Student Loans are out of control

Back in my Air Force days, I remember visiting a friend who was trying to balance his checkbook. He said he was spending a bit more than he earned each month. He went on to say, "If you die with a million dollars in the bank, you've lost a million dollars. If you die owing a million dollars, you are a million dollars ahead."

I told him, "That's fine, but you have to die next month."
 
I used to always accept what I thought was free money at Walmart when they would ask, "do you want cash back?" :cool:
 
jbarrass said:
Correct. The Government backed loans are not dischargeable and interest rates are currently around 6%. The 20% loans are private and are dischargeable. They will often require a cosigner to cover their bets.
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What is dischargeable?
 
If we just quit messing with things, the marketplace will sort this out. It can be pretty efficient.

"No one wanted to be pilots b/c of the entry fee..... so they became scarce.
Pilot demand rose as a result, and so did wages.
Soon, wages were enough to make it worthwhile, and pilots became plentiful again."
 
As long as the government makes these loans possible, the colleges and "higher education" institutions will keep raising their rates faster than the CPI. Because..... they can. A program started with good intentions had delivered devastating unintended consequences. End the Student Loan program. People will not be able to go into debt to get a Masters of Puppetry Arts - yes, a real thing. Universities will either reduce their costs or go out of existence - hint, the answer is they'll complain but will reduce their costs.

 
WDD said:
As long as the government makes these loans possible, the colleges and "higher education" institutions will keep raising their rates faster than the CPI. Because..... they can. A program started with good intentions had delivered devastating unintended consequences. End the Student Loan program. People will not be able to go into debt to get a Masters of Puppetry Arts - yes, a real thing. Universities will either reduce their costs or go out of existence - hint, the answer is they'll complain but will reduce their costs.

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Bingo. This, right here is why college costs and medical costs are rising.
 
SkyChaser said:
So if the school is too expensive, find a cheaper school or forego the degree and learn a trade. Quite frankly, there are very few professions in which college degrees even offer value and almost every student paying $400k could have gone to a no-name college, learned the same or nearly the same stuff, and graduated with 1/10 or less of that 400k.
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In many cases, this is NOT about EDUCATION. As you clearly point out, the same [undergrad] education can easily be had for far less.

The extremely expensive schools are about NETWORKING with other people who presumably have the means to go to such a school.

Many people clearly believe this is the way to success. It is not what you know but rather who you know. That is not my way of life but I see it frequently on full display.
 
Mongoose Aviator said:
In many cases, this is NOT about EDUCATION. As you clearly point out, the same [undergrad] education can easily be had for far less.

The extremely expensive schools are about NETWORKING with other people who presumably have the means to go to such a school.

Many people clearly believe this is the way to success. It is not what you know but rather who you know. That is not my way of life but I see it frequently on full display.
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For Harvard, maybe that works. For ATP or Riddle. Yeah, probably not.
 
Mongoose Aviator said:
In many cases, this is NOT about EDUCATION. As you clearly point out, the same [undergrad] education can easily be had for far less.

The extremely expensive schools are about NETWORKING with other people who presumably have the means to go to such a school.

Many people clearly believe this is the way to success. It is not what you know but rather who you know. That is not my way of life but I see it frequently on full display.
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I think that most people going to those top tier schools, like Harvard, MIT etc, probably will make enough to pay back their loans.
And good students that go to middle tier schools, like Georgia Tech (borderline great) will also make enough to pay back their loans.

It is the people that take excessive loans to go to middle tier and lower tier schools and pursue degrees that are known to not pay much that will find themselves in trouble. I knew people 15 years ago that went to Jr. College, as it was called then, took liberal arts type classes and lived a lavish lifestyle that they couldn't afford, but were able to promise to pay up "when their student loan check arrived". Those are the people I know that are clamoring for debt cancellation.
 
Some people argue that part of the increase in secondary educational costs are associated with the reduction in government subsidies of education.
 
JOhnH said:
middle tier schools, like Georgia Tech (borderline great)
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Are you insane? Middle tier?! Borderline??!! Gad!

From Wikipedia:

In 2021 U.S. News & World Report named Georgia Tech 3rd worldwide for both its Bachelor's in Analytics and Master of Science in Business Analytics degree programs.[121][122] Also in the 2021 Times Higher Education subject rankings, Georgia Tech ranked 12th for engineering and 13th for computer science in the world.[123][124][125]​

12th ranked engineering school out of the entire world. And it’s a public state school.

Tech's undergraduate engineering program was ranked 4th in the United States and its graduate engineering program ranked 8th by U.S. News & World Report for 2021.[126] Tech's graduate engineering program rankings are aerospace (4th), biomedical/bioengineering (2nd), chemical (tied for 5th), civil (tied for 3rd), computer (tied for 6th), electrical (tied for 6th), environmental (tied for 5th), industrial (1st), materials (9th), mechanical (tied for 5th), and nuclear (9th).[126] Tech's undergraduate computer science program ranked 5th and its graduate computer science program ranked 8th. ​


4th ranked engineering program in the US. Does that sound like “middle tier?” Do you see anything below top 10 in all those disciplines?

