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Credit worthiness is not usually considered as these loans usually cannot be discharged and there is no collateral, so why should the lender even consider credit worthiness? If a parent cosigns, the lender will always have someone to go after. A house or a car can be repossessed or foreclosed upon (even though the debtor may have negative equity, they can often just bankrupt out a deficiency judgment), but an education is just not the same thing.
The amount one can borrow should be tied to the expected ROI on the degree. For example, an engineer or a nurse should be eligible for more loans than a women's studies major, as the nurse and engineer are more likely to both find in-field employment as well as earn a higher income. If a school charges $10k per year, and someone needs to finance $40k for an engineering degree, that should be far more palatable than financing $100k for a theater degree from an Ivy.
If someone takes out $50k to get a women's studies degree, that was a foolish decision, but it shouldn't be a "financial cross" one has to bear indefinitely. With most other debt, people who make stupid decisions have a way to start over, and that's through bankruptcy. There are severe penalities with bankruptcy, as well as there should be for getting overextended from student loans, but the difference is overextension in student loans has almost no reprieve.
Ultimately, if tuition keeps increasing while salaries and the number of jobs available for graduates decline, the pendulum will swing in favor of not going to college. I think we are already at the point where lifetime ROI for most degrees for most graduates is going to be negative. I know people who have huge student loan balances they will never be able to repay, and while they were stupid to take out such colossal loans, it's even more idiotic to allow this debt to impede economic progress going forward.
So than other unsecured debts such as credit cards and gambling debts should be treated the same as student loans with no statue of limitations, predatory lending, and no discharge options right? I mean you're not singling out student loans are you?
That's not entirely true, loans are "forced" with a lot of students. Especially at 18-19 when they live with their parents and the federal gov't decides their parents make too much, there goes the pell and map grants...possible scholarships too. Whats left....loans.
No one is forced to take a loan or attend college, it's a choice. If some has literally forced you to sign a loan paper the you need to get the authorities involved
Credit worthiness is not usually considered as these loans usually cannot be discharged and there is no collateral, so why should the lender even consider credit worthiness? If a parent cosigns, the lender will always have someone to go after. A house or a car can be repossessed or foreclosed upon (even though the debtor may have negative equity, they can often just bankrupt out a deficiency judgment), but an education is just not the same thing.
The amount one can borrow should be tied to the expected ROI on the degree. For example, an engineer or a nurse should be eligible for more loans than a women's studies major, as the nurse and engineer are more likely to both find in-field employment as well as earn a higher income. If a school charges $10k per year, and someone needs to finance $40k for an engineering degree, that should be far more palatable than financing $100k for a theater degree from an Ivy.
If someone takes out $50k to get a women's studies degree, that was a foolish decision, but it shouldn't be a "financial cross" one has to bear indefinitely. With most other debt, people who make stupid decisions have a way to start over, and that's through bankruptcy. There are severe penalities with bankruptcy, as well as there should be for getting overextended from student loans, but the difference is overextension in student loans has almost no reprieve.
Ultimately, if tuition keeps increasing while salaries and the number of jobs available for graduates decline, the pendulum will swing in favor of not going to college. I think we are already at the point where lifetime ROI for most degrees for most graduates is going to be negative. I know people who have huge student loan balances they will never be able to repay, and while they were stupid to take out such colossal loans, it's even more idiotic to allow this debt to impede economic progress going forward.
Other debt is for material things, not knowledge. You fail to see that college is about learning and that can't be repossessed however many have made college out to be a lifestyle that involves living in a dorm and focusing on non educational things like parties and friends which is a reason many have 20-50 grand debt for a degree with a major in uselessness.
It's quite simple, don't borrow money that you can't pay back and don't major in something that will not be employable. I would love a million dollar house but I wouldn't buy it even though I could probably get a loan that big because it would be living above my means just like most kids take out student loans that are and always will be above their means.
