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Are Student Loans Burying Graduates?
DrHogie asks: "This is an interesting Op/Ed piece on student loans -- and how they bury the graduate in a load of insurmountable debt. As someone who is considering going back to college to finish his degree, are student loans (and the degree they get you) worth the debt load?" Update: 05/09 5:45 GMT by C :I apologize. The link in this story is bad, and I can't locate the original story on Yahoo. In the meantime, here's a replacement story in the same vein, and an article about student debt and how most college kids are having to work more to offset rising tuition costs. The original question is still valid, however. Is college getting to be too expensive for the average high school graduate?
Student loans are not that bad if you do what I did, put most of college on credit card... No, that's not right...
More seriously, student loans are not that bad, infact are a decent investment. For a lot of jobs a diploma really looks good, so you should be able to demand more, especially when just out of school since you need that better pay to pay off college. Also, you do not necessarily need to go to a huge named school to get a decent education. If you start with a local CC for your first year or so to get the gen-ends out of the way then go to a "real" state school you can get a decent education at a reasonable price. All said an done, I probably spent less on college then I make in 8 months. While that may seem like a lot, school loans tend to have lower interest rates and payment is deferred upto six months after you get out.
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Document Not Found -- fix the link. Or better yet, don't link to Yahoo!
Anyhow, yes, it's very expensive to get a good education these days; I was lucky in that I went to an in-state public school, but still ended up with $20k of loans. And for what? Bad job prospects.
I feel for anyone graduating into today's bleak economy, I really do. We private citizens can't just perpetually borrow money like our governments do...
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Nobody forces you to take a student loan. And by having them so easily available, it gives a choice of college when they would not have that choice. Now, that Visa that you got in exchange for a free T-Shirt that you racked up 15k on for beer and clothes... kill those.
This isn't the sig you are looking for... Carry on...
I found that working while in school helped to pay for tuition. Some people believe that they can worry about the payments later, but never pay tomorrow what you will be charged interest for today.
School doesn't need to be paid for all at once. Pay for each semester as you earn the money. Do a work study so that you are learning on the job and making money to pay for your next semester.
Yeah, but you should ask THEM if they say it's not worth it.
I am spending about $40k total on my college ed. Even if I spend $100k, over 30 years, that's $10 every 3 years, or 3600 every year. About $200 a month.
Now, if you make $400 more a month just 'cause of the diploma, you already have $200 extra a month after paying off the loan (monthly). An extra $100k over the 30 years, assuming no raises.
That's IRA, pr0n, wedding, anything else money, and that's after those 30 years. Your investment continues after that too... until 60'ish.
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I had to pay for my first year of college with mainly student loans. I didn't qualify for enough student aid, and didn't recieve much scholarships. I realized I wouldn't be able to handle that debt x4 years, so I followed my brother's advice, a sailor, and joined the Air Force Reserves. I got a nice elistment bonus ($8000), plus the GI Bill (almost $700 a month, for 3 years), and a well paying weekend job ($200 a weekend). I was able to recieve more money in federal aid after enlisting and didn't have to take any more loans to pay for school. I highly suggest this for anyone thinking of paying for school by themselves, i.e. no rich uncles. Even the waiting a year part, since I got 2 stripes for having 30 college creditsand the GI Bill only pays for 3 years anyways.
Th
Try to participate in a co-op/internship if you can. I finished my undergrad degree with only $3k of student loans and 24 months of work experience. It takes an additional year to finish the degree but it is WELL worth it.
Your desire to accept student loans should be proportional to you ability to pay them off.
For example, if you are planning on getting a degree, and similar people with that degree are offered a median starting salary of US$45000, then you might be able to tolerate a significant debt load after you graduate because your debt payments will be a relatively small fraction of your monthly income.
If, however, your likely starting salary is US$20000, that same debt load might not be such a good plan because it is going to be a significant fraction of your monthly income.
As noted by other posters, an education can be a good investment, provided you will ever have the means to pay off your debt, and you make the most of you time in school so that you actually learn something.
Outside of a dog, a book is a man's best friend. Inside a dog, its too dark to read.
Of course, they do this because it benefits them when you bring your enhanced knowledge and skills to the job. I don't know how they'd feel about someone who skips out as soon as the schooling is finished... And you certainly don't want to say in the interview that you're just looking for someone to foot the bill for your education! If going this route, it really ought to be a place where you'd be happy working for some period of time after you finish school. Good karma and all that. ;-)
As others have said, a degree can go a long way towards getting a better job, especially if you're not the best at doing interviews, regardless of your actual skills. I'm now about 7 years out of college and getting close to paying off my loans in full. They were set as 10 year loans with low interest rate (as most student loans are) -- I could have paid them off earlier (arguably should have, to save money in the long run) but I didn't. The pace was slow and easy enough that I never had trouble making payments, even when I was making half of what I do now.
