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Thirty & Broke
Old 11-05-2005, 12:57 PM   #1
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Thirty & Broke

Thirty & Broke is the title of a Business Week article from this week. One of the major themes of the article is how rising college costs are making it difficult for young people starting out. Some numbers from the article:

The consequence of student loan debt on graduates in 1987 and 2002:

1987 2002

changed career plans
11% 16%

delayed buying a home
23% 38%

delayed getting married
9% 14%

delayed having children
12% 21%

(source, Nellie Mae statistics)

Why it is so much harder to pay for school in 2005 than it was in 1990:

Median family income: up 5.8%
Total cost at private four year colleges: up 47%
Total cost at public four-year colleges: up 63%

( source Census Bureau college board)

Federal student loan debt for four year bachelors degree:
  • For 1992-3, 24.8% of public school students and 40.4% of private school students graduated with student loan debt
  • For 2002-3, 58% of public scholl students and 69.2% of private school students graduated with student loan debt

(source, ACE Center for Policy Analysis)







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Re: Thirty & Broke
Old 11-05-2005, 01:24 PM   #2
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Re: Thirty & Broke

Interesting Martha. I certainly belong in that category --- educated and broke.
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Re: Thirty & Broke
Old 11-05-2005, 06:29 PM   #3
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Re: Thirty & Broke

And it's only going to get worse- part of the proposed budget cuts include cuts to the federal student loan program. Seems like a short-sighted place to make budget cuts IMO.
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Re: Thirty & Broke
Old 11-06-2005, 08:25 AM   #4
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Re: Thirty & Broke

It's interersting to consider studies like this in light of 401-K proliferation.

Data seems to support this theory: high-school graduates who buy their way into the workforce with college educations financed by student loans are less likely to maximize their 401-K contributions at the early career stage when 401-K contributions are most productive thanks to interest compounding. As retirement savings lose traction, career lengths increase.

It's a trap; buying your way in impairs your ability to buy your way out. Which is an economic efficiency...retirement is unproductive. You toil not, neither do you consume.

So why play the game at all? I'm sending my daughter to welding school. Try outsourcing that to an Indian call center.

Ed
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Re: Thirty & Broke
Old 11-06-2005, 09:34 AM   #5
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Re: Thirty & Broke

Quote:
Originally Posted by gratefuled
I'm sending my daughter to welding school.* Try outsourcing that to an Indian call center.
Ummm, try telling that to the welders at Delphi who are at risk of having their $30 / hr wage cut to $10 / hr.

Delphi's demand: Take $9 an hour
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Re: Thirty & Broke
Old 11-06-2005, 10:36 AM   #6
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Re: Thirty & Broke

Wow. Ouch. On second thought, I'm teaching her how to grow dope.

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Re: Thirty & Broke
Old 11-06-2005, 10:40 AM   #7
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Re: Thirty & Broke

Quote:
Originally Posted by gratefuled
Wow.* Ouch.* On second thought, I'm teaching her how to grow dope.


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Re: Thirty & Broke
Old 11-06-2005, 10:49 AM   #8
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Re: Thirty & Broke

Quote:
I'm sending my daughter to welding school.
The concept isn't as crazy as some might think. *It's just that welding isn't as in demand today as other crafts. *Consider electricians.. a major problem in days past for women was pulling wire. *Today electricians use wire pullers. *The biggest problem is social. *Architects love female carpenters on projects. *They tend to be more careful and the quality of work is usually higher. *

The skills most in demand in the future are the ones that must be performed where delivered. *The operation of medical equipment, for example. *The operator must be here, but the evaluation of the output can be outsourced to professionals elsewhere. *The demand for nurses is increasing, as well as opportunities for professional growth.
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Re: Thirty & Broke
Old 11-06-2005, 10:59 AM   #9
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Re: Thirty & Broke

Quote:
Originally Posted by gratefuled
Wow.* Ouch.* On second thought, I'm teaching her how to grow dope.
She can make a great living designing & welding the entrance gates to gated communities & luxury homes... say, would she do custom work with low shipping expenses to Hawaii?* Can I send a photo & dimensions?
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Re: Thirty & Broke
Old 11-06-2005, 02:23 PM   #10
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Re: Thirty & Broke

I think that part of this is due to the fact that very few people have any clue about managing money. They want the instant gratification of getting the degree and will worry about the money "later". Take a look at the agressive marketing credit card companies do on college campuses (a CONSTANT presence), and the average credit card debt of college students (around $3k per graduate).

We all know the costs of college are going up. However, I finished college less than 10 years ago and had classmates with tens of thousands of dollars in student loans. They went to the same school... same classes... same standard of living. I just chose to work really hard (nearly full time job, plus an internship) while carrying a full load of classes. I wasn't wealthy, didn't have scholarships, missed many of the parties, and paid for nearly all of it on my own. I was willing to work hard and chose a state college I could afford.

