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"They can't. There are both annual and cumulative limits on the amount that can be borrowed, currently $57,500 for independent undergraduates." yes, where they get into trouble is the private loans!!
Stafford Loan Options
Stafford loans come in two forms — subsidized and unsubsidized.
Subsidized Loans:
4.66% interest rate
Federal government pays interest while enrolled in school
Can borrow up to $8,500 per year DEPENDING ON ELIGIBILITY
Unsubsidized Loans:
4.66% interest rate
Interest accrues while in school
Can borrow up to $12,000 per year DEPENDING ON ELIGIBILITY
It amazes me how easy it is for just any 18 year old to simply fill out an online form and receive a $200,000 stafford loan to study humanities at some fancy private school. Is this not similar to banks giving out mortgages people could not afford prior to the housing bubble burst?
If you cannot afford college and need to attend on the government's dime (on a generous loan they gave you with a low interest rate), why would you not minimize the loan amount by going to the cheapest college you get into? And why not maximize your ability to repay said loan by majoring in something that has a strong history of job demand, stability and growth? (STEM fields primarily)?
The cheapest college you can get into is rarely the best value. There's no point in going to a college if you aren't getting a good value in terms of education. No matter the cost.
Not everyone is going to college for a potential paycheck. It really comes down to why people are going to college. As far as the government is concerned, a student who finished college with a large debt is much better than a student that has not finished college with a small debt. This is because a person who has finished college has met one of the goals of the government as awarded by the constitution... and that is to support the furthering of arts and sciences. That constitutional requirement is more important than budgetary concerns and is without prejudice to any particular field.
Quote:
Originally Posted by nalghanim
Many young people feel as if they had been wronged by the higher education system and the US government which was so nice to give them a low interest loan which enabled them to go to college in the first place because they are unemployed or underemployed and unable to pay back their massive student loan debt, when in reality, they should have simply gone to a cheap in-state college and chose to study something that can get them a high-paying job upon graduating, no?
They wronged themselves.
Quote:
Originally Posted by nalghanim
Of course, some blame does lie with universities who have used this influx of student loan money to build unnecessary infrastructure and other amenities that don't contribute to the student landing a job and transferred the costs to students by raising tuition rates. But some blame does lie with students, who feel entitled to being debt free and work high paying jobs after spending 4 years drinking and partying on the government's jobs while being mediocre students in a field of study that provides them with no real employable job skills.
Thoughts?
If you look at the traditional schools, they haven't taken a whole lot of federal student loans and they haven't expanded as quickly has public schools or some private schools. In one statement you say that people should go to a cheap in-state and then you blame universities for taking advantage of federal student loan money. But you don't acknowledge the fact that these in-state schools were the ones abusing federal funds.
The reality is that the blame belongs with the students, the government, and low quality universities. The students for making poor decisions. The government for giving out loans to low quality students and for low quality universities. And low quality universities for providing sub-par education.
I would think this another of those unintended consequences of an action done for a good cause.
It is now quite clear that the Education industry has utilized the loan programs for its own benefit driving the cost of a college level education to levels that could never have been supported without the loan programs. The result is better paid professors and more profitable schools. The bad news is that the mechanism may well cripple a large percent of the students with debts that cannot be repaid.
And the mechanism is open ended...the amount of debt can be increased again and again and the cost of school increased to consume it.
It is practically impossible to reverse the trend and say cut the loans in half. The colleges will have no way to reduce their costs enough to compensate.
So the out? Public funding of college. Just about has to happen.
It is now quite clear that the Education industry has utilized the loan programs for its own benefit driving the cost of a college level education to levels that could never have been supported without the loan programs.
Compare the cost of an education at a second level college from say 1980 to 2010. The cost of a college education in constant dollars has more than doubled. Constant dollar income has moved only a few percent
Or a college education cost has increased about 2.2 times compared to income. That is virtually all driven by loans.
Strictly speaking from a rational viewpoint (the only viewpoint I deal with), people SHOULD be going to college with the intention of getting a job that they normally wouldn't be able to get without at least a bachelors degree. Either they have to be incredibly exceptional at whatever they do or they have to pick a safer "STEM" field where long term financial success and stability exists. College was always designed to be a place for professional career training (Although now it is more like a 4 year resort and spa , will get to this later)
For those who want to go attend college for the "experience" or to simply broaden their knowledge for their own personal reasons, they should be prepared to pay out of pocket for this, as the way they are approaching college is more of a luxury rather than a necessity (career training).