I'd take advantage of my company's tuition program for a Masters or something, but I lack the motivation. Life after school is so much nicer, and school + job at the same time would be hell. ;-)
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My college saving evaporated in my sophomore year when my dad lost his company. If it wasn't for the federal school loan program (and getting lots of part time programming jobs), I would have had to drop out. The interest rates are extremely low (usually near the prime rate) and the cost to taxpayers is almost nil, AFAIK, so it's good for everyone.
I'll be paying $80 a month for the next 30 years, but I wouldn't have my current (great) job if I didn't have a degree, so in the long run, there's no question. Student loans are a wonderful thing.
are student loans (and the degree they get you) worth the debt load?
From the 2002 Statistical Abstract of the US (warning - this is a PDF):
Median Annual Income by Educational Degree (No 664)
Overall - $32,092
High School Graduate - $27,669
Some college, no degree - $33,035
Bachelor's degree - $49,180
Master's degree - $59,376
Professional degree - $81,606
Doctoral degree - $71,732
Obviously, the answer to your question depends on how much debt you're carrying. But education does pay off.
The wealth numbers (which I don't have on me) are even more striking. The vast majority of Americans are in debt. If you have a college degree or above, you can begin to break even (especially if you own your house and are middle-aged or older). Those with Master's degrees have the most wealth, followed by those with Doctoral degrees. (Master's does better than doctorate, I suspect, because of all the MBAs.)
The issues isn't loans; it's the outrageous cost of higher education. Tuition has risen MUCH faster than average incomes, often in the double digit per year range. So what it costs to go to college versus what you can save before toward tuition, and what you'll earn for the first ten years after graduation (typical payoff timeline) is really different now. Also, interest rates are much higher; my first undergrad loan was at 5%. My grad school loans were at 8.5%.
o sts/199 8/07july/straight_talk.html
Interesting link:
http://www.acenet.edu/washington/college_c
If you're a programmer wanting a productive way to ride out the recession in school and you've already got a bachelor's degree, consider going to grad school in CS, mathematics, EE, or any of the 'hard' or even soft sciences. (particularly if you're female )
Why? First of all, it's a great way to develop all those great ideas you weren't "allowed" to when working in a closely managed and directed "role" with the concommittant "responsibilities." Second of all, here's a little secret: in grad school in the US, they pay YOU , not the other way around. Low wages, but beats workin'! Third of all, your entering, say, CS with a psyche background, or math with a bio background, or physics with an engineering background is not only possible at the best schools, but positively encouraged. It's not "off topic" or "irrelevant" background, it's cross-disciplinary .
A few years work experience-- or even more than a few years--particularly in any area of computer support, installation, management, programming, are all viewed very positively by selection committees (I know, I've sat on them). Why is this? Well, for one thing, they can get certain kinds of specialist work done around the department for about a third of the commercial rate. For another, you're going to appreciate the chance to work on your own projects far more actively than a kid fresh out of college who's maybe done one or two closely supervised "independent" projects. You know how to organise and present your work. You can make decisions for yourself. You don't necessarily believe everything the professor says. This is called critical thinking and it's positively discouraged in high school, can get you labelled as a troublemaker at work, is encouraged in some university classes, discouraged in others -- but in graduate school and beyond in academics it is absolutely essential .
Furthermore, hving been in the "real world" you know the real economic advantages of developing and owning your own Intellectual Property-- as distinct from developing IP for someone else. You can develop all sorts of ideas into almost marketable products in graduate school--prototypes--and create the opportunity for yourself to develop it further when you get out. It's much, much easier to get invesment with that Ph.D. after your name, and the prototype you and only you developed in your pocket .
For those of you who quit to go to work for awhile say, half way through your undergraduate degree, you might as well take a few courses at a time while still working, at the local state or community college to get back into it. Cheaper, and it gives you more flexibility in which course of study you choose to get your undergraduate degree in, because the competition at those institutions is just not as stiff. If your heart is in the field you're switching to, believe me, you will ace these courses, and be able to transfer into a "real" school -- with scholarships . The other advantage of taking a few classes is that it will eat into your savings enough that these won't literally count against you when it comes time for the real school to calculate your financial aid package. If you've switched to working-part-time while taking your classes, all the better.
