Why did 17 million students go to college?

[cruisin]

My niece just graduated from college with a $130,000 student loan (for a bachelor's) degree - and she is without a job! I hear so many people are now defaulting on their student loans because they don't have jobs to pay them back, and its gonna be tougher for future students to get loans at all.

Please look at the list I posted up thread. At $40K - $50K per year (without scholarship money) it would be very easy to accrue that level of debt. And before someone says this person could have gone to a state school, 1. She might have majored in something where only a few schools offered it. 2. She might live in a state where there are only 1 or 2 state schools.

[iloveemoticons]

My son did go to a top undergrad school. And he is in a very good law school. But, it is not as "top tier" as his undergraduate school. For several reasons. Foremost is that he wants to practice in NJ or NY, so it was necessary to go to a school where he would learn local laws. The school he is in is a smaller school, but many of the NJ judges went there and it has an excellent reputation in NJ/NY/CT. It really doesn't matter what it's position is nationally, since the system he wants to work within is here. Obviously a school like Yale, Harvard, or Cornell would be nice, but not necessary ($$$$) for his purposes. The second reason we chose the school he is in, was that they gave him a huge amount of money !

Congrats to your son! I think it's rare for students to be offered that much money (60% of tuition), usually I've heard around 25% or 50%, so that's awesome.

[FigureSpins]

I will admit to being a pro-college bigot, but I'm not alone. At our college, even the receptionist has to have a bachelor's degree. I think that's a little over the top, personally. To me, the job requires personality and intelligence more than a degree in Fine Arts. We do have a growth plan that allows the receptionist to move onto a recruiting position, so it's sort of like "paying your dues." That's why the degree was required: having someone without a college degree become a college admissions counselor doesn't quite sit right.

http://www.campusgrotto.com/colleges...otal-cost.html

Rather depressing, isn't it? Both of my kids went to a school on this list .

I work for one of the colleges on that list. The pay isn't huge, but the benefits are good, including vacation/holiday time. One of my benefits is a four-year tuition scholarship for my children. My DD has to cover her rent and food. We give her a small allowance to make sure she has some cash, but she works at a restaurant. Oh, and she's studying for a Bachelors in Food Service Management. She's employable because her college program includes several food safety and handling certifications that have been earned as part of her program of study.

The economy and unemployment definitely impacts the original article's statistics. I'd like to see an adjusted or comparison to other times - I remember when restaurants had openings that could fill the entire newspaper. Thanks to the flexible schedules that the food industry can offer, many families cobble together child care arrangements that cost less than a corporate job requiring a formal day care enrollment. A certain number of hours can also provide medical benefits for less than an independent policy; important after college if one hasn't found a position in the desired field.

Many of the food chains offer tuition assistance to entice better employees to work for them. They provide some mentoring/support for employees who are going to college, which is great for first-time college students and many stay with the company after they graduate, hoping to use their degrees to move up. The chains also have formal management development and training programs along with a structured work environment and promotion opportunities. For that matter, even a gas station attendant can become a Regional VP, given time and experience. There's a pre-determined ladder that they can see and figure out how to climb, rather than dealing with the whims of small businessmen/women who could let you go if their nephew needs the job.

I also know that people work "off the books" at other jobs, which they wouldn't want to reveal out of fear of the IRS. Underemployment is a big issue; I know a woman who works as a waitress part-time, but she also does bookkeeping. She puts "waitress" on her tax forms and declares her tips, but not her off-the-books bookkeeping job earnings. During tax season, she takes a vacation from the restaurant and makes a lot of money doing taxes.

In the US, the food service business is a major industry and we're obsessed with the concept. Look at the number of foodie shows on television - many people dream of being a successful restauranteur or chef. Working in a restaurant is a great way to get on-the-job experience without the risk of going it alone. Prospective franchisees are encouraged to work at an existing business they're thinking of buying into, to be sure they understand the workload and responsibilities other than money. Having a business school knowledge is an asset in food service to deal with the financing, human resources, organizational planning, accounting and legal needs of the business. You can go broke paying others for their knowledge, or you can gain that knowledge yourself.

