Student Loans are out of control

[SkyChaser]

So could transportation and entertainment. Why do you have a pilot certificate?

People make stupid decisions in both of those departments as well. The number of people upside down in luxury SUVs, for example, is quite high. People spend hundreds or thousands of dollars on tickets to concerts and sport games when they can't pay their electricity bill every month.

Just because people make stupid decisions in other arenas of life does not negate the point about taxpayer-funded schools wasting money on things that look pretty but don't do much for instillation of knowledge.

 

[ArrowFlyer86]

People make stupid decisions in both of those departments as well. The number of people upside down in luxury SUVs, for example, is quite high. People spend hundreds or thousands of dollars on tickets to concerts and sport games when they can't pay their electricity bill every month.

Just because people make stupid decisions in other arenas of life does not negate the point about taxpayer-funded schools wasting money on things that look pretty but don't do much for instillation of knowledge.

This hits a little too close to home. A close family member of mine bought a $500 Bears ticket a few years back, which left them without enough money for a train ticket home, a hotel, or any food. They only planned as far ahead as the football game. Only after the game when they were faced with the prospect of sleeping on a park bench... in downtown Chicago... did they realize they'd f'd up.

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.

This is a point that few people truly accept because of its political implications. But there was a very good paper on this exact effect recently from NBER: Plus or Minus - The Effect of Graduate School Loans on Access, Attainment and Prices.
Their conclusion (paraphrased): Creating a bottomless pit of money on which to pull from does not produce meaningful benefits for students regardless of socioeconomic background. The key beneficiaries are universities that operate in a market place with virtually no price elasticity. They can raise the prices as much as they want (and they do) and the gov't will keep funding their insane-o increases (as 92% of student loans are federally funded). What doesn't help is that the government does not discriminate based on the course of study. The net effect is a surplus of college grads loaded with mountains of debts holding degrees that are mismatched with demand (that part isn't news lol).

 

[Albany Tom]

Simple solution: Make the colleges guarantee the loans. Eliminate federal subsidies, make the colleges provide full scholarships, merit based, to 10% of the students. Eliminate the exemption for bankruptcy for student loans. This would put the schools in a position where they actually had to provide measurable value for the crazy amounts of money they charge. Talk Johnny into a degree in performing arts? Great! Now it's your problem if he can't pay that loan back. This is possible. The incremental cost of 1 student is very close to 0 for any school. Online? Even closer.

We don't have an over-educated population, clearly, but we do have a society with way too many people walking around with degrees that they don't need, that's not providing a benefit to anyone but higher ed. We can't afford that. I work in IT, with people who have degrees and those that don't. They are indistinguishable in performance. You don't need a degree to fly an aircraft, or to run a fortune 500 company. Many people have done both with neither. Engineer, doctor, lawyer? Sure.

The whole thing is driven by greed as well as instant gratification. We're not only letting it happen, we're encouraging it, while the colleges and loan companies are laughing.

Ok, I'm doing the 'get off the lawn' thing again. Time for some bad TV.

 

[Clip4]

People make stupid decisions in both of those departments as well. The number of people upside down in luxury SUVs, for example, is quite high. People spend hundreds or thousands of dollars on tickets to concerts and sport games when they can't pay their electricity bill every month.

Just because people make stupid decisions in other arenas of life does not negate the point about taxpayer-funded schools wasting money on things that look pretty but don't do much for instillation of knowledge.

I am sure someone sometime said the same things you are when a college opted for indoor plumbing. If you desire inexpensive education, you are starting out in a community college and not living in a dorm room. Living in a 10x10 room that resembles a jail cell isn’t what the students shopping for universities are looking for in 2023.

 

[2-Bit Speed]

I am sure someone sometime said the same things you are when a college opted for indoor plumbing. If you desire inexpensive education, you are starting out in a community college and not living in a dorm room. Living in a 10x10 room that resembles a jail cell isn’t what the students shopping for universities are looking for in 2023.

There is a difference between improving sanitation and installing a 30x30 game room with leather chairs, game consoles, and large TVs in dormitories.

 

[francisco collazos]

Simple solution to the problem.. First you can not get loan amounts for more than the average yearly salary of said profession. Secondly, cap interest rates at 2% fixed and third make student loans dischargeable in bankrupsty.

 

[ateamer]

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

Not that I’m an educated man, or even a college graduate, but GT would be on my short list of top schools just based on its fight song. When a college’s song includes drinking, cussing, and trash talking its rival, then you know it’s great.

