Speaking of Student Debt

[chinaco]

Someone posted an introduction question about their projected debt load.

Here is an article about people that acquired debt and due to the recession are having problems finding jobs

My degree isn't worth the debt! - Erik Solecki (1) - CNNMoney


It seems that people (parents or students) incur huge amounts of debt getting a college education. Some parents go into deep debt paying for a full ride, apartment, car/insurance/maint/gas, food, and college entertainment for their children.


Some of those debt loads seem enormous for a 4 year degree.

 

[kombat]

I think a big part of the problem is that kids are lied to in their youth. They're told they can "be anything they want to be," and they must "follow their dreams," no matter what. So you get kids following that advice, and spending $12,000/year studying art history (their "passion"), only to find that nobody is impressed.

I think it would be far better to advise our kids to find something they're good at, there's a market for, and that they can find fulfilling, and pursue that. Keep their "passions" as their hobbies.

 

[FUEGO]

I think a big part of the problem is that kids are lied to in their youth. They're told they can "be anything they want to be," and they must "follow their dreams," no matter what. So you get kids following that advice, and spending $52,000/year studying art history (their "passion"), only to find that nobody is impressed.

I think it would be far better to advise our kids to find something they're good at, there's a market for, and that they can find fulfilling, and pursue that. Keep their "passions" as their hobbies.

There, I fixed your typo!

Just looking at the first guy in the article - Erik Slolecki. It seems like he was deluded going in to the whole college experience. Incurring almost $50,000 a year in debt to get a degree from "one of the top engineering schools in the nation" and expecting to make $70,000 to $80,000 a year straight out of school? First I question whether Kettering University is one of the top engineering schools in the nation. Next I wonder why this guy didn't opt for a cheaper in state option that would not have left him so debt laden. And finally, he says he is making $15000 less than he expected, so presumably in the neighborhood of $55000 a year at least. Is that really such a bad salary versus someone without a college degree? I know folks 7-10 years out of engineering school and they would be only slightly displeased with that level of income.

 

[Texas Proud]

I think a big part of the problem is that kids are lied to in their youth. They're told they can "be anything they want to be," and they must "follow their dreams," no matter what. So you get kids following that advice, and spending $12,000/year studying art history (their "passion"), only to find that nobody is impressed.

I think it would be far better to advise our kids to find something they're good at, there's a market for, and that they can find fulfilling, and pursue that. Keep their "passions" as their hobbies.

It probably is not that bad to spend $12K to study art history..... it is spending $50K... there are jobs in museums etc. that need to be filled... there are also social workers, etc. etc... but the debts of these people are a multiple of the $12K...

heck, some are in the $200K range... I can say with 100% certainty that my kids are not going to a school that costs $200K to get a degree even with all the external costs included...

 

[pimpmyretirement]

That article could also be titled "People who are bad at math"

It is unfortunate they drive education prices up for everyone.

If the experience teaches them to "trust but verify" with financial matters, even the biggest debt loads mentioned in the article could pay for themselves.

 

[Sarah in SC]

I sent the one with the pic of the guy and his kid, bemoaning his public health master's degree debt, to my cousin who is contemplating the same. I told her it wasn't worth going into debt at her age for a dubious payoff.

 

[chinaco]

I gotta believe some of that money... perhaps much of it was spent on social activities (gotta have fun), living expenses, etc.

It seems like student do not want to be deprived when they are a poor student, so they wind up with a big debt.


Whatever happened to living at home (with mom and dad) and commuting to the local state university?

 

[eytonxav]

There, I fixed your typo!

...$55000 a year at least. Is that really such a bad salary versus someone without a college degree? I know folks 7-10 years out of engineering school and they would be only slightly displeased with that level of income.

What country are those folks in?

 

[FUEGO]

What country are those folks in?

Unfortunately the US of A. Must be a regional thing (southeast). I'm talking mostly folks with a civil engineering background, although there are other types (industrial, computer/electrical, etc). Not saying $55,000 is a great salary for these folks, just some are stuck with what they have, pay cuts, stagnant wages, etc. Some work for the government.