One last note: the US really encourages students to go to college right after high school. Students are often covered by their parents' insurance plans. Most merit scholarship programs are based on high school performance, not work experience. Athletes are recruited, sometimes too aggressively, to become part of one college or another as they wait for their big break in professional sports. Having a college degree can open doors in a better economy.

A coworker of mine went to college on the GI Bill after serving in the armed forces. He told me that he didn't regret the experience because he grew up during that time and was better prepared to focus on his education when he was discharged. His concern was that people his age who went to college right after high school had six years more experience, were earning more money and had already been promoted one or more times. In a way, he felt like he was a late bloomer. IMO, he was much nicer to work with than those age-peers. He understood team building far more and was trustworthy.

[Auntie]

http://www.campusgrotto.com/colleges...otal-cost.html

Rather depressing, isn't it? Both of my kids went to a school on this list . We paid for it, now we're done!

My high school senior gets unsolicited mail from about 1/3 of the colleges on this list. I find the whole thing a bit . Her SAT scores are pretty impressive but she's not a genius. I get the distinct feeling that she is being targeted because we live in a well-off zip code. One of my other friends suggested that the colleges are just fishing for applications so their admissions numbers will look better. The whole thing feels a bit swarmy to me.

Cruisin - I am totally jealous that you are done with the whole college thing. I have eight more years!

[cruisin]

Congrats to your son! I think it's rare for students to be offered that much money (60% of tuition), usually I've heard around 25% or 50%, so that's awesome.

Thanks! We were pretty happy about it. He's a very smart kid and works really hard.

My high school senior gets unsolicited mail from about 1/3 of the colleges on this list. I find the whole thing a bit . Her SAT scores are pretty impressive but she's not a genius. I get the distinct feeling that she is being targeted because we live in a well-off zip code. One of my other friends suggested that the colleges are just fishing for applications so their admissions numbers will look better. The whole thing feels a bit swarmy to me.

Cruisin - I am totally jealous that you are done with the whole college thing. I have eight more years!

Both of my kids got unsolicited mail from more schools than we can count. It was generated by SAT courses and testing. They get put on lists.

We had them in school with 3 years of overlap! It was a killer, but we got through it. We had invested wisely when they were born and had the benefit of long term investing and high interest rates at the time. We were lucky. It still was a struggle, but not as bad as it could have been. Good luck! Hope you like pizza .

[FigureSpins]

I work in college admissions and you're right: they purchased your daughter's information because it met certain criteria that they were looking for; location is certainly one of those criterium.

To prevent unsolicited mail from colleges, make sure to "opt out" of all communications when the student registers for any website or standardized tests. I also recommend using a single, special email address for all the college services so that your regular inbox isn't innundated with mail. Being consistent with name, address, email, etc. on every service also helps match up all the electronic data that comes from a variety of sources. (Application, test scores, electronic transcripts, financial aid, recommendations, etc.)

If a student doesn't specifically opt-out when registering with the ETS/College Board/ACT/etc., the testing service will include the student in their "available for recruiting" files. Colleges and universities are able to purchase lists of names from that list and they can specify criteria like sports, arts, music, test scores, major, gender, geographic location as well as demographic information. It's a race between the colleges to flood the students before the other schools' mail/email arrives and they get overwhelmed.

Theoretically, the test services collect that information to do statistical reporting on the testing outcomes and effectiveness. A nice side bonus is that they collect a fee for giving colleges matched lists. If you do get emails that you don't want, just unsubscribe - the link is required to be on the email. For mail, a simple email to the admissions office can put you on the "Do not contact" list. Just be aware that, should the student apply later on, that has to be reversed or they won't be sent any mail about their application.

[GarrAarghHrumph]

Please look at the list I posted up thread. At $40K - $50K per year (without scholarship money) it would be very easy to accrue that level of debt. And before someone says this person could have gone to a state school, 1. She might have majored in something where only a few schools offered it. 2. She might live in a state where there are only 1 or 2 state schools.

