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Past performance is no guarantee of future results.
Besides, for a normal family making the national median of $55K - neither a 401k nor a 529 are realistic, at least not enough to save the amounts needed. At best, they can be a supplement.
250 a month is doable, especially as family gets some back via lower taxes owed.
A few interesting observations. If you're interested, just click on the link to read the respective articles (I'm just quoting a few snippits so as not to run afoul of copyright rules):
"The U.S. government over the last 15 years made a trillion-dollar investment to improve the nation’s workforce, productivity and economy...The investment was in “human capital,” or, more specifically, higher education. The government helped finance tens of millions of tuitions as enrollment in U.S. colleges and graduate schools soared 24% from 2002 to 2012...New research shows a significant chunk of that investment backfired, with millions of students worse off for having gone to school...
The Obama administration is wading through nearly 20,000 applications from Americans seeking to have student loans canceled on the grounds they were deceived by colleges, the fallout from a student-debt boom that already has led the government to forgive tens of millions of dollars of borrowings...
Many Americans are struggling under huge monthly student-debt bills. But they are a sizeable minority, not the norm.
That’s the conclusion of research from the Federal Reserve Bank of Cleveland. The typical borrower between ages 20 and 30 pays $203 a month toward student debt. Three-quarters of borrowers pay no more than $400 a month, the study shows.
The instructions from Congress for how a struggling student loan borrower can attempt to leave that debt behind in bankruptcy contains one word that can have two meanings.
The Obama administration announced plans to ramp up efforts to reach Americans who have defaulted on their student loans and enroll them in debt-relief programs, reflecting concerns that millions of borrowers are damaging their credit.
Purdue University is experimenting with a new way to finance an education.
Rising juniors and seniors at Purdue can now apply for an income-share agreement, an equity instrument that allows a student to promise a share of future earnings in exchange for cash. The arrangement, funded by Purdue’s research arm, is not a loan. A graduate who earns nothing pays nothing, and there’s no risk of crushing debt if a career doesn’t pan out. Recipients are free to pursue any jobs they wish.
So let me get get this right, the middle class are expected to save for college, but the poor get a pass?
The poor get grants, and as long as they are private, it isn't a concern to me as a taxpayer. All can get scholarships if they deserve them. My godson had his Bachelor's plus 1/2 an MBA paid that way despite being upper middle class.
The root cause of the student loan problem, of course, is many decades of unwarranted excess demand resulting from student subsidies. At the end of the day, far too many 18 year olds go to college compared to what they would have done absent those unwarranted subsidies. Excess demand drove up prices. Excess revenue at colleges encouraged excess expansion of fixed costs (plant & equipment & labs) and the creation of new incremental colleges that would never have been formed in the first place absent those student subsidies.
I totally agree, and I repped this post. Even in 1989 when I returned to Cornell for the reunion the Residence facilities had already been gussied up. Paid for by guess who? College costs are up about eight-fold from my years (Cornell 1979). Prices overall are up about three-fold and up around 445% from when I started in fall 1975. That increase did not come from real value added.
Quote:
Originally Posted by SportyandMisty
The huge student loan burden of 20-somethings has profound economic implications and consequences. There is no easy way out. Those students are delaying household formation, delaying marriage, delaying childbearing, and delaying autonomy because of those debts.
That's not the only cause, but quite true.
Quote:
Originally Posted by SportyandMisty
The first rule of problem solving is sometimes said to be the old adage "if you find yourself in a hole, stop digging." We have a very real hole. We need to stop digging -- stop offering massive subsidies to students to attend college.
The lobbying power of higher education is immense. One of the reasons for constant and inconclusive studies ranging from global warming to cancer to totally impractical subjects is the hunger of universities for research grants.
Quote:
Originally Posted by SportyandMisty
We need to educate high schoolers and their families that college is not the only pathway to financial security or the middle class. We need to educate high schoolers and their families about the financial consequences of choosing college over other alternatives. Some colleges need to close.
Necessary but difficult. For generations families have not wanted late adolescents onwards living at home. That is another driver for college demand. When my mother returned home from college in 1954 her parents ensured she was married within about a year. Many of her friends were in the same boat. Many marriages at age 22 were not especially happy though not all ended in divorce. My mother's would have if my father hadn't died about 18 years into the marriage.
Quote:
Originally Posted by SportyandMisty
One of the great things that happened in the Great Recession were some tough kitchen table discussions where parents told aspiring high school juniors and seniors that paying for college away from home was not a financial option.
I wouldn't know. I have not seen that in my community, which is an affluent, upper-middle class New York suburb.
I totally agree, and I repped this post. Even in 1989 when I returned to Cornell for the reunion the Residence facilities had already been gussied up. Paid for by guess who? College costs ......................
Scroll down to the sub-heading about Freshman enrollment. I lived for a Summer term in one of the demolished dorms, Mrs. NBP spent two years in one of them.
Also notice what else is in the new facilities (like Starbucks). And ponder again about college costs (not you specifically, I think you and I are on the same page for the most part).
But compared to the negative externalities of massive loan defaults?
People by and large are rational. When students and parents know that student loans can be forgiven by PSLF & IBR & PAYE, at the margin students will borrow more than they otherwise would and enter non-profits and government service at higher rates simply to take advantage of loan forgiveness. Absent PSLF, at the margin some of those students would choose the for-profit private sector rather than the public sector or non-profit.
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