Yeeesh.

Ramblin’ Wreck, EE, class of ‘84
 
bradg33 said:
It's interesting to see how many people on here don't really understand that a very large portion of the population in the US is utterly financially incompetent. Frequently, it's a function of poor education (public schools do a terrible job of teaching any sort of financial literacy) and parents/family with equally poor financial education. There's a bit of a selection bias on here, as most folks who fly or own airplanes are at least reasonably well educated and semi-successful. But there are a ton of folks who simply don't understand even simple financial concepts like interest, compounding, amortization, etc.
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How do you expect the schools to teach finances when they are graduating students that cannot read, write, or do basic arithmetic???

2-Bit Speed said:
This seems like a symptom of at least two larger problems;
1: A public education system which fails to teach basic, everyday math.​
2: A lack parental oversight.​

At some point, the parents should be talking to their kids about finances and loans and interest rates and good bets and bad bets. A 100k loan for an aviation career is solidly in the bad-bet category. Much like 100k loans to be a teacher or a nurse, the end-goal (career) does not pay enough to justify the cost of the loan.
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You are assuming that the parents have a clue about finances and loans. Most of them are as clueless as their kids.
 
Pinecone said:
You are assuming that the parents have a clue about finances and loans. Most of them are as clueless as their kids.
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And this is assuming that kids are growing up with a parent in the home. A kid in a single parent home with the one parent working two or three jobs isn’t going to have a lot of interaction with that parent.
 
So we can agree that insufficient parentage is contributing to this?

Pinecone said:
You are assuming that the parents have a clue about finances and loans. Most of them are as clueless as their kids.
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Not at all. To observe a problem is not to make assumptions or even expectations, however I will admit that I expect adults with children to learn or have learned responsibility, including financial responsibility. If they cannot teach themselves responsibility, they will fail to teach responsibility to their children. This becomes, almost inevitably, an irreversible (without outside assistance) downward spiral.
 
It's a little amusing to read this bunch claiming " if they just put their wallets back in their pockets, prices will go down". I mean, at my home drome planes still line up for $6.95 avgas when other fuel prices are down 30%. $2,200 for a replacement cylinder? $40 FOR AN OIL FILTER? We can't pull our wallets out fast enough. We're like crack addicts, we pay what it takes 'cause we gotta have it.

At least we're not borrowing to do it (I hope.)
 
When I went to school the dorm room was a 10 X 10 cinder block room with two twin beds. Common shower area for each floor. When my daughter went to a public university the standard dorm room was a private room in a two bedroom suite with a shared bath, kitchen area, etc. With new temperpedic mattresses.

New construction everywhere.

Yes - education can cost a lot less.
 
2-Bit Speed said:
This seems like a symptom of at least two larger problems;
1: A public education system which fails to teach basic, everyday math.​
2: A lack parental oversight.​

At some point, the parents should be talking to their kids about finances and loans and interest rates and good bets and bad bets. A 100k loan for an aviation career is solidly in the bad-bet category. Much like 100k loans to be a teacher or a nurse, the end-goal (career) does not pay enough to justify the cost of the loan.
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That assumes the parents have the knowledge to educate the kids on the topic. As someone previously in the thread mentioned, I would argue most of the people taking out these loans are either too emotionally invested and don't see the downsides, or are ignorant to just how fast the career path can be taken away.

*ETA: Late to the party.
 
Ultimately the source if the problem are —- the people who take out the loans.

But it would be in everyone’s best interest if the government didn’t make “stupid” so easy.
 
I don't fault anyone for pursuing their dream as long as they understand the risks associated with their choices to achieve it. Someone taking out the loan mentioned in the OP doesn't understand those risks. So, sure, it's easy to blame them for signing on the line anyway, but for many people there is no other option to reach the goal.
 
Hi.
Sierra_Hotel said:
....but for many people there is no other option to reach the goal.
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I will disagree with that. In this country, USA, is very possible to do what he wants without a loan and without anyone's else's help or loans.
Prioritize and work for it. The I want it now has taken over, and some people think that every thing should be free.
 
Back to my comment about levels of risk, I meant that they see no other option, though there are plenty of options they just don't like.
 
Children mortgaging their lives out of control... It is a social norm, and every Tom, Dick, and Harry is there to take advantage of it, whether its the company loaning the money, or the business taking it, or both.

One of my friends has a degree zoology and works full time at Hy-Vee (grocery store). She married and popped out two kids of a chronic alcoholic which everyone has known for years long before they got together...including her. Got divorced and far as I know his drinking is so bad he will end up dead or in jail.

Its eye popping, student loans, wedding, cars, house, then divorce, are you set for life? Definitely...a lifetime of debt.

My Dad's lifetime of debt was building a farm. In his 70s and still farming, never been divorced, only married once. They built something and paid for it.
 