Even if that were so, $130k in debt is excessive. It'll constrain her future choices. In addition, she's at very high risk of defaulting on her loans. Doing so will, literally, destroy her future plans. She's cooked, unless her parents have the funds to bail her out.

I know it's easy to accrue this level of debt re: college. But is it smart to do so? Is it the best choice re: your future? How will doing so impact your future choices re: choice of job, choice of career, and in the case of your parents, their ability to retire, etc?

Even if her major was only offered at a few places. Even if there were only 1-2 state schools in her state. Was this worth it? I'd argue that she's made an extremely dangerous choice - as has her family, who cosigned for what are obviously private loans (at this level of debt, there would be private loans involved), which come with some rather harsh terms.

In my estimations, in order for her to be able to pay off this level of debt under normal student loan terms, she'd need to be in a job, right out of school, that pays her at least 120,000 per year, and she'd need to devote 15% of her income to paying down this debt (which is more than what's normally recommended - this repayment plan will hurt), in order to keep up with the repayments. If she can extend the terms of the loans to 30 years (not sure if that's possible with the private loans), she'd need to make about $70k right out of school to be able to make her loan payments. At least that's maybe do-able, depending on her field. It's do-able if she's a petroleum engineer. Not so much if she's a library assistant.

When the average salary for a college grad is about $45k, how likely is it that she'd get a job that would pay her enough that she could make her loan payments? Maybe her parents can handle her loan payments while she's getting herself on her feet. Can her parents handle an extra $800+ per month?

I'm guesstimating that if she can extend the terms of her loans to 30 years, the lowest monthly payment she can get (which will basically mostly cover the interest on the loans, plus a tiny bit toward principal) would be about $800/month. It can't go much lower, because it would extend the repayment beyond 30 years, and that's not something the lending agencies will agree to.

[cruisin]

^^ I agree and appreciate your concerns. I was just showing how a debt like that can easily happen. Especially if the kid gets into an Ivy or just below Ivy school. They factor the prestige into the debt/earning ratio. For some students that level of debt is foolish. What I wonder is why (maybe she did) she didn't do some sort of work/study program at the school for reduced tuition or R&B.

[skaternum]

Especially if the kid gets into an Ivy or just below Ivy school. They factor the prestige into the debt/earning ratio. For some students that level of debt is foolish. What I wonder is why (maybe she did) she didn't do some sort of work/study program at the school for reduced tuition or R&B.

I'm sure I'll get a verbal smack for somebody for saying this, but I think it's the whole entitlement thing. Kids feel entitled to go to the best school they can get in. Parents overindulge, to the point of destroying their own retirements. Pretty much the same entitlement mentality that got us into the mortgage and credit card crisis. Just because someone will loan you a million dollars doesn't mean you should borrow it. Nobody wants to make the hard choices. Nobody wants to think seriously and realistically about the future.

[modern_muslimah]

^^ I agree and appreciate your concerns. I was just showing how a debt like that can easily happen. Especially if the kid gets into an Ivy or just below Ivy school. They factor the prestige into the debt/earning ratio. For some students that level of debt is foolish. What I wonder is why (maybe she did) she didn't do some sort of work/study program at the school for reduced tuition or R&B.

I did work study while in school and it doesn't reduce the cost of tuition. It's included in financial aid but it doesn't reduce the amount you have to pay like grants or scholarships. Theoretically, you could use money from work study to pay tuition but you would need a work study position that has enough hours. The most hours any of my work study positions had was 20hrs/wk and I didn't use it for tuition. I don't know of any students who did. I used it for food (I commuted), bills, etc.

[cruisin]

I'm sure I'll get a verbal smack for somebody for saying this, but I think it's the whole entitlement thing. Kids feel entitled to go to the best school they can get in. Parents overindulge, to the point of destroying their own retirements. Pretty much the same entitlement mentality that got us into the mortgage and credit card crisis. Just because someone will loan you a million dollars doesn't mean you should borrow it. Nobody wants to make the hard choices. Nobody wants to think seriously and realistically about the future.

