so many useless degrees. Now that we have so many young adults who just exist with nothing to do, they go to school to stupid pointless BS. Why? And what do we still do with them when they graduate and still know nothing useful, especially when most jobs where one could be useful are already filled. When you have 5 holes and 10 pegs, what do you do with the other 5 pegs? "Go work on dad's farm" or "get a job at the mill like your dad and grandfather" just aren't options anymore.
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An interdisciplinary degree in religious and women's studies. :facepalm:
Wonder why folks in their 20's get a degree in basketweaving (any degree unlikely to apply to a job). I mean, I can understand taking basketweaving classes after you're settled in something that interests you such as philosophy, women's study, sociology, etc.
Course, I'm laughing my tail off. I've always gotten other people to pay for my education. Grants, GI bill, my company, etc. Only direct funds I spent on education were books, equipment, food, transportation, etc. Seriously. What is the mindset in spending $100k or more on religion and women's studies? You could buy a TON of books on virtually any subject, and a basketweaving degree from the local community college.
The reason why lenders are willing to fork over that kind of money is because they're guaranteed by the feds and it's virtually impossible to get rid of the debt.
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She could join the army. They'd help with her loans.
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The longer I work, the less I believe in a college education as an absolute requirement for a decent career. I work in IT. Currently, I'm working as a Sales Engineer/Project Manager. I have an MBA and make a 6-figure salary. I'm not exactly struggling. However, I've known several folks with GEDs or much less formal education than me (Associates Deg or just a few classes) who are doing as well and making the same money or more.
There's no reason in my mind to amass $100k in debt for college unless you're working towards an MD or similar.
Chris
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. . . an interdisciplinary degree in religious and women’s studies.
I remember when I was in grad school, talking to a young woman on the university shuttle bus, who was VERY upset that she couldn't find a job; she blamed it on the university's placement office.
I allowed as I already HAD two firm job offers, and was setting up another interview. Another student (an EE major) mentioned that HE had multiple offers, too.
The woman, rather crossly, said that "Well, maybe THOSE WOMEN in the university placement office only help men!!"
"Well, what was your major?" I asked.
"I have a Master's Degree in Art History" she replied. :facepalm:
So I asked "Can you type?"
Much laughter from the other students on the shuttle bus.
As for Ms. Muna, notice this: For much of the time since her 2005 graduation, she’s been enrolled in night school, which allows her to defer loan payments.
What's she studying now, finger painting? ;/
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I've had a lot of education. I understand the value.
Having said that, FAR too many people are going to college.
FURTHER, I have no pity for someone who decided to borrow $100,000 in order to major in "Religious and women's interdisciplinary studies."
Strangely, I have more pity for the law school grads that cannot find work now.
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Charles Murray wrote a book on this topic of WAY too many folks at university.
Probably about 25%, tops, of the folks in college really ought to be there. They are wasting their time on remedial courses and then on obtaining a near-worthless degree that will set them up for a lifetime of cubicle scut work.
For the same time/money investment, they could learn a useful trade, craft, skill and one day perhaps work for themselves, rather than a PHB.
And this "college for all" deal really hoses affirmative action folks. They end up at an institution tougher than they ought to be at and then have to dumb down their degree selection even more. Toss in a big honking load of debt at the end of it IF they graduate with their less-than-useful degree. Affirmative action is all about making liberals feel good about themselves.
David Gelernter, one of the guys blown to bits (but not fatally) by the unibomber took up computer science & software specifically because he was more of a hands-on kinda guy and he likened forging code to other old-school trades. His autobio about getting blown up and recovery, Drawing Life, is one hell of a book. Short, incisive, to the point, and mildly searing. (Witness, by Whittaker Chambers is one of the most searing books written by a man in the West who did not live under communism.)
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My history degree might be considered useless by some, but I didn't pay $100K for it, either...and I've held a job related directly to it.
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Probably about 25%, tops, of the folks in college really ought to be there. They are wasting their time on remedial courses and then on obtaining a near-worthless degree that will set them up for a lifetime of cubicle scut work.