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Sierra_Hotel said:
Back to my comment about levels of risk, I meant that they see no other option, though there are plenty of options they just don't like.
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And they haven't been taught that they can either be unhappy now or unhappy later, but unhappiness (maybe I should have used 'hardship') is simply part of life.
 
This conversation veered way off track. Student loans cannot be discharged in bankruptcy. “Career loans” to pay for All ATPs and similar fast track flight schools are unsecured loans that have less protection from being discharged in bankruptcy court. Borrowing close to six figures at a high interest rate before you even know if you have the aptitude to be a pro pilot is foolish, but can pay off. I would strongly advise against someone doing it, but fools are being born everyday.
 
WDD said:
When I went to school the dorm room was a 10 X 10 cinder block room with two twin beds. Common shower area for each floor. When my daughter went to a public university the standard dorm room was a private room in a two bedroom suite with a shared bath, kitchen area, etc. With new temperpedic mattresses.

New construction everywhere.

Yes - education can cost a lot less.
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The nicest public buildings in any state (aside from Capitol buildings) are at colleges. The highest paid public employee in any state, is a college employee (usually a coach). The amount of money public universities consume is sad, especially when you look at the quality of their products. They have created an endless market with the mantra that everyone needs a degree to get ahead.

Mike Rowe of Dirty Jobs has it right, quit conning all high school kids to go to college. Most drop out or end up with a worthless degree and a mountain of debt.
 
I think a majority of us older folks (i'm a GenX) remember a different time with respect to schooling and loans. I remember having $8 a week for food and that was it. I also remember paying about $800 a semester for college and this was back in the late nineties. Schooling has changed a lot and TBH unless you are going for a degree that will net you good money fairly quickly after finishing your education I would look deep within to see if its a good idea. Universities have become big bloated money making machines like most things here in the US.

I remember getting a call from a freshman wanting me to donate money to the University. I asked her if she was being paid to make these calls. She said she was not and then I explained that as an alumni of the school, I am still paying off my loans and the university raises tuition every year. I told her to stop wasting her free time and go find something better to do because I will not send a dime while the school raises tuitions and adds more new building and stadiums.

So much of life is being at the right place and the right time. I graduated owing 200k and a base salary of 50k. What saved my ass was hard work and a fixed interest rate of 2.3%. I'm all paid off now but it took many years. Students in my profession graduating with >300k at 7% and its ridiculous. No one taught me what capitalization was so while I thought the loan companies were doing me a favor with graduated repayment plans, they were actually screwing me over. Then you get the government involved and they want you to think they are doing you a favor by providing interest based repayment plans... well guess what. They are part of the problem because they know that no new graduate is going to be able to pay the monthly payment on that type of loan. The banks won't get their money so this is the compromise. Sure pay the minimum while you are on the plan well guess what happens when the 25 yrs come up.. The tax bomb and then you owe that forgiven amount and if you haven't saved, you will owe the IRS money as well. If the government really wanted to help they would reduce the interest rate to 1%. That would go a long way.
It's a racquet.
 
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JOhnH said:
I think that most people going to those top tier schools, like Harvard, MIT etc, probably will make enough to pay back their loans.
And good students that go to middle tier schools, like Georgia Tech (borderline great) will also make enough to pay back their loans.

It is the people that take excessive loans to go to middle tier and lower tier schools and pursue degrees that are known to not pay much that will find themselves in trouble. I knew people 15 years ago that went to Jr. College, as it was called then, took liberal arts type classes and lived a lavish lifestyle that they couldn't afford, but were able to promise to pay up "when their student loan check arrived". Those are the people I know that are clamoring for debt cancellation.
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Close, but people do to top tier schools and major in fields with few to no jobs.
 
I once met a guy who had a masters from Yale in European art history. He was temp secretary.
 
I got my first degree from MIT*. Only took 4 months.

Best 750 bucks I ever spent.

If I had another 100 bucks I coulda got a Masters.

*Murray's Institute Of Tools...
 
francisco collazos said:
Interesting, I thought student loans public or private were not readily dischargeable in bankruptcy
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FFEL and Perkins (programs ended in 2010) and direct loans owned and serviced by the Dept. Of Education may not be discharged in bankruptcy. No one is borrowing for 20% under a govt guaranteed student loan program today as suggested by the OP.

There are loans available for flight training that are simple unsecured consumer loans that some mistakenly call student loans.
 
WDD said:
When I went to school the dorm room was a 10 X 10 cinder block room with two twin beds. Common shower area for each floor. When my daughter went to a public university the standard dorm room was a private room in a two bedroom suite with a shared bath, kitchen area, etc. With new temperpedic mattresses.

New construction everywhere.

Yes - education can cost a lot less.
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So could transportation and entertainment. Why do you have a pilot certificate?
 
Clip4 said:
So could transportation and entertainment. Why do you have a pilot certificate?
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All three could also cost more. The point is that there is a tremendous amount of waste within public colleges and universities which drives up the cost beyond that which is reasonable. Furthermore, the level of waste which is occurring should be shocking and unacceptable to all tax-payers.
 
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