I hear you. When my son went to undergrad school, we paid, he went to a more expensive school. We all agreed it was the best choice for him and we were able to manage it. But, for Law school, he had to get a loan (we told both kids they had to pay their own way after undergrad). He chose to go to a school that gave him a significant amount of money and chose to live at home to keep his debt down. I guess, he is learning that he is not so entitiled . My daughter is now thinking of getting her master's and is looking into schools and loans. But, she is currently working and saving.

[cruisin]

I did work study while in school and it doesn't reduce the cost of tuition. It's included in financial aid but it doesn't reduce the amount you have to pay like grants or scholarships. Theoretically, you could use money from work study to pay tuition but you would need a work study position that has enough hours. The most hours any of my work study positions had was 20hrs/wk and I didn't use it for tuition. I don't know of any students who did. I used it for food (I commuted), bills, etc.

I thought I remembered students getting a break in some costs doing work/study, but I may have misunderstood how it worked.

I was fortunate that my family could pay for my education (of course back then it was $6,000 a year ). My husband put himself through school, working and taking loans. That was tough for him, so my husband and I agreed that we would pay for our children's undergrad education. We were fortunate that when our kids were born, investing in long term secure products was at prime rate. Our families were also very good at giving savings bonds and money toward education as gifts, when they were little. We were able to make up the difference, without too much hardship. I will say, however, it is much easier to breathe now that we are done with tuition payments .

[modern_muslimah]

I'm sure I'll get a verbal smack for somebody for saying this, but I think it's the whole entitlement thing. Kids feel entitled to go to the best school they can get in. Parents overindulge, to the point of destroying their own retirements. Pretty much the same entitlement mentality that got us into the mortgage and credit card crisis. Just because someone will loan you a million dollars doesn't mean you should borrow it. Nobody wants to make the hard choices. Nobody wants to think seriously and realistically about the future.

For some students, yes, it is entitlement. However, I think for a lot of students, you really think that going to this Ivy or this baby Ivy will make a difference in your life circumstances. It doesn't help that counselors and administrators push students to go to the top schools. I remember as a high school senior, I had friends who got half or full rides to state schools (Temple, UPitt, etc.) who went to Ivies because they thought that going to an Ivy would give them more connections for grad school and life. They also thought the quality of education would be different at the elite school. Additionally, we had a principal who subtly pushed kids to attend the Ivies and then would gush about how many kids went to an Ivy. Plus, a lot of us thought "If we're lucky enough to get into those top schools [let's face it, the overwhelming majority of applicants to these school get rejected] then we should be grateful and attend."

I'm not saying it's wise thinking but when you're 17, 18 your reasoning isn't as well developed as it is at 22.

However, the education bubble that Prancer referred too isn't just the result of students attending top tier schools. There are tier 2 private colleges and universities as well as for profit school to contributing to this mess as well.

[cruisin]

Plus, a lot of us thought "If we're lucky enough to get into those top schools [let's face it, the overwhelming majority of applicants to these school get rejected] then we should be grateful and attend."

Add to that the pressure from the Ivys that accept you. They do not take "no thank you" well. They assume that if they accept you, YOU WILL GO. My son turned down one Ivy, they badgered him for 2 years, telling him he could still go there next semester. He was happy where he was. Not that he saved us any money there . But, I can see where a student could feel pretty important with an Ivy courting them that way.

[GarrAarghHrumph]

I thought I remembered students getting a break in some costs doing work/study, but I may have misunderstood how it worked.

Even back in my college days, work/study was simply an on-campus job. The uni would reserve certain jobs for students who got work/study. The advantage re: being work/study was that you were given priority for those jobs. But after my first year at college, I refused work study as part of my financial aid package, as I realized that the off-campus jobs in the area paid more, and the jobs I wanted on campus weren't part of the work/study program. But if you're at a school where there aren't a ton of decent off-campus jobs, work/study can be very helpful. But all it is, is a job. No additional benefits beyond holding a job and getting paid.