Yep. And 25% is very, very generous.
Undergrad was an eye-opening experience. And grad schools are now washing out the functionally illiterate. =|
And the only excuse for the degree in women's studies and religion is if one has serious prospects in academia. And if one has serious prospects in academia, one should not need to borrow money to pay tuition. Tuition usually is not an issue for those individuals. Nor is going to "the best college one can get into." If you got it, you'll get into a good grad program out of a mediocre undergrad program or get a scholarship to an excellent institution for undergrad.
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I have an associate's degree in mechanical engineering, and I attended a college for gunsmithing, as well. I've zero debt, currently.
There simply isn't an excuse for this sort of stupidity.
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My history degree might be considered useless by some, but I didn't pay $100K for it, either...and I've held a job related directly to it.
No degree is ever useless if a person puts it to good use.
I don't know the lady in the article, so obviously I'm guessing a bit. But it sounds like she doesn't intend to try to make good use of her degree. As she's saying she thinks she wasted a decade and wishes she could turn her degree back in. She could try to use it to get into writing, administration, academia, etc.
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She could try to use it to get into writing, administration, academia, etc.
She's the kind of person that expects everything to be handed to her because "she's done the right thing!!11!!!! by going to college"
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FURTHER, I have no pity for someone who decided to borrow $100,000 in order to major in "Religious and women's interdisciplinary studies."
If she'd had a real plan, including how she was going to pay the loans, when she picked that major, I might have more sympathy.
I had a friend who banked her entire college fund in CDs and other investments while she went to school on scholarships and loans, (enough in CDs to pay off the expected loans, and the rest in moderate-risk stuff) then worked part time and lived cheap while going to school full time. By the time she finished her master's, pulled the investments and paid the loans in full, she was nearly $50k ahead, which took care of the down payment on her first business. She's since sold it at a profit and expanded. I've known lots of others who went in with a lot more money and came out with a degree they had no idea how to use and debt they had no idea how to pay.
IMO, the first step in getting the loans should be explaining what you plan to do with the degree that will allow you to pay them back. The more you're borrowing, the more difficult it should be. Think of it as the first good lesson for when you need to get a business loan someday. Some degrees could be summed up in a sentence, ("I'm studying medicine to become a radiologist, which pays $X/year on average in this area." "I plan to use this business degree to continue and expand my family's oil drilling operations.") while you'd pretty much need a book to convince a lender that you're going to be able to come up with $100k using a degree in "______ studies." ("Uh, maybe someone will pay me to, uh...hell, I dunno.")
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I saw "$100k in loans" and thought "Lawyer who can't find work, that sucks." For her useless degree? No sympathy.
The whole "college for all" thing is such a huge scam. Partly because most don't need it, partly because student loans are damn near impossible to get rid of aside from paying them off. You can't even bankrupt them. So you get $40k in debt, a useless piece of paper, and a job that sucks your soul for $30k a year. What a deal! ;/
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Guaranteed loans enable stupid actions. Eliminate the loans and nature will win out.
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Another thought . . .
The OP begins with:
Like many middle-class families, Cortney Munna and her mother began the college selection process with a grim determination. They would do whatever they could to get Cortney into the best possible college,
Note the phrase " . . . into the best possible college."
Good colleges and universities don't offer interdisciplinary degrees in tripe like "religious and womens's studies." It sounds like she attended an institution (N.Y.U.?) that's remade itself in the image of the fictional Walden College from the Doonesbury comic strip. ;/
It's bad when people with degrees in medicine, engineering, science, and yes, even law - have difficulty finding appropriate work. But when people waste years of their early adult life, well, slacking and running up debt . . . I have no sympathy. (With the way she's run up debt, I wonder if she votes Democrat . . . )
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It's bad when people with degrees in medicine, engineering, science, and yes, even law - have difficulty finding appropriate work.
I sometimes wonder how many of those people can't find appropriate work because the companies seek out the ones with underwater-basket-weaving degrees so they can pay them less. Plus, the sociology major is just going to be a clerk, while the accountant who takes a job as a clerk to get a "foot in the door" is expecting to advance and get even more money later.
