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Old 11-11-2011, 11:53 AM   #81
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It was interesting to hear the republican debate on this question on the $1 trillion of debt...

I think Newt had a great answer, and I am probably going to mangle it...

He said that there was a college where the students had to work during their courses, had to work during the summer and had to take full loads and graduate in 4 years... I also think that they did not pay tuition, but am not sure of that...


To me, that is one of the big problems... a lot of students do not take 'full loads' and take 5 or 6 years to graduate... that does not help the debt load...


I would also like to see a graph or table showing the ratio of debt to starting salary... IOW, if the ratio was 50% way back when and is about 50% now (from the numbers shown this looks like it might be)... then what is the big deal... nothing has changed... except for the total amount due...
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Old 11-11-2011, 02:54 PM   #82
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It was interesting to hear the republican debate on this question on the $1 trillion of debt...

I think Newt had a great answer, and I am probably going to mangle it...

He said that there was a college where the students had to work during their courses, had to work during the summer and had to take full loads and graduate in 4 years... I also think that they did not pay tuition, but am not sure of that...


To me, that is one of the big problems... a lot of students do not take 'full loads' and take 5 or 6 years to graduate... that does not help the debt load...


I would also like to see a graph or table showing the ratio of debt to starting salary... IOW, if the ratio was 50% way back when and is about 50% now (from the numbers shown this looks like it might be)... then what is the big deal... nothing has changed... except for the total amount due...
Actually, it can help the debt load. One of my sons was working as a programmer when he started college. By continuing work, and spacing out his classes, he not only graduated with no debt but with some savings and a whole lot of contacts and experience. It took him 6 years, but so what?

Ha
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Old 11-11-2011, 03:14 PM   #83
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That was my experience as well. I took 5 years because I worked large numbers of hours in college.

I could have done it in 4 years if I had taken loans.

It depends on a few things though. If the college has a plateau where the cost is the same for a higher number of credits ("slacker" full time vs "go-getter" fulltime), as the price of college goes up compared to wages it starts making more sense to forgo work to get the free credits.

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Actually, it can help the debt load. One of my sons was working as a programmer when he started college. By continuing work, and spacing out his classes, he not only graduated with no debt but with some savings and a whole lot of contacts and experience. It took him 6 years, but so what?

Ha
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Old 11-11-2011, 03:16 PM   #84
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A very interesting article in the WSJ about how hedge fund traders who specialize in student loan bonds view college students.

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Ask hedge fund manager Daniel Ades about the future for recent college graduates and he likes to draw a picture, a very ugly picture. He sketches out a bell curve mapping the historical default rate on student loans then he draws another curve much higher to show the likely default rate for the Class of 2011. ...

Historically, investors have assumed 25% to 30% of student loans bundled into their bonds will default but they are baking in 30% to 40% default rates for loans owed by the current crop of graduates, said Chris Haid, a director in asset backed trading at Barclays Capital. Even those assumptions are a best guess and defaults could ultimately go higher if unemployment rises, Mr. Haid said....

Just as important is finishing on time. Investors in bonds backed by student loans hate to see perpetual academics in their portfolio, chronically changing majors or stopping and starting school, adding years of tuition to their debt load. "When you see a guy in a loan made in 2005 that is still in school, you throw that away," said investor Rubin Bahar, of Eagle Asset Management....

"It's not just about where you can get the best education," he said during an interview in the Miami Beach office of his hedge fund, Kawa Capital Management. Students should pick schools where the payoff from higher salaries upon graduation exceeds the cost of the education by the widest margin, he contends, especially when the job market contracts.
By that arithmetic, technical colleges come out on top, Mr. Ades said. "We're in a skills based economy and what we need is more computer programmers, more [nurses]," he said. "It's less glamorous but it's what we need."

Law school, on the other hand, can end up a sucker's bet in periods of high unemployment, experts in student loan-backed bonds say.
I guess the adage of "follow the money" applies to student loans also.
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Old 11-11-2011, 03:28 PM   #85
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Actually, it can help the debt load. One of my sons was working as a programmer when he started college. By continuing work, and spacing out his classes, he not only graduated with no debt but with some savings and a whole lot of contacts and experience. It took him 6 years, but so what?