I think this is just another symptom of a society that doesn't understand how credit works, how loans work, and how compounding works -- charge now, worry later.

This post probably sounds like I'm ripping anyone who finishes college with debt... that's not the case... there are some situations where it's the only option. It would help everyone if the cost of college quit skyrocketing. It would also help if kids went into college with a better financial education than they are today.



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Re: Thirty & Broke
Old 11-06-2005, 02:39 PM   #11
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Re: Thirty & Broke

Quote:
Originally Posted by Sisyphus
This post probably sounds like I'm ripping anyone who finishes college with debt... that's not the case... there are some situations where it's the only option.* It would help everyone if the cost of college quit skyrocketing.* It would also help if kids went into college with a better financial education than they are today.
I borrowed every cent of student loans I could get my hands on. I reasoned, correctly I believe, that 1) I would never be 20 and in college again and 2) No one was ever likely to offer me these credit terms again.

I advised my kids the same way; I would do it the same way if I were doing it again. After all, would most people prefer relative freedom between 18 and 24, or between 48 and 54? I know my answer.

In the choice between rich and old, and working and young, young is best. Only way to enjoy it is enjoy it while you are there.

Life is more than an exponential function.

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Re: Thirty & Broke
Old 11-06-2005, 02:48 PM   #12
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Re: Thirty & Broke

Hmmmm

Close - but no cigar. JC plus State U and no debt - 18 to 21 and layed off at 49 - pretty free since.

Of course college was cheaper then and four summers work - lumber mill, woods and two in the lab - footed the deal. Two years free room and board during JC.

Of course that was long ago and far away in the 'old' PacNW.
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Re: Thirty & Broke
Old 11-06-2005, 02:54 PM   #13
 
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Re: Thirty & Broke

You're darn tootin'!* (dunno what the heck you're burbling about but feel strangely compelled to agree.)

Quote:
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Re: Thirty & Broke
Old 11-06-2005, 07:49 PM   #14
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Re: Thirty & Broke

Nords: no, we can't transact business by mail. Obviously (and sheesh...do I have to point this out?) we'll have to come out and perform a personal job site inspection.

Ed
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Re: Thirty & Broke
Old 11-06-2005, 08:07 PM   #15
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Re: Thirty & Broke

Thankfully I didn't graduate with any student loan debt at all...thanks to mom and dad. Hubby and I plan on helping our kids the same way by opening an RESP (Registed Education Savings Plan). Of course, we expect them to pay something (I paid for my books and other miscellaneous items) but hopefully the tuition will be covered.
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Re: Thirty & Broke
Old 11-06-2005, 09:11 PM   #16
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Re: Thirty & Broke

I borrowed. Didn't get help from parents. Wasn't smart enough to get a scholarship. So what, that's life. I will dig my way out eventually.
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Re: Thirty & Broke
Old 11-06-2005, 09:32 PM   #17
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Re: Thirty & Broke

Quote:
Originally Posted by Calgary_Girl
Thankfully I didn't graduate with any student loan debt at all...thanks to mom and dad.* Hubby and I plan on helping our kids the same way by opening an RESP (Registed Education Savings Plan).* Of course, we expect them to pay something (I paid for my books and other miscellaneous items) but hopefully the tuition will be covered.
We did the same thing for our sons, put them through the University of Calgary. Wanted them to get a better start than DW and I did having to pay off student loans. But we claimed all the tuition tax deductions to our own account.
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Re: Thirty & Broke
Old 11-06-2005, 09:37 PM   #18
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Re: Thirty & Broke

Quote:
Originally Posted by wildcat
I borrowed. Didn't get help from parents. Wasn't smart enough to get a scholarship. So what, that's life. I will dig my way out eventually.
Ditto, finally rolled the last of it into a home equity line.

I have friends who make almost as much as we do without going to college. He works 5 a.m. to 2 p.m. with a rotating week schedule, managing aircraft supply routes or something, his wife works ~4 to midnight managing the loading center for aircraft shipping (?), and they have their kid in daycare all sorts of hours and see each other on an odd day here or there. It ain't just about the money wrt college, there is a quality of life factor as well.
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Re: Thirty & Broke
Old 11-06-2005, 11:56 PM   #19
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Re: Thirty & Broke

Quote:
Originally Posted by gratefuled
Nords: no, we can't transact business by mail. Obviously (and sheesh...do I have to point this out?) we'll have to come out and perform a personal job site inspection.
Well, of course! No pressure-- although to familiarize yourselves with the wave design on the gate, you guys might have to spend a few afternoons surfing the real waves...
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Re: Thirty & Broke
Old 11-07-2005, 08:14 AM   #20
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Re: Thirty & Broke

Quote:
Originally Posted by wildcat
I borrowed. Didn't get help from parents.
We did too. And eventually worked our way out of student loan debt. Seems like a lifetime ago.
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