I know this seems like a strange concept for some on the board who work in high tech high demand fields and have done really well, but there really are a lot of people out there making less than $75,000 a year even ten years out of engineering school. And of those that I know, that is the rule, not the exception.

 

[eytonxav]

Unfortunately the US of A. Must be a regional thing (southeast). I'm talking mostly folks with a civil engineering background, although there are other types (industrial, computer/electrical, etc). Not saying $55,000 is a great salary for these folks, just some are stuck with what they have, pay cuts, stagnant wages, etc. Some work for the government.

I know this seems like a strange concept for some on the board who work in high tech high demand fields and have done really well, but there really are a lot of people out there making less than $75,000 a year even ten years out of engineering school. And of those that I know, that is the rule, not the exception.

Wow, that's a real surprise to me, but probably better than collecting unemployment. Most of the folks I deal with are Chem E or mechanical and are much better paid than than $55K.

 

[Sarah in SC]

Unfortunately the US of A. Must be a regional thing (southeast). I'm talking mostly folks with a civil engineering background, although there are other types (industrial, computer/electrical, etc). Not saying $55,000 is a great salary for these folks, just some are stuck with what they have, pay cuts, stagnant wages, etc. Some work for the government.

I know this seems like a strange concept for some on the board who work in high tech high demand fields and have done really well, but there really are a lot of people out there making less than $75,000 a year even ten years out of engineering school. And of those that I know, that is the rule, not the exception.

Fuego is right about this. At least in this part of the world.

 

[Ronnieboy]

Whatever happened to living at home (with mom and dad) and commuting to the local state university?

And having a PT job. In my early school year(s), I had FT job, married and two kids!!

 

[Mulligan]

I gotta believe some of that money... perhaps much of it was spent on social activities (gotta have fun), living expenses, etc.

It seems like student do not want to be deprived when they are a poor student, so they wind up with a big debt.

Whatever happened to living at home (with mom and dad) and commuting to the local state university?

I learned to be frugal in college to minimize my debt thankfully. I learned real quickly $5 could buy a lot of ramen noodles and PBR! I think the economy has started to change college habits to some degree in my area. Many students are now going the community college route for 2 years, then moving on to the university. That strategy significantly reduces the total cost of a college degree.

 

[FUEGO]

Wow, that's a real surprise to me, but probably better than collecting unemployment. Most of the folks I deal with are Chem E or mechanical and are much better paid than than $55K.

The difference in wages is probably due to the different type of engineering. A lot of my contacts were in a field of engineering closely linked to real estate development in one way or another, and that didn't do so well the last couple years. Probably a hangover from the Great Recession, I would say in general, wages have been flat to slightly negative in real terms among most the engineers I know since about 2008. Of course this is in an area where dual income earners bringing in a household income of $100k a year are still able to live fairly comfortably, something I understand would be unheard of in places like NYC or SF or LA.

Since you mentioned Chem E I wonder if you are in the hydrocarbon biz of some sort. Salaries in that field are mind blowing (from my perspective) and the salaries of the professors at my alma mater are maybe a good indicator of market value - the ChemE's get roughly 2x the salary of the civil E professors.

Either way, I don't think I would be pushing my kids into pursuing an engineering career if they have to go into $185,000 debt to earn maybe 50% more than a semi-skilled or unskilled laborer (or a community college grad). However the local State U is nowhere near that expensive, and I imagine most kids can finish an engineering degree with $20,000 or less in debt, maybe zero if they live at home or get a summer job. Of course they can't go to Cancun all the time, drink beer 8 nights a week, and have an expensive sports car and keep their debt low.

 

[Bimmerbill]

Most of my buddies are EEs or software devs and make pretty good money as well. But we are close to Boston, so the pay levels are high- as is the cost of living.

I really do think the guaranteed student loan deal is pushing the cost of education up. Not sure what to do about that tho.

 

[plex]

This caught my interest since it mentioned Kettering. I definitely agree that many degrees are not anywhere near worth what you have to spend, but I don't think the Kettering example was a good one. This isn't so strange, since most engineering schools are still usually not ridiculous in cost compared to the pay starting out, unlike most other non-math related degrees.