One program that sounds a bit like what you mentioned, and which can work out well for a student financially, is trying to become an RA - resident assistant. This is the student who lives on the dorm floor and organizes events for the residents, helps maintain the peace, etc. Many schools will give you free or reduced-cost room in exchange for being an RA. My school did more - free single room, plus a very small salary. But free room was a major bonus. Very helpful, financially.

[Prancer]

I'm not saying it's wise thinking but when you're 17, 18 your reasoning isn't as well developed as it is at 22.

But you can't just blame the kids. Their parents have to be behind them on this. Most kids who get into Ivies have been aimed at the Ivies their entire lives; that's the POINT of going to college.

Colleges aren't seeing quite as many parents who are willing to put themselves into debt to pay for their children's tuition, but there are still a lot of them around, and there are still plenty who just can't see the opportunity to attend a top school pass by, no matter what. As a society, we don't have a particularly good record for putting off what we can't afford today if there's a chance we can pay it off tomorrow.

You really can't blame them; the message that college is the key to success comes from everywhere. And if college is the key, then a really great college must be the golden key. Perfectly reasonable, as long as people keep in mind that going for golden keys they can't afford is what put so many people into debt.

[Anita18]

My high school senior gets unsolicited mail from about 1/3 of the colleges on this list. I find the whole thing a bit . Her SAT scores are pretty impressive but she's not a genius. I get the distinct feeling that she is being targeted because we live in a well-off zip code. One of my other friends suggested that the colleges are just fishing for applications so their admissions numbers will look better. The whole thing feels a bit swarmy to me.

Cruisin - I am totally jealous that you are done with the whole college thing. I have eight more years!

Everyone I knew in HS got an unsolicited application from Harvard. I joked that this must be how they get their super-low acceptance rates.

Even if that were so, $130k in debt is excessive. It'll constrain her future choices. In addition, she's at very high risk of defaulting on her loans. Doing so will, literally, destroy her future plans. She's cooked, unless her parents have the funds to bail her out.

I know it's easy to accrue this level of debt re: college. But is it smart to do so? Is it the best choice re: your future? How will doing so impact your future choices re: choice of job, choice of career, and in the case of your parents, their ability to retire, etc?

Even if her major was only offered at a few places. Even if there were only 1-2 state schools in her state. Was this worth it? I'd argue that she's made an extremely dangerous choice - as has her family, who cosigned for what are obviously private loans (at this level of debt, there would be private loans involved), which come with some rather harsh terms.

In my estimations, in order for her to be able to pay off this level of debt under normal student loan terms, she'd need to be in a job, right out of school, that pays her at least 120,000 per year, and she'd need to devote 15% of her income to paying down this debt (which is more than what's normally recommended - this repayment plan will hurt), in order to keep up with the repayments. If she can extend the terms of the loans to 30 years (not sure if that's possible with the private loans), she'd need to make about $70k right out of school to be able to make her loan payments. At least that's maybe do-able, depending on her field. It's do-able if she's a petroleum engineer. Not so much if she's a library assistant.

When the average salary for a college grad is about $45k, how likely is it that she'd get a job that would pay her enough that she could make her loan payments? Maybe her parents can handle her loan payments while she's getting herself on her feet. Can her parents handle an extra $800+ per month?

I'm guesstimating that if she can extend the terms of her loans to 30 years, the lowest monthly payment she can get (which will basically mostly cover the interest on the loans, plus a tiny bit toward principal) would be about $800/month. It can't go much lower, because it would extend the repayment beyond 30 years, and that's not something the lending agencies will agree to.

I completely agree. If anything, law/medical school is where people I know accrue the most debt (anything close to six figures), but at least when you have the degree, you have at least SOME hope of getting a job that will repay it.