The fact is, nobody has been "lied" to. No college guarantees you will be debt free and have a great job when you graduate, but they do try their best to point you in the best direction where it is more probable. Nobody decides to major in History because a college told them "You need to do THIS to succeed". Students know what they are getting into.
As for the "$200,000" figure, I should have researched that beforehand. Fortunately I did not have to take loans for my education, but many of my classmates often complained about having to be in "$200,000 of debt when they graduate" (The 4 year cost of my undergraduate school, and most private schools). Sorry about that. But the fact still remains. Why should the government give any amount of money to a student who has a low chance of repayment due to studying arts and crafts? Why should the tax payers be responsible because some people decided to take the easy route and go on a 4 year vacation instead of putting in the extra work to study the more difficult topics associated with fields that have a strong history of abundant career oppurtunities?
Obviously Colleges have taken advantage of the government's lackadaisical approach towards giving out what is virtually free money to certain students, similar to how the value of homes became inflated due to banks and mortgage brokers giving out high risk mortgages, the value of college is also grossly overvalued. With enrollment at all time highs and many of these students attending on loans that all they had to do to receive was fill out some online form, colleges virtually have cash to burn, and they have done exactly that- carelessly spending on things like expensive infrastructure to gain a competitive advantage over other schools (i.e: luxury student dorms may attract some students to apply and enroll, but have no affect job prospects), much of which is paid through loans which have been granted based tuition income which is primarily sourced from loans that students obtained. What will happen when the higher education bubble inevitably bursts? Loans will dry up, students will have to drop out, schools that relied on student loan money to pay off their expensive (and unnecessary) construction projects, programs and other various amenities will collapse and go bankrupt if they do not have a large enough cushion (endowment and equity) to fall back on- this is probably every single university in the US outside of the extremely prestigious ones that are actually centers for scholastic research, innovation and advancement and focus on preparing students for the real world as opposed to the ones that allow them to lounge out in hot tubs and attend keggers everyday while expecting little of them academically.
1. Someone mentioned big players like Goldman Sachs only hiring top-school grads. This is true. However if someone is low income, places like Harvard, Penn, Princeton, etc give GENEROUS financial aid packages.
2. In today's economy the number of high paying jobs that one can do with only a bachelor's degree is shrinking. A Master's is the new bachelors. For those going to graduate school, it's better to go somewhere cheaper for undergraduate. Better to go to a state school where one can be a superstar than an elite private school where one is average.
3. I'm a capitalist. If people are stupid enough to waist $260k on a Bachelor's in Fashion Therapy from St. No-name of Expensivia Liberal Arts College, I say let them.
How did you pay for your education, out of curiosity?
My parents paid out of pocket.
Quote:
Originally Posted by Mandalorian
1. Someone mentioned big players like Goldman Sachs only hiring top-school grads. This is true. However if someone is low income, places like Harvard, Penn, Princeton, etc give GENEROUS financial aid packages.
The first part is not exactly true. The bulge bracket firms (Goldman, Morgan Stanley, Barclays, JP Morgan etc) recruit at hundreds of schools across the country of varying prestige for entry level analyst jobs ($55k-$70k depending on company and location), it is not all too difficult for any college student to land these jobs as long as they have a high GPA and some relevant internships/experience. The Wharton/Harvard/Columbia/Princeton etc grads are generally recruited into more elite roles in Investment Banking and Consulting ($100k+).
Quote:
Originally Posted by Mandalorian
2. In today's economy the number of high paying jobs that one can do with only a bachelor's degree is shrinking. A Master's is the new bachelors. For those going to graduate school, it's better to go somewhere cheaper for undergraduate. Better to go to a state school where one can be a superstar than an elite private school where one is average.
This is true, but it's also no secret. High School students already know where the money is and which fields are growing. They need to adjust their academic paths accordingly.
Quote:
Originally Posted by Mandalorian
3. I'm a capitalist. If people are stupid enough to waist $260k on a Bachelor's in Fashion Therapy from St. No-name of Expensivia Liberal Arts College, I say let them.
I have no problem with this if they are footing the bill. But many students are using government loans to study topics that have no job prospects outside of menial labor jobs that are available to high school drop outs and they will never be able to repay the loan. IMO loans should only be available to those with the highest job prospects.
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