Basically, there are a number of winning strategies for finishing degrees and even changing fields in the process that don't involve taking out huge loans and going for broke. What you need to do is take up the discussion with the financial aid officer and some of the faculty you are interested in working with at your "dream" school, your "safety" school and your "University Near Mom" school where you can take a few courses(that's what we used to call UNM, which is a very good school for a very reasonable price BTW).
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Then your friends wasted their money. Not finishing college or some other educational enhancing facility at all, once you start, is really lame.
That's like getting a subscription to the gym and never going. You give your money and you come out behind.
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Student loans are a good way to finance education costs, especially if you don't have other options. I took out a modest amount while at college but I can honestly say that 1. I would not be where I am today without the degree and 2. I would not have been able to pay for colledge without the loans.
Tha debt loan can eat up a decent amount of your income when you first graduate. But, I think it is more important to look at it as an investment. If you can raise your earning potential from $6/hour (12,000 a year) to $15 (31,200) you are seeing over a 100% increse in your investment (yourself) in the first year alone.
Take that over your entire lifetime and see that they will end up giving you more than they take away.
Student loans are not the real heart of the problem with education debt. Yes, they open opportunities to pay for an education one might otherwise be unable to afford. But the fact so many people need loans to go to those colleges is indicative of the need for better government support in education. In some countries, such as the United Kingdom, as well as in states like California, education is surprisingly inexpensive because it is subsidised for local residents.
In America this would be a controversial use of tax dollars, but I can't imagine it being more controversial than using tax dollars for a war in Iraq, or for a tax refund that will bankrupt our Social Security and Medicare programs before I'm old enough to use them. I don't mean to bash the current president specifically when I say this. Rather, I mean to point out that subsidised education would benefit a lot of people, and be more useful than what we're doing with our government now. It's money well spent if it means that people graduate with little or no debt. I'd probably own a house right now if I wasn't still paying loans.
I took the last exam of my undergraduate career yesterday and will graduate tommorow with $0 in debt.
Here a few of the things I did to make that happen:
1. Went to a state school in my home town and lived at home most of the time. Saved a ton of money there.
2. Freelanced and made some decent money (while learning my trade!!!!!) instead of a burger-fliping job...
3. Co-oped three semesters, and used the money from this to buy for a good chunck of school.
4. Didn't abuse credit cards or live a crazy lifestyle (beer adds up, first from the wallet, then to the belly)
5. And lastly, in the spirit of full disclosure, my dad help me a little the first few years, take advantage of every oppurtunity you get...
Yeah, I know sounds like my college years sucked, but they didn't really. I didn't need dorms to find friends, and I traveled a lot with money i saved over the years. For those of you about to say that most state schools suck. I agree, ALL school suck if you attitude is that you are going there to sit in class and be pumped full of info. I learned so little IN class, but out of class, I learned a ton, special projects, starting a business, independant studies, etc...
There is just about no better feeling to be had with your clothes on that having your car and dipolma paid off.
Now bring on that 30 year mortgage!!!!
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My wife and I have had quite different lives. She came from a family where the mother didn't give a shit about educating her four daughters, but managed to get her son interested in commmunity college (an old-school Mormon mentality, where her daughers were to be perfect wives/baby-makers and nothing else). She dropped out of HS, got knocked up (before she met me), got a GED for herself, and has worked shit jobs ever since. I came from a middle class family that paid for 5.5 years at a decent state college, but I never finished. I'm a sysadmin. Sometimes she gets irritated that I can gross $25/hr sitting at a desk at a job that I love while she (when she decides to work) usually busts her ass for (at best) $10/hr.
The quicker route would be to take that $40k for college (if you have the savings) and simply jump to the final step above (own real property with no consumer debt). But the 4 years of living poor will really make one appreciate the value of money.
You might think that both of us would be huge supporters of the college degree thing. Oddly enough, we're not. We've both filed for Chapter 7 bankruptcy at different points in our lives. She did mostly due to hard times (single mother anyone?). I did because I was a dumb-ass who racked up unsecured debt and then lost his job.
Once we both we jarred out of consumerism, we became much more accutely aware of just how well-off most people could do with modest income. The problem is that most people choose not to. They piss away countless money on eating out, cable/sattelite TV, new cars, homes in the 'burbs, and countless other crap. It's sad, really.
But it doesn't matter what demographic people are in, they'll waste money just the same. There are just as many DirecTV dishes in poorer neighborhoods as there are in your typical middle-class 'burb.