The reason I don't think this was a good example was #1, I am pretty sure this guy took the 6-year route to hit almost $200k. You have to graduate in 6-years or you get kicked out. I had roommates on the 6-year route once at Kettering (for one term), except they at least were going for reasonable degrees like EE/ME instead of industrial. I do not know what he was thinking going industrial, he could see the manufacturing industry falling apart (it is 1/3 of its former size over 10 years), and you can switch majors halfway through at no cost. I can only guess he could not handle one of the harder engineering degrees. Anyways, to be on the 6-year route, you have to fail about 1/3 of your classes, which was the case with these roommates. That is basically the only way his degree would cost that much, he could not have been spending more than $26k/year on tuition, though it would be $30k/year now. Cost of living in Flint is ridiculously cheap, rent is $6k/year, and all utilities are included. That adds up to $180k/year on the 6 year plan, probably with a 2.1 GPA and almost no work experience (maybe he worked 2 terms), sounds like a winner.

Personally, I came out of Kettering with no debt. Tuition was 30% less, but it was 5-9 years ago, the increase is still a bit high though. Kettering had an awesome co-op program, much stronger than any school I know of, and easily the strongest in the state. I always had a good co-op, so I made about $65k, which off-set a lot of the $85k tuition. I also had a small scholarship, so that paid for most of the rest. Not that hard, I just did the degree in a normal amount of time, got a non-worthless degree, and used the school's co-ops.

My law school on the other hand...well, we will see how the job interviews go.

 

[Katsmeow]

Many students are now going the community college route for 2 years, then moving on to the university. That strategy significantly reduces the total cost of a college degree.

I am absolutely a fan of this except in fairly rare instances. My daughter (14) made a comment the other day of not wanting to go to community college and wanting to go 4 year college. I sat her down and explained the difference in cost. I explained that you can even live in a dorm in community college if you want that experience (lots of community colleges have dorms). I told her that for her older brother at residential community college last fall we had costs of $4000. Even at a state university, the costs would have been quite a bit more had he gone to a 4 year school. And the credits would be fully transferable to a state university (in his case he didn't work hard and didn't do well...I'm glad we wasted $4000 and not several times that amount!) Our other son also attended community college and is doing well and ultimately will go to a 4 year college for the last two years at much less cost.

I do also tell my kids to think about what they can earn with their degree and I've encouraged also looking at fields that require training at the community college level but don't require a 4 year degree. My younger son has now decided he wants to major in English and I've talked to him about income prospects and about not spending too much to acquire his education.

 

[Mulligan]

I am absolutely a fan of this except in fairly rare instances. My daughter (14) made a comment the other day of not wanting to go to community college and wanting to go 4 year college. I sat her down and explained the difference in cost. I explained that you can even live in a dorm in community college if you want that experience (lots of community colleges have dorms). I told her that for her older brother at residential community college last fall we had costs of $4000. Even at a state university, the costs would have been quite a bit more had he gone to a 4 year school. And the credits would be fully transferable to a state university (in his case he didn't work hard and didn't do well...I'm glad we wasted $4000 and not several times that amount!) Our other son also attended community college and is doing well and ultimately will go to a 4 year college for the last two years at much less cost.

I do also tell my kids to think about what they can earn with their degree and I've encouraged also looking at fields that require training at the community college level but don't require a 4 year degree. My younger son has now decided he wants to major in English and I've talked to him about income prospects and about not spending too much to acquire his education.

I'm going through the same thing you are with your younger son. I've got her convinced to go juco then state u. I tried to get greedy and nudge her into exploring a better paying career than what she was wanting to do. Eventually she caught on and last week said: "I don't even want to work, but since I have to, at least it will be in something I will enjoy." I won't bring it up again, and just help get her through with minimal to no debt.

 

[Independent]

I think a big part of the problem is that kids are lied to in their youth. They're told they can "be anything they want to be," and they must "follow their dreams," no matter what. So you get kids following that advice, and spending $12,000/year studying art history (their "passion"), only to find that nobody is impressed.

