Huge student loans = bleak financial future. Guaranteed.

Here's another student loan article on CNBC/MSNBC. The article was last updated on December 21, 2010 at 7:39 Pm; its December 22, 1.04 Am (Chicago time), and its got over 700 comments already. The article paints grim financial picture for students who owe huge amounts but with very little prospects for jobs.

The over-arching theme of the article is that: the schools get to keep all the money they collect from students; the students who graduate can't get a job so they cannot repay the loans and are stuck with the debt; and lastly, tax payers are soaked with the all the cash that the government is handing out (currently in the range of $1 trillion). Worst, more students are borrowing more money than ever right now, and there is no end of this cycle in sight.

Interestingly, the comments and discussion by readers micmic what is not new to this forum regarding super high tuition rates, and what students who borrow this huge sums study. Overall, the article is quite an interesting read. Again, here's the link: Student loans leave crushing debt burden - Business - CNBC TV - msnbc.com

 

This trend towards ever higher and higher education costs bugs me to no end. In most cases, it's not even necessary to charge so much. They keep raising the prices because they can. And what do they spend it on? ....sports stadiums, fancy student lounges, high end exercise facilities, grand, Gothic-looking buildings and on and on.


Today's colleges and universities are looking more and more like Club Med than anything else.

 

..or are they raising the costs to attend University in hopes of having less people attend? Is it not possible that too many people want a University degree in hopes of making high $ while trade schools have spots open? Perhaps too many people want white-collar jobs... everyone needs plumbers, electricians, carpendars, etc...

Why charge outrageous prices? ..because they can. And why not - attendance shows that people are willing to throw themselves into debt to get a degree, yet I know a good number of people who work in vocations entirely unrelated to their degree. It needs to go back to the days of 'show me what you can do' (i.e. what do you have for experience in that field) vs 'what paper do you have that shows me that you can study and get that piece of paper'.

Let me put it this way, as this is something that aggrevates me to no end: I go to a jeans store and they want to charge me $120 for a pair of jeans that are made in China. I am sorry, but I refuse to pay top $ for something that cost pennies to produce and offers no jobs to the people supporting our economies (US & .CA). I would be willing to spend that kind of money on a pair of jeans that supports our economies in more than just the sales department.

Why do they charges those prices? Because they can. People pay high prices for cheaply produced jeans.

I was at the Lulu Lemon store the other day (just seeing what the hype is all about) - people were lined up from the cash register to the end of the wall. There was no sale on. A sweater? $134CDN. Why do they charge those outrageous prices for gear that is produced in China? Because they can.

Until there is a change in our mentality, schools and retailers will continue to charge outrageous prices, because they can.

 

In previous posts, it has been suggested that one of the only effective ways to avoid payback of a student loan is through death. This is technically not true, as the MSNBC story points out. Under some circumstances, lenders can continue to demand repayment even after death:

The lesson here may be that if you must take out student loans, do not ask your parents or other relatives to cosign. It probably isn't necessary anyway. Current laws are tilted heavily to the favor of lenders (as one quote in the MSBC story says: ""These powers would make a mobster envious"), and so they are fully prepared to offer 6-figure loans to undergraduates, even without a co-signature.

 

That is in fact the case. In 2008, it was estimated that some 2 to 4 % of delinquent student loan debt was held by students who had left the country. But this figure may be an underestimate, because (1) it's a few years out of date, and (2) students who do leave the country for this reason may not inform their creditors about it. See this CNN story:

"Student loan fugitives: When faced with unaffordable monthly payments and relentless creditors, some see leaving the country as their only way out."

Note that this strategy -- like death -- may not work if your parents or other relatives co-signed for your loans. In this case, your parents will simply be on the hook instead. And it's probably harder for them to leave the country, because they probably have a house, cars, jobs, etc

 

Lululemon has its main factory in Vancouver, British Columbia, Canada. In 2004 production expanded outside Canada and currently takes place in factories in the United States, China, Israel, Taiwan, India, Thailand, Peru, and Indonesia.

 

In the 1960s, it was common for young men to emigrate from the US, to avoid the draft and military service in Vietnam.

It's conceivable that there could be a similar exodus in the 2010s (this time including women), as the negative effects of excessive student lending are increasingly felt.

 

Thank you for pointing that out, I should have done a bit of research before posting.

 

This is why I have been suggesting an economical online degree at somewhere like Excelsior to my daughter and to others here on DI for young people. Why spend all of that money whether via student loans or by spending a college fund? Either way it seems ridiculous to me. Sure the on-campus college life is a great experience for a young person, but at the price of over $100K is it really THAT important? I don't think so.

 

Leaving the country is indeed an effective way out. But leaving the country seems to be an option for folks who have lived elsewhere before. A lot of Americans, in my opinion, that have only lived in the U.S are afraid to venture into the "real world," where life is "not made easy" as it is in the U.S. They are afraid to live where you have to pay 100% upfront at a hospital before a doctor would even think about seeing you, or a place where there are no student loans to live off of. I know of several folks who took out maximum loans; completed their PhD from prestigious B & M schools, and then left the country. They are doing very good right now, in addition to enjoying the prestige of being called "Dr." Very unethical, but it is happening and it will continue.

 

Here some of the action. For-Profit Universities Under Fire in Student Debt Crisis

 

I completely agree. I totally skipped the campus experience and don't think I'm any worse for it.

There are many ways to expand a young person's horizon other than partying at college for several years. A young person could join the Peace Corps for awhile (and take DL courses at the same time). There's also many different charities to volunteer for. Even the Coast Guard might make more sense than going into debt for a degree. Those who join the Coast Guard will most likely be stationed in a US coastal city and be working on a small cutter dealing with police issues. And unless I'm mistaken, I think Coast Guard people get military tuition benefits and the GI Bill too. Not a bad deal. If I had to do it all over again, I think I'd seriously look into the Coast Guard.

 

Since they now live in other countries (China, Malaysia, Nigeria, Ghana, India, South Africa), it would be hard for me to provide detailed contact information since I wasn't that close to all of them (I knew two of these folks well. The rest were through friends and my family members). Besides the security ramifications of divulging personal contact information (which I do not have, and as you know, they wouldn't appreciate that), tracking them in other countries would be almost impossible because they do not maintain internet accounts like facebook etc, that I'm aware of. In short, I am unable to do that (point you to them) and I hope you understand.