 

[chemgeek]

End the Student Loan program.

All this will due is disenfranchise individuals of modest means, making higher education accessible only to the rich. As a first-generation college student, I would not have been able to earn an advanced degree without student loans. That advanced degree opened up access to a 35 year career and earnings that repaid those loans many times over. I am not alone. Nor were many of my university students.

The problem isn't the loan programs, it's a lack of understanding on the part of those consuming the loans what it means. The non-optional plan is to take out $100,000 or more in student loans to attend an elite, private institution, prioritize having a good time at college instead of acquiring and honing useful skills and establishing relationships with mentors, arrange to graduate in the bottom third of your class, and then complain about not being able to get a good job and having crushing student loan debt. (Some parents can deserve blame for letting this happen.) However, I have mentored many economically disadvantaged students who took full advantage of their opportunity to get a first-class education and parlay that into fulfilling and financially rewarding professional careers. Student loans did not slow them down post-graduation.

 

[bradg33]

To be clear, in general, both government and private student loans are exempt from discharge in a bankruptcy proceeding, unless the Court determines that repayment "would impose an undue hardship on the debtor and the debtor’s dependents." That's traditionally been a very, very high bar to clear. For private loans, there are a variety of factors that have to be looked at, but generally, if the funds are used to attend a traditional university, the loan(s) will be non-dischargeable. It gets a lot murkier and very fact-specific when you start talking about "professional schools" like an ATD (vs. say Embry Riddle, which is closer to a traditional university).

 

[2-Bit Speed]

All this will due is disenfranchise individuals of modest means, making higher education accessible only to the rich. As a first-generation college student, I would not have been able to earn an advanced degree without student loans. That advanced degree opened up access to a 35 year career and earnings that repaid those loans many times over. I am not alone. Nor were many of my university students.

Fair enough. That said, I think the system needs to be overhauled. There need to restrictions in the amounts that can be borrowed and in how the borrowed money can be spent (tuition to a public, in-state university? Fine. Tuition to a private, out-of-state university? Not so fine).

I don't oppose students borrowing money to attend school. The problem is that students are borrowing unnecessarily large sums of money to attend a specific school with tuition two or three times competing schools (due to the target school being out-of-state or being private, therefore not being subsidized by taxes).

 

[GaryM]

 

[tspear]

Maybe I'm just an old curmudgeon, but why on earth would someone have to be taught that:

If you borrow money, you will have to pay it back.
When you do borrow money, you at least need to know how much your payments will be and for how long.
If your payments are more than your expected salary, or don't leave enough to live on, it is probably a bad idea.

I don't think anyone ever taught me that. It just seems sort of natural, like if you are hungry you eat or if you are thirsty you drink and if you have to take a crap, drop your drawers first.

I had a family friend who was on the board of trustees for a community college and a couple universities.
When my parents when to college in the 60s over 90% of the revenue for the public colleges was provided from general tax funds.
When I went in the early 90s, it was down to roughly half. Now, it is below 1/3.
The fundamental point, the cost burden has been shifted from the general public to the students. And then the public made the loans not forgivable in BK.
So yes, I think the general public has screwed the students....

Tim

 

[Half Fast]

Not that I’m an educated man, or even a college graduate, but GT would be on my short list of top schools just based on its fight song. When a college’s song includes drinking, cussing, and trash talking its rival, then you know it’s great.

You are wiser and better educated than you realize....

 

[Pinecone]

Simple solution to the problem.. First you can not get loan amounts for more than the average yearly salary of said profession. Secondly, cap interest rates at 2% fixed and third make student loans dischargeable in bankrupsty.

Hmm, that only counts people with JOBS in that field.

They used to be dischaged in bankrupcy. So many students graduated, declared bankrupcy before starting their job and left the tax payers holding the costs.

 

[Half Fast]

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.

Well, there are other reasons for attending a big name school.

Yes, the same undergrad eductation can be had for less, but the less-expensive schools don't do as much to ensure it, at least from what I've seen in the engineering world.

From time to time during my career at Lockheed, I made campus visits to recruit. Lockheed, Boeing, NASA, etc., all recruit at top-tier universities. Most of our interns and college hires come from big-name schools with top ranked engineering programs, and even at that we usually only take high-performing students.

