Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The average student loan debt in America is $29,000. The average new car price in America is $31,000.
People finance new cars all the time, including new college grads. Is there any particular reason why any of us should be concerned that the average student will be paying the equivalent of a new car payment in monthly student loans?
Most people pay their cars off in 5-7 years. I see no reason why student debt should be considered a "crisis" when in reality that debt can be paid off in a few short years, just like the car these folks will inevitably buy and pay off lest it be repossessed.
I just don't see student debt as a "crisis." These numbers are manageable.
It's not a crisis, folks just want someone else to pay their debts. Through the years, our family did just what you suggest. And, regarding the payments, it's not like they won't work with you. They have monthly limits, deferments, etc..
People don't generally buy new cars at the beginning of their lives. Why? Because they can't afford it. They don't buy new cars....because at that point in their life the numbers are not in fact manageable.
Thats kind of the point of why 22 year olds dont generally buy new cars.
As for deferments, payments, etc....yeah great...so over time you pay MORE. Its really designed to siphon away a persons ability to grow wealth at the very start when its the most critical.
It's not a crisis, folks just want someone else to pay their debts. Through the years, our family did just what you suggest. And, regarding the payments, it's over 30 days not like they won't work with you. They have monthly limits, deferments, etc..
It's a crisis, although not nearly as large as the mortgage defaults. 1 in 5 behind 30 days, half in repayment and over 1Trillion in debt. Delayed repayments are just a warning sign.
Interest rates at around 5-6% have a rather large impact even before they enter repayment.
Let us know when you can get 1.75% or less on a student loan.
And that word, average... Do you honestly think the loan from a for-profit college dropout is going to be anywhere close to the same as a middle income kid getting an engineering degree from say Penn State? Average is a terrible for comparing apples to oranges.
Err, hmm, that is not possible . For 80 k you can only pay tuition for three semesters. You need 200k minimum for four years, assuming you do not eat food. And that may not be enough!
Nonsense. One can easily attend MIT and spend less than $80k to do it. You just have to be a reasonably competent student. Good universities have plenty of funding available in the form of scholarships, grants, and aid. And it will be a much better value than getting a degree at a low end highly crowded school like Penn State or similar.
Err, hmm, that is not possible . For 80 k you can only pay tuition for three semesters. You need 200k minimum for four years, assuming you do not eat food. And that may not be enough!
Not everyone is incompetent and rich. In fact, most people who get accepted into MIT are not; so they aren't paying anywhere near that.
If you can't afford it (or your parents can't) it's absolutely possible to get a 4 year college degree without emerging with $$$ in loans.
Going away to school for 4 years is not a necessity. You could do two years at a community college (VERY affordable) and then transfer to a local 4 year - or then move away to complete your last 2 years.
AP credits in high school can also give you class credit. Lots of schools/states offer dual credit classes - I know some kids who have graduated high school and have almost completed an associates degree.
Kids with top GPAs/test scores/ECs can get lots of aid at the nation's top privates - most of them will meet all of a student's demonstrated financial aid without loans.
Kids with lesser GPAs/test scores/ECs can "undershoot" and still receive LOTS of merit aid from schools.
And not everyone is built to get a 4 year degree. There are LOTS of opportunities in traditional blue collar careers that earn good salaries. People need to stop turning up their noses at them - especially when there are several fields that are hurting (or will be soon) for qualified employees.
If someone is stupid enough to exit with a 4 year liberal arts degree, no concrete career plan and tens of thousands of dollars in loans that they can't pay for, they deserve to live like paupers. Stupid is as stupid does.
This is a good post with lots of good advice. However, I have to disagree with your last paragraph.
High school students are generally only as financially astute as the parents who raised them. There are many intelligent students whose parents - for whatever reasons - do not have the financial smarts to guide their students through the maze of financial aid options made available to today's high school seniors. It is very easy for a naive 18 year old to get caught up in the promises made to him/her by an predatory recruiter from a for-profit private college.
That could be a valid argument. Are you of the opinion that niceties such as high speed internet, cable TV, and high dollar cell phone plans should be scrapped in order to make ends meet, including paying student loans? Do you think that many of these indebted students are willing to do that?
Internet and cell phones are absolutely necessary to find a job. Usually the cheapest plan is crap and better ones are not much more expensive.
$29,000 is the average and there are people with MUCH more.
The problem is the way our culture views college. We tell our kids "Go to college! You have to go or you'll grow up to be a bum loser. Pick a major, any major, it doesn't matter, you'll figure out how to pay it off somehow."
If an 18 year-old takes a loan for a $29,000 car, people will say he's an idiot and has no financial sense. If he gets into $29,000 of debt to go to college for a worthless degree, he's bettering himself!
I don't know about the "crisis" so its not really an argument about that. if the govt. puts in rules to lower interest rates they increase borrowing and help drive up college tuition prices.
Yet - some of that college education is needed here. The argument is really flawed. its based on assumption that the average reflects everyone. Average is adding everything up and dividing. Its usually close to the mean. . .so cars go for as low as 5,000 and as high as several hundred thousand. Hell some cars on the long tail go higher/lower.
So the idea that "most people" can afford a car loan of 29,000 seems pretty off. Only the middile/upper of that bell curve would be able to afford it. People buying 5,000, 13,000 cars. . aren't able to afford 29k cars.
tldr - pretty bad logic to apply averages as a threshold for a population salary capability.
You miss the point. Average student loan debt is a manageable number. Being $29,000 in debt is not the end of the world.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