This is true.. but isn't it also true that schools are a business too and they are selling education at rising prices that the average 18 yr old adult doesn't know yet how to manage money and believes that he/she will get a good job at the end of graduation with help from the school? Like many kids also believed after joining the army for college tuition that they will get back in one piece. Uneducated kids are naiive and if their parents are also uneducated then they really have little help and recruiters, schools, and large banks know this and will try to sell them their expensive product. The argument is that if this were happening in another country these same kids would be more politically active to decrease costs of tuition in schools to make it more rational and affordable.
Quote:
Originally Posted by introv78
Whats more impractical is that people are going in debt for amounts they can never pay back. I think its funny we calculate house and vehicle payments before we purchase them to make sure we can afford the payments however students or parents never think twice about borrowing money for college .
I'm glad there is no bailout for student loans, knowledge can't be taken away and people should think hard before taking thousands in loans for college. Students should also think hard on picking less expensive colleges and living at home while attending. No one is forced to borrow the money and when a person does they are agreeing to pay it back, period.
No one is forced to take a loan or attend college, it's a choice. If some has literally forced you to sign a loan paper the you need to get the authorities involved
Like I said, they are forced in a sense because once they realize its take out a loan or get your classes dropped and don't attend, which one do you think they will take? You think its just a coincidence that tuition continues to rise?
These "kids" can get a job of some sort. Even 40 years ago, people couldn't necessarily find a wonderful job as soon as they graduated. I think it will be good for them to work at a lesser type job learning some of life's lessons. Oh, HOW AWFUL!
Like I said, they are forced in a sense because once they realize its take out a loan or get your classes dropped and don't attend, which one do you think they will take? You think its just a coincidence that tuition continues to rise?
Not sure how to say it without being blunt but look up the definition of choice and then look up the definition of forced. Just like my 3 degrees were my choice, no one forced me to obtain them.
This is true.. but isn't it also true that schools are a business too and they are selling education at rising prices that the average 18 yr old adult doesn't know yet how to manage money and believes that he/she will get a good job at the end of graduation with help from the school? Like many kids also believed after joining the army for college tuition that they will get back in one piece. Uneducated kids are naiive and if their parents are also uneducated then they really have little help and recruiters, schools, and large banks know this and will try to sell them their expensive product. The argument is that if this were happening in another country these same kids would be more politically active to decrease costs of tuition in schools to make it more rational and affordable.
Just like car salesman and realtors are in the business of selling things but in the end it the individual that chooses to buy . It's not the college or the lenders fault, it's the students and often times the parents fault for not thinking and just signing. It's easy to write checks with other peoples money but it's harder to pay that money back especially when you went overboard.
OP, you say your daughter needs to go to a $50k/year school so she can network and meet the right people...well if that isn't going to lead her to a job that can pay off $200k in student loans readily, then it's not really worth it, is it?
Quote:
Originally Posted by plmokn
Many kids that graduate from college have loans that they cannot pay
"Can not" or "will not"?
iPhone? Check.
5 gig data plan? Check.
Fancy rims on the car? Check.
300 cable channels? Check.
$45 weekly Starbucks bill? Check.
More than five pairs of shoes? Check.
Ski Vacation? Check.
College loans paid off? Maybe.Maxing out 401(k)? Probably not.
Fully funding Roth IRA? Are you kidding?
Six month emergency expenses? What?
This is beautifully said!
It only makes sense to borrow what you can comfortably pay back, in a reasonable amount of time, based on what profession you are choosing. Believe it or not, it is possible to borrow a reasonable amount, pay it back in a reasonable amount of time, and enjoy the good things in life all at the same time. It's hard to feel sorry for someone who borrows more money than they can afford, and then lives beyond their means.
Not sure how to say it without being blunt but look up the definition of choice and then look up the definition of forced. Just like my 3 degrees were my choice, no one forced me to obtain them.
At that point they have no choice if they want to continue with higher education. But it is as a result of decisions they have made in the past. They weren't forced to make those decisions.
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