There's really no such guarantee of repayment for a six-figure debt for a bachelor's degree, even when you're an engineer. It just doesn't happen. Unless you go to Wall Street, but then again it helps if you've got a finance-related degree. (My cousin just got a sweet Wall Street gig that pays super-good money with a bachelor's in financial engineering. Something tells me not many college grads are as lucky/devious.)

^^ I agree and appreciate your concerns. I was just showing how a debt like that can easily happen. Especially if the kid gets into an Ivy or just below Ivy school. They factor the prestige into the debt/earning ratio. For some students that level of debt is foolish. What I wonder is why (maybe she did) she didn't do some sort of work/study program at the school for reduced tuition or R&B.

The thing is that many Ivies will give you money! If your parents earn less than $200K (which honestly, is most parents), then tuition is FREE at Stanford. I think all of the Ivies, and many just-below-Ivy schools, offer need-based aid. If you're accepted and you need the money, you'll get it. Some of it will be loans, but no way would they let you graduate six figures in the hole. That's just irresponsible.

I had a college classmate whose parents simply refused to pay for college after she started, and she just told the financial aid office and they were like, "Okay" and adjusted her aid accordingly.

I think many not-so-prestigious-but-still-private colleges are expensive with little aid and families assume that ALL private colleges are this way when they're totally not. You have to compare all the packages you get when you get them from each individual school.


ETA: Just asked my sister, who works at a non-profit about student debt, and apparently Stanford's feeling the economic pain and not doing free tuition exactly anymore. (Under $60K incomes qualify for something close to it.) Oh wells, it was an awesome pledge while it lasted.

[Prancer]

ETA: Just asked my sister, who works at a non-profit about student debt, and apparently Stanford's feeling the economic pain and not doing free tuition exactly anymore. (Under $60K incomes qualify for something close to it.) Oh wells, it was an awesome pledge while it lasted.

Stanford isn't the only one (although I think the cutoff was only $100K, not $200, and even then didn't apply to everyone ). Endowments are down across the board, some by quite a bit; lots of colleges are cutting nonfederal aid to students.

The economy and unemployment definitely impacts the original article's statistics. I'd like to see an adjusted or comparison to other times.

While not exactly what you are asking for, this study is often cited as evidence that college graduates who get jobs in depressed economies face decades of lower wages.

http://mba.yale.edu/faculty/pdf/kahn_longtermlabor.pdf

[skaternum]

However, the education bubble that Prancer referred too isn't just the result of students attending top tier schools. There are tier 2 private colleges and universities as well as for profit school to contributing to this mess as well.

Agreed. I didn't mean it was the only factor, but I think the entitlement problem is a major factor.

[modern_muslimah]

But you can't just blame the kids. Their parents have to be behind them on this. Most kids who get into Ivies have been aimed at the Ivies their entire lives; that's the POINT of going to college.

Colleges aren't seeing quite as many parents who are willing to put themselves into debt to pay for their children's tuition, but there are still a lot of them around, and there are still plenty who just can't see the opportunity to attend a top school pass by, no matter what. As a society, we don't have a particularly good record for putting off what we can't afford today if there's a chance we can pay it off tomorrow.

You really can't blame them; the message that college is the key to success comes from everywhere. And if college is the key, then a really great college must be the golden key. Perfectly reasonable, as long as people keep in mind that going for golden keys they can't afford is what put so many people into debt.

Oh, ITA! Just about all of the girls I was referring to in my posts were definitely pushed by family, guidance counselors, and pushy principal to go. We all got good grades all of lives and most went to my alma mater with the express purpose to getting into a competitive college. Even as a child, I was taught college was the way to be successful.

Even when you get that tuition bill after all federal aid and state aid sources have been used up, you think "well, the degree is an investment and it's worth it."

So you're right. When you get the message that college is the key, you end doing an unwise thing like going to $$$$ private U with the brand name and taking on private loans with higher interest rates in the hope that you'll get an edge in life. No one thinks "gee, maybe I won't be able to get a job that help me pay the bills and loans once I get out of college."

Still, I know I blame myself partially and so do some of my friends. I should have done more research.