Sunday, September 5, 2010
Student Loans
I ran into this disturbing page about student loans. I just watched a Frontline documentary from earlier this year called "College, Inc." While they put the primary focus on for profit colleges as the source of the problem, what concerns me is that I am seeing a lot of evidence that a lot of people are getting themselves deeply in debt for educations that are unlikely to allow the student to ever pay off those debt. College is not for everyone. It is especially not for those who have failed to master certain basic skills--and are misled into believing that they can go to college, pile up a mountain of debt--and then get a good paying job to pay off that debt.
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College loans are a crazy feedback loop. The government makes more college loans/grants available, so all colleges (private and public) raise rates to take advantage of the largesse, the govt sees prices for college going up, so they make more $$ available. Rinse, repeat....
ReplyDeleteI have a friend who spent 8 years in college and wound up with a Bachelors' in Political Science. He changed his major twice and took the maximum loan every semester.
ReplyDeleteBy the way, he went to a major state university. His monthly student loan payment is now more than my wife and I pay on our mortgage.
Who would have thought that supply-and-demand applies to higher ed?
ReplyDeleteDon't they have economics professors at some of these places?
it isn't the colleges per se, it is the easy availability of "free money" in the form of student loans. Students don't feel like they have any real skin in the game, so they go and borrow all that money and don't really grasp that at some point they have to pay it back. Colleges (for profit and non-profit both) have no real competitive pressures to try to keep costs low or deliver more for the student's dollar so they have no reason to keep the tuition low. Students pay it because they can get all the money they want from loans. then they get out, get into the real world of work and figure out that those massive student loans are killing them and they can't get out from under them by filing bankruptcy either. But by then it is too late.
ReplyDeleteThat's what I'm facing right now. Of course, I majored in something useful (mathematics) but focused on the pure side, all the way up to doctorate...so now I'm wondering what I can do to pay off a huge mountain of debt. In some ways, I'll consider myself "debt-free" once I pay off my non-student debt...yet my student debt is a HUGE percentage of my overall debt.
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