Over the years, I've seen great engineers come from small no-name schools but I've seen mediocre engineers come from them, too. OTOH, I've never seen a poor engineer come out of Ga Tech (or Auburn, Clemson, Purdue, etc.). These schools have their reputations for a reason. Difficulty of admission, the difficulty of the curriculum, and the student competition make excellent filters to weed out the less talented.

Sure, you can learn the same material at Whazzmatta U, but you can also probably graduate without learning it, and your only internship may have been at Jiffy Lube. GT (and others) has weed-out classes early in the program, purposefully designed to flunk the bottom feeders out of the college. It works.

 

[Bob Noel]

Well, there are other reasons for attending a big name school.

Yes, the same undergrad eductation can be had for less, but the less-expensive schools don't do as much to ensure it, at least from what I've seen in the engineering world.

From time to time during my career at Lockheed, I made campus visits to recruit. Lockheed, Boeing, NASA, etc., all recruit at top-tier universities. Most of our interns and college hires come from big-name schools with top ranked engineering programs, and even at that we usually only take high-performing students.

Over the years, I've seen great engineers come from small no-name schools but I've seen mediocre engineers come from them, too. OTOH, I've never seen a poor engineer come out of Ga Tech (or Auburn, Clemson, Purdue, etc.). These schools have their reputations for a reason. Difficulty of admission, the difficulty of the curriculum, and the student competition make excellent filters to weed out the less talented.

Sure, you can learn the same material at Whazzmatta U, but you can also probably graduate without learning it, and your only internship may have been at Jiffy Lube. GT (and others) has weed-out classes early in the program, purposefully designed to flunk the bottom feeders out of the college. It works.

you might not have seen mediocre engineers from top-flight school, but I certainly did.

and after a few years of working, actually producing something, that is what separates the best from the slugs. Being able to apply the learning, being able to continue learning.

 

[tspear]

you might not have seen mediocre engineers from top-flight school, but I certainly did.

and after a few years of working, actually producing something, that is what separates the best from the slugs. Being able to apply the learning, being able to continue learning.

In IT I like to ask prospective hires with the following question.
Do you have twenty five (or whatever number) years experience? Or do you have one year of experience twenty five times? The number of people who admit to the following is rather amazing.

Tim

 

[francisco collazos]

Colleges and universities have a lot of blame in this. Lets not forget that they have increased out of state tuition spots and it's not because of the kindness of their hearts. Also students have no control of yearly increases once they are tracked in their majors especially medical and veterinary students.

 

[tspear]

Colleges and universities have a lot of blame in this. Lets not forget that they have increased out of state tuition spots and it's not because of the kindness of their hearts. Also students have no control of yearly increases once they are tracked in their majors especially medical and veterinary students.

A major reason why many colleges increase out of state spots is to drive revenue. They are effectively trying to use out of state students to lower the cost for in-state students. How effective this is, is an open question.

Tim

 

[hindsight2020]

Out of state tuition is their major win. It's a cash cow. Many states have had to resort to compacts with lesser popular adjoining states to honor in-state tuition, in order to serve local populations displaced by more monied out of staters exercising the educational equivalent of college tourism. It's bad enough when it's other americans doing it, but it gets real dicey for the Regents when it's visa holders doing it. yee yee!

 

[chemgeek]

The problem is that students are borrowing unnecessarily large sums of money to attend a specific school with tuition two or three times competing schools (due to the target school being out-of-state or being private, therefore not being subsidized by taxes).

I definitely agree with this. There is no extra value-added for spending more to attend an elite, private institution if you don't take advantage of the curricular quality, personal mentoring, or networking offered to nearly every student at such institutions. I am still baffled by those students I encountered that largely wasted their extraordinary educational opportunities while exhibiting little urgency about what their post-baccalaureate path might be. They would have been better served (or at least less in debt) by attending a more affordable public institution.

I am envious of (but very happy for) the students at the institution where I spent my career. EVERY student at my institution had educational and professional development opportunities that only 1% of those at the public institution like the one I attended as an undergrad could access.

 

[Half Fast]

you might not have seen mediocre engineers from top-flight school, but I certainly did.

and after a few years of working, actually producing something, that is what separates the best from the slugs. Being able to apply the learning, being able to continue learning.

Well, I will.say that we only hired top graduates and I'm sure that made a difference.

 

[Llk]

Community college cost in California: 1700 per year, of which 85-90% of students get free tuition in.