I think it would be far better to advise our kids to find something they're good at, there's a market for, and that they can find fulfilling, and pursue that. Keep their "passions" as their hobbies.

+1

One in a million is wonderfully successful (say an olympic gold medalist), gets interviewed on TV, says "Never give up on your dream", and damages many lives.

 

[Independent]

I don't know how carefully these people researched the incomes before they started taking loans. My experience is that even if they tried, they couldn't get much useful information.

When the first guy was applying to Kettering, did they send him a salary report? I'm imagining:

"Of the XXX grads in EE last spring, xx% have jobs that require their degrees. Their 25th and 75th percentile incomes are __ and __. The others include yy% who are unemployed, zz% who are back in school, and ww% working at jobs that don't require their degrees (and their incomes are .....) "

This is information that the student can't get anywhere except from the college, and which could make a lot of difference on critical decisions like whether to invest $KKK thousand in a college degree, which major to pick, and whether borrowing makes sense. But, AFAIK, colleges just don't want to provide it.

 

[Katsmeow]

I don't know how carefully these people researched the incomes before they started taking loans. My experience is that even if they tried, they couldn't get much useful information.

When the first guy was applying to Kettering, did they send him a salary report? I'm imagining:

"Of the XXX grads in EE last spring, xx% have jobs that require their degrees. Their 25th and 75th percentile incomes are __ and __. The others include yy% who are unemployed, zz% who are back in school, and ww% working at jobs that don't require their degrees (and their incomes are .....) "

This is information that the student can't get anywhere except from the college, and which could make a lot of difference on critical decisions like whether to invest $KKK thousand in a college degree, which major to pick, and whether borrowing makes sense. But, AFAIK, colleges just don't want to provide it.

Do colleges actually have this information? I've earned 3 degrees from different institutions and I never reported to them where I went to work or what I made.

 

[REWahoo]

Do colleges actually have this information?

They get it from Google.

 

[pimpmyretirement]

My university definitely communicated major specific starting salaries to undergraduates. I used this information to help guide my major choice. They also had a job placement office, career counseling, and held a job fair with corporate recruiters at the start of every year. Securing a job upon graduation was not complicated, if one tried.

A motivated student can get a 4 year degree in 3 years. This can be more valuable than choosing an inexpensive school. Save a year of tuition AND get a year of salary.

I went the 3 year route. My experience was that AP credits make it trivial, including at a competitive university. On top of a major switch after my first year, I even had a term where I took one less class than a full load, because I would have enough credits anyway. Who wants to do extra learning with no reward, after all

Alternatively, my university allowed a full time student to take an extra class each term at no additional cost. I knew one student that used this to earn their masters degree within the 4 years one would typically spend on their BS or BA. A few others I knew were able to dual major in music and engineering as a result. Yes, they worked HARD, but they also got to pursue their passion with a solid backup plan.

It comes down to the drive of the individual. The ones who have their act together and come out of college with little debt, they were probably going to succeed anyway. The ones who bury themselves and then cry victim...

 

[GregLee]

I think it would be far better to advise our kids to find something they're good at, there's a market for, and that they can find fulfilling, and pursue that. Keep their "passions" as their hobbies.

The problem with that advice you can see all about you on this forum. People don't follow their passions and end up stuck for their working lives in jobs they hate. Vocational education isn't for everyone.

 

[Independent]

Do colleges actually have this information? I've earned 3 degrees from different institutions and I never reported to them where I went to work or what I made.

Sorry, I meant "This is information the colleges should have."

I believe that if you got a job through the college's placement office, the employer might have reported the salary even if you didn't.

But, I really meant that colleges should be expected to survey all their grads xx months after graduation and ask about jobs and salaries. With so many families pushing hard to come up with the money for college, this seems like a basic "Truth in Education" requirement.

I saw an article in the last few months (NY Times maybe?) about the job market for new lawyers. Lots of people not getting jobs or not getting the salaries they expected. One point was that colleges that were promoting excellent job results were fudging the numbers one way or another. I think to make this work (specifically to get them to be honest about grads who don't find jobs), it would probably need to be tied to government money. As in, you have to provide this information to every student who gets a federally guaranteed loan.