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My wife is about to go back to school, for 3 weeks ($400) to get her CNA certificate. After 8 yrs she found out she isnt happy as an accountant. She does have a bachelors in accounting (she didnt pay for it, QWEST did).
I have an AAS from a tech college in IT stuff but my new job has nothing to do with IT. I learned more in the IT field with hands on and volunteering to learn Unix Admin stuff than I did in a classroom.
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As of a few moments ago, there were 315 comments on this article at the NYT. Ms. Munna is not getting a lot of sympathy.
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As of a few moments ago, there were 315 comments on this article at the NYT. Ms. Munna is not getting a lot of sympathy.
I can't find the comments on it. Linky?
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The whole "college for all" thing is such a huge scam. Partly because most don't need it, partly because student loans are damn near impossible to get rid of aside from paying them off. You can't even bankrupt them. So you get $40k in debt, a useless piece of paper, and a job that sucks your soul for $30k a year. What a deal! ;/
Agreed....Texas is pushing for every student that graduates HS to go to college when 90% would be better off going to some type of technical college or trade school (i.e. Texas State Technical College http://www.tstc.edu/ (http://www.tstc.edu/) ).
Somedays, I wish I'd went this route....a BA in Psychology doesn't get you far....and a Master's in Psychology gets you even less..... :facepalm:
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I can't find the comments on it. Linky?
http://bucks.blogs.nytimes.com/2010/05/28/assigning-responsibility-for-high-student-loan-debts/?ref=student-loans
358 comments now.
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I graduated from dental school a week ago and have just under $250k in loans. I never would have gotten myself into this much debt if I didn't have a realistic expectation of getting a job where I could pay them back. Friends of mine who got jobs straight out of school (I'm doing a residency) are going to be making anywhere from $50-75/hour and the thought of the ~$2500+/month loan payment is still scary.
I can't imagine getting all that debt without having a very good idea of what I'd be doing/how much I'd be making once I graduated.
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I get tired of this assigning blame to creditors. Creditors sell money like J.C. Penny sells slacks. If I wrote a hot check to J.C. Penny, they would be the victim. Why is it different for businesses that sell money?
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No degree is ever useless if a person puts it to good use.
I don't know the lady in the article, so obviously I'm guessing a bit. But it sounds like she doesn't intend to try to make good use of her degree. As she's saying she thinks she wasted a decade and wishes she could turn her degree back in. She could try to use it to get into writing, administration, academia, etc.
She'll get a job in local, state, or fed.gov.
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Good colleges and universities don't offer interdisciplinary degrees in tripe like "religious and womens's studies." I
http://www.hds.harvard.edu/prse/
http://www.yale.edu/religiousstudies/
http://www.yale.edu/wgss/index.html
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She'll get a job in local, state, or fed.gov.
If she can, most states are cutting jobs and are having massive layoffs.
Seriously though, I am questioning the truthfulness of the article. Does this person really exist? I've seen articles made up before. 100k on that degree!?!? If so, she is too stupid to get a job. If you are going to spend 100k on schooling, there had better be Dr. preceding your name or Esq. after it. I really believe that this is a made up person.
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^^^ Yes, I am sure that the New York Times, one of the pre-eminent newspapers of the world, just makes up articles. [tinfoil]
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I'll just ask Dan Rather for you. ;)
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Economic hard times generally help clarify which degrees are the most utilitarian.
When times are good, a lot of folks make money hand over fist while adding little to societies overall well being.
When times are lean, the truth of what is necessary, in comparison to what is just the vanity of excess becomes clearer.
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Got my BS degree in Computer Information Systems in 1987. Never used. After I got out of the Army, My degree was 4 years out of date and they could hire new grads for less. So I tried going into Financial Planning, it didn't work out, so I went into Logistics. (As an MP platoon leader, I was responsible for moving a Mech Infantry Brigade from one side of Germany to the border, that's my story and I'm, stickin' with it.)
The 4 year degree was just proof that I could make through school, nothing more.