Ever hear a parent advise their kids: "When you graduate, I'll buy you a reliable used car. I want you to find yourself a cheap place to live. Share a house or apartment with 2-3 other kids your age (in a college town), or find a cheap efficiency, whatever it takes. Then find the best-paying job you can find right now. I don't care if it's labor shift work at a factory, waiting tables (decent money for the work), or whatever. If the pay-to-rent ratio is too low, I'll relocate you. You're young, you have your health, and you have no family and/or kids to bog you down. Live like a pauper. Scrimp every spare penny you can for 4 years and put it somewhere where you can't touch it -- bonds, CDs, even a savings or money market account at your local credit union. I'll cover disasters for you (you break a leg or your car gives up the ghost), but you handle the rest. You may not believe it, but in 4 years you'll be far further along than 95% of your classmates who went to college. Many will have loans, and nearly all will have credit card debt. You'll have at good-sized wad of cold hard cash and you can use that to put down (or buy outright) a fixer-upper house or a piece of land to throw a trailer on. From there, if you're smart, you'll be on a very short road to financial freedom, and you won't owe anyone a dime (excepting property taxes)."
Of course you'd never hear that. Any parent who said that would be shunned as an evil parent. Note that I didn't say to kick the kids out the door and hope they have a good life. I think a life of financial freedom (note, not "idependantly wealthy") is better than any typical middle-class life that I know of.
Maybe slightly idealistic, but true freedom is possible for most everyone until they head down the road of consumerism and debt. The sad part is that most people want Shiny New Things (tm) instead.
Man, if I
Disclaimers
1) I'm a Brit. That means with my parents throwing in $400 a month, and working 40 hours a week in vacations, I'll only owe $18000 when I graduate.
2) I graduate in July
3) I'm looking for jobs right now
4) Job prospects in the computing field, for students and graduates, in the UK, are minimal to non-existant
5) Average UK graduate wage is $33k
6) Average UK wage is £36k
7) Above $30k gross earnings, we get taxed at 32%, with an additional 17.5% tax on everything (aside from food) we buy (effectively a 50% tak rate)
8) Above $50k gross earnings, we get taxed at 40%, with an additional 17.5% tax on everything we buy (effectivly a 60% tax rate)
9) The current government wants 50% of kids to go to university
10) Current government propaganda states that the average graduate earns $15,000 a year more then non-graduates ($8,000 paid straight back in taxes). Thats based on figures before the whole "cram everyone into increasingly underfunded universities" policy
11) Almost every computing job outside graduate training schemes requires 1, 2 or more years full time commercial experience. About half of them would like a degree, and a third of them say a degree is essential.
12) We can only take out $5000 a year loans (to cover rent + food), and some banks lend upto $4000 over the 3 year degree.
13) Many UK computer courses suck, teaching you 20 year old crap no companies have ever used (or certainly dont now).
Unless you have, or can afford to take, at least 1 years work experience (which is usually unpaid, as you have no experience *or* qualifications, and demand is very high), chances of finding a job better then flipping burgers is minimal. If you have contacts (real contacts, not people on IRC that claim to run a company in Vermont), you probably wont find one in the computing field. Not in the UK anyway.
Personally, I'm off to greece for the summer - my parents emmigrated from this shithole last year, and things are just getting worse. Thanks Tony!
My degree may help later in life, but it sure as hell doesnt help getting your foot in the door. If you got experience in the boom, then uni's probably worth it. Tighten the belt buckle, stop buying iPods and tivos, maybe sell your DVD collection, and it's probably a good thing. I had a friend that went straight to work at 18, for a year, then chose a local uni while still working there. As luck would have it, that uni is getting better and better (
Most of the people I know who feel "buried" either went to colleged that cost ~$19,000 per year or didn't work at all and ate off their loan amounts. I've gone the "high-stress/low-debt" route--work full-time and only put the tuition on the loan balance.
Danke tres mucho, tovarishch.
Part of the reason scholarships are out there is FOR keeping students heads above water with the student loans.
:) Also, look for local scholarship contests. You have a much greater chance there because LESS people are applying. :) happy trails.
There is over 3 BILLION dollars of scholarship money out there (including those for refrigerator engineers, waitress's, women, everything-- dont tell me you cant get scholarships because you CANT write-- bull), if you try hard enough, work long enough,and prepare well enough, you can have half to all of your college tuition on scholarship money. Some great sites are www.scholarships.com and www.collegeboard.com -- If you begin to prepare in your sophmore year, you'll get there
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Compiler doesn't care if you spell it correctly, as long as you are consistant :)
Glonoinha the MebiByte Slayer
Yes, I have. Did you ever take a history class? The movie underplays the role of the French. See http://www.state.gov/www/about_state/history/time1 .html#french for a more accurate accounting. Here's a representative sentence: "The French navy transported reinforcements to the southern American army under the Marquis de Lafayette, fought off a British fleet, and protected Generals Washington and Rochambeau's march to Virginia."