Ha

I was referring more to the students who do NOT do any work while in college... but I was not clear on that....
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Old 11-11-2011, 04:22 PM   #86
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Actually, it can help the debt load. One of my sons was working as a programmer when he started college. By continuing work, and spacing out his classes, he not only graduated with no debt but with some savings and a whole lot of contacts and experience. It took him 6 years, but so what?

Ha
You know, especially for lower pay career tracks, that might not be a bad way to go to keep from swimming in debt. I can have a little sympathy for this first group of graduates who got caught with their pants down, because previously you always got a job, and could pay it off eventually. Now, there is no certainty of a job, so students should be more mindful of their debt before they sign the dotted line. Maybe have a " Gweedo" flexing his biceps and cracking his knuckles in front of the signee as a reminder of consequences from not being able to sign one debts One thing is for sure the tax payers dont need another trillon dollar bailout to pay for.
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Old 11-11-2011, 09:56 PM   #87
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Actually, it can help the debt load. One of my sons was working as a programmer when he started college. By continuing work, and spacing out his classes, he not only graduated with no debt but with some savings and a whole lot of contacts and experience. It took him 6 years, but so what?
This is similar to my experience. I needed 5.5 years to graduate for various reasons (mainly because I couldn't get the classes I needed when I was an engineering major). But for the last two years of it I was working as a programmer and even before that I lived at home and went to a cheap state university while working 25 hours a week as a stock clerk (and full time during summers), so I graduated with a good job and no debt.

I'll take that over a 4-year program with no job and tens of thousands in debt.
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Old 11-11-2011, 10:09 PM   #88
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This is similar to my experience. I needed 5.5 years to graduate for various reasons (mainly because I couldn't get the classes I needed when I was an engineering major). But for the last two years of it I was working as a programmer and even before that I lived at home and went to a cheap state university while working 25 hours a week as a stock clerk (and full time during summers), so I graduated with a good job and no debt.

I'll take that over a 4-year program with no job and tens of thousands in debt.
DW & I had a similar experience. In the UK it takes 3 years full time to get a degree but we both took 4 years, working 6 months, then 6 months at college on a "sandwhich" course. Well worth the extra year with a sure full time job at the end (providing you graduated with a decent degree).
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Old 11-14-2011, 11:27 AM   #89
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while I only perused, I'm surprised I didn't see anyone mention that part of the problem could be graduates generally are poor at managing money. Even as I considered myself to be saavy in the personal finance department for a 22 yo, I still had a huge a learning curve handling an actual salary and playing the game of life. I would argue, most graduates, regardless of their "education level" have a difficult time transitioning to real life once they actually land a job, generally speaking. What's the quote? "somethings cannot adequately be explained to virgins either through pictures or words"

I graduated with 65% of my salary in student loans and had it all gone within 4 years. My brother in law on the other hand, bought a motor vehicle a few years ago that is equal to his annual salary with nothing down. He also enjoys a nicer TV, cable TV, nicer cars, a mortgage equal to mine and 3 more kids than I do. I enjoy a salary 4 times his. I expect the vehicle to die before he ever gets it paid off, and I am grateful I don't carry the note (or that he doesn't beg me for money).
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Old 11-14-2011, 12:13 PM   #90
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This is similar to my experience. I needed 5.5 years to graduate for various reasons (mainly because I couldn't get the classes I needed when I was an engineering major). But for the last two years of it I was working as a programmer and even before that I lived at home and went to a cheap state university while working 25 hours a week as a stock clerk (and full time during summers), so I graduated with a good job and no debt.

I'll take that over a 4-year program with no job and tens of thousands in debt.
And how are the people who did something similar, and paid all/part of their way by working going to feel when they hear that those who took loans will have some of it 'forgiven'?

Why not provide some relief for the entire bill, not just for those who borrowed to pay the bill? Why not forgive even more for those who paid up front, didn't they 'suffer' the most?