California State Univesity: $6-7500/yr undergraduate

UC system: 13500 a year or so undergrad.

Private universities? Try upwards of the 70kish per year.

Most tenured COMMUNITY college teachers including shop guys with AA’s make over 100k - generally retiring well in the 200k range.

The advent of education standardization by way of learning management systems (Canvas - thank you, Pelosi, big investor and driver of the requirement (Eyeroll) means that a large amount of teachers cheat. How, you say??? The book publisher offers you the whole shell for the course along with the textbook. Quizzes, exams, homework, lessons and lesson plans. What are you left to do??? Take attendance, of course, while all the material shows up in Quizlet, study blue, Chegg and Brainly….

If you don’t think education is one of the most profitable businesses outthere, I have news for you. Just ask a helicopter school how much they make from VA / GI Bill students….

 

[Sierra_Hotel]

Just ask a helicopter school how much they make from VA / GI Bill students….

Same as any other flight school, around $15k/yr.

 

[weilke]

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.

100k loans (at currently 4.99% for fed loan) for a nursing degree is a great deal. Any RN who is financially literate, works full time in the field, puts in some overtime or a travel gig will be able to knock them out in a few years before moving on.

 

[JOhnH]

100k loans (at currently 4.99% for fed loan) for a nursing degree is a great deal. Any RN who is financially literate, works full time in the field, puts in some overtime or a travel gig will be able to knock them out in a few years before moving on.

So then the conversation between parents and kids should not only concern loan terms, interest rates and the general economics of household budgeting, but it should also encompass a conversation about various career fields and their pros and cons (like not being able to meet the terms of said loans).

And of course we all know, kids pay attention are are obedient to their parents.
And we also know that many low income parents are "low income" because they understand those principles so well themselves.

Some kids are going to make stupid choices. Just like in the real Darwinian world, choices have consequences.

 

[Morgan3820]

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.

My daughter is going to med school. While everybody else there is racking up, huge amounts of debt, she is not. She did incure some debt at her undergraduate school program, but only for tuition costs. She worked off room and board as a resident assistant. Worked full-time summers at the local hardware store at home. We let her borrow a car. There always smart ways and not so smart ways to do the same thing. It is all about motivation. The bonus is that I doubt she’ll grow up to be a socialist.
If I wanted to make a career as a pilot, the last thing I would do is walk into the local flight school.

 

[2-Bit Speed]

100k loans (at currently 4.99% for fed loan) for a nursing degree is a great deal. Any RN who is financially literate, works full time in the field, puts in some overtime or a travel gig will be able to knock them out in a few years before moving on.

Maybe. It depends on your risk-tolerance. I would not consider taking out a loan greater than a year's salary for the required training. That's too much risk for me.

Took a quick look and it seems that RNs can expect to earn anywhere from 60K to 90K a year. If that's accurate, I wouldn't be comfortable borrowing more than 40K to become an RN.

 

[Tarheelpilot]

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.

A broke SOB that can’t afford to pay for training out of pocket doesn’t need to be a finance or math expert to question borrowing over 100k for a chance at a job.

Having just a little internal dialogue about how that gets payed back if the flying job never materializes does not require full understanding of the terms. It requires individual responsibility.

Self awareness and maturity overcome a lack of knowledge in many scenarios.

I would also hypothesize the individuals borrowing money as described do it because they are not willing to take a longer more affordable path. They want it now. Whatever it is.

 

[Half Fast]

Self awareness and maturity overcome a lack of knowledge in many scenarios.

Meeting and speaking with a few others who have been down the road can be a big help, too, and doesn't require in-depth financial knowledge.

 

[BMan]

Considering there is a huge current/future demand for pilots to the tune of 6,000 to 60,000 depending on the source, it should behoove the airline and aircraft manufacturers to put some money in the game to support those with potential who seek an aviation career. My daughter is graduating med school and will have a monthly loan payment higher than my mortgage. She isn't whining, though, and is already budgeting for the first five years when she'll earn (essentially) peanuts. There are many graduates I know who have my daughter's attitude, so we have hope for the future...I hope.

 

[BMan]

Self awareness and maturity overcome a lack of knowledge in many scenarios.

Amen. Too bad the youths don't get that from a college degree; parents have to guide and award accordingly to get that ship straight.

 

[DesertNomad]

NBC Nightly News the other night mentioned pilots pulling in 700K/year