These programs make it tougher and tougher for people to do 'the right thing'. They make us look like chumps.

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Old 11-14-2011, 12:40 PM   #91
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College costs are high, but there are plenty of ways to mitigate that. What's more troubling is what we're spending all of this money to learn:

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Old 11-14-2011, 07:30 PM   #92
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After reading this thread for a couple weeks, I have to add a response.

I agree with ERD50. I understand the price of college is high but I see a lot of irresposibility by those who want someone else to pay for their college education. I live in a fairly small town with a 25,000 student university. Of course there is a small group of "occupy" folks downtown but I don't think they are very devoted to their cause since they hide in their tents when it gets a bit chilly. All the occupiers seem to be students so one of their main complaints is the cost of getting their college education but it only takes a short conversation to understand a few have college loans but most of them have parents who are paying for their degree and they are just out there to say they are participating in the latest "in" thing.

I understand there are students who really need assistance but there are others who need to re-evaluate their priorities. My oldest son is in college. He works full time and goes to class three nights a week. His new wife just graduated from college - her parents picked up most of the tab but she worked to help pay for her college expenses. My DS and DIL are frugle cut costs wherever they can including ditching their cable TV.

My other son recently finished his active duty in the Marine Corps so his college education is paid for by the GI Bill. Even though he chose a job that put him in harms way, there are lots of jobs in the various military branches that are not dangerous and teach skills that can be used in future careers. For those with tight budgets, the GI Bill (i.e. free college) is available to anyone who wants to serve and passes the muster so I don't have a lot of sympathy for those who prefer to whine about college loans.

Neither of my sons nor DIL chose schools with high tuition rates but here are three examples of students who will earn their degree without a huge debt and will not be asking the tax payers to bail them out. Common sense, showing discipline and setting priorities seems to be working.
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Old 11-14-2011, 09:01 PM   #93
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Loaning such large amounts of money to young people who just a few years earlier had perhaps only borrowed lunch money from time to time still seems to be taking advantage.
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Old 11-14-2011, 09:20 PM   #94
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My other son recently finished his active duty in the Marine Corps so his college education is paid for by the GI Bill... For those with tight budgets, the GI Bill (i.e. free college) is available to anyone who wants to serve and passes the muster so I don't have a lot of sympathy for those who prefer to whine about college loans.

Neither of my sons nor DIL chose schools with high tuition rates but here are three examples of students who will earn their degree without a huge debt and will not be asking the tax payers to bail them out. Common sense, showing discipline and setting priorities seems to be working.
I just wanted to point out a bit of irony here. The GI Bill benefits ARE a taxpayer funded benefit. Not begrudging your son the benefits he signed up for and earned, just saying they are still paid for by taxpayers. I'd rather fund your son's education via the GI bill than the educations of so many others who just want a handout.
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Old 11-15-2011, 09:32 AM   #95
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That comes from making a college degree a pre-requisite for pretty much all white-collar work outside of the mailroom.

Most people do not have the ability to get an engineering degree. But they need a college degree to have even a chance to get a job that isn't a complete dead end.

So they get the degrees that they are capable of getting.

There is a huge chunk of the older workforce that don't have degrees, but are working jobs that will require their replacements to have one.

That fluffy degree is required to be considered for most real jobs nowadays.

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College costs are high, but there are plenty of ways to mitigate that. What's more troubling is what we're spending all of this money to learn:

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Old 11-15-2011, 09:36 AM   #96
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Of course, twenty years ago the states/feds were picking up a much larger share of college expenses. So most of the people who went to a state college in the past already got their "handout".

Now they spend time complaining about "kids these days".



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I'd rather fund your son's education via the GI bill than the educations of so many others who just want a handout.
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Old 11-15-2011, 10:26 AM   #97
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That comes from making a college degree a pre-requisite for pretty much all white-collar work outside of the mailroom.

Most people do not have the ability to get an engineering degree. But they need a college degree to have even a chance to get a job that isn't a complete dead end.

So they get the degrees that they are capable of getting.

There is a huge chunk of the older workforce that don't have degrees, but are working jobs that will require their replacements to have one.

That fluffy degree is required to be considered for most real jobs nowadays.
Of course, part of the problem is the expectations many young people have when getting a degree. my friend who went to the great law school of Tulane thought he'd be rolling on 24's with a six fig income right out of law school. I had a six fig income while he was in law school, and many times I wondered how he was able to spend the money he was spending, as I wasn't able to "keep up with him." Well, he makes about a 1/3 of what he thought he would. many "youngin's" think that if they get so and so degree, they are entitled to the highest pay they have heard of.

it's important to remember that colleges are businesses and your best interest is always second to their cash flow. a great deal of deception goes on and I'm not sure how to fix it, but I'm not an advocate of removing concequences to people's choices or eliminating the choice people get to make. of course, deception is every where in this world, it's just a shame that this life lesson has to take place on the backs of tax payers.
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Old 11-15-2011, 11:13 AM   #98
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Sure, but expecting people entering college to make universally good financial decisions is foolish too.

No generation of 18-22 year olds has been wise as a group. Foolish decisions come with inexperience. That's part of the human condition, and it hasn't changed for thousands of years, and is unlikely to change in the future.

What has changed is the consequences of the mistakes kids are making. Twenty years ago, it was difficult to graduate with crippling debt. Tuition was relatively reasonable, and loans were more modest. Credit card companies were slow to extend large lines of credit to students (my first credit card had a $300/limit). Students did really foolish things with their money, but they hit their credit limits and the consequences were modest.

Nowadays those same mistakes result in crushing debts that follow them for a lifetime.

We've taken the guide-rails off for the current generation.


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Of course, part of the problem is the expectations many young people have when getting a degree. my friend who went to the great law school of Tulane thought he'd be rolling on 24's with a six fig income right out of law school. I had a six fig income while he was in law school, and many times I wondered how he was able to spend the money he was spending, as I wasn't able to "keep up with him." Well, he makes about a 1/3 of what he thought he would. many "youngin's" think that if they get so and so degree, they are entitled to the highest pay they have heard of.

it's important to remember that colleges are businesses and your best interest is always second to their cash flow. a great deal of deception goes on and I'm not sure how to fix it, but I'm not an advocate of removing concequences to people's choices or eliminating the choice people get to make. of course, deception is every where in this world, it's just a shame that this life lesson has to take place on the backs of tax payers.
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Old 11-15-2011, 11:24 AM   #99
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Sure, but expecting people entering college to make universally good financial decisions is foolish too.

No generation of 18-22 year olds has been wise as a group. Foolish decisions come with inexperience. That's part of the human condition, and it hasn't changed for thousands of years, and is unlikely to change in the future.

What has changed is the consequences of the mistakes kids are making. Twenty years ago, it was difficult to graduate with crippling debt. Tuition was relatively reasonable, and loans were more modest. Credit card companies were slow to extend large lines of credit to students (my first credit card had a $300/limit). Students did really foolish things with their money, but they hit their credit limits and the consequences were modest.

Nowadays those same mistakes result in crushing debts that follow them for a lifetime.

We've taken the guide-rails off for the current generation.
I think this is a very wise post.

I also think that 90% of the ideas that people hold dear to their hearts as morals, or principles, or whatever, are really only whatever is blowing in the wind.

For reasons that I really cannot fathom, many of us today seem to have quite punitive felings toward the younger generations.

Ha
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Old 11-15-2011, 12:25 PM   #100
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so...what do you guys suggest? my point is exactly the same, college age kids can't make wise (or educated) personal financial decisions. so...what to do? cut the profs' salary? cut the profs' benefits? pay for college for everyone? limit borrowing? subsidize only the "profitable" degrees? privatize student loans. I guarantee any suggestion you can make, people will come unglued. until then, graduates continue to carry the burden.

it's hard for me to empathize with the "younger generations" b/c I was there 6.5 years ago. I do consider myself VERY fortunate, and am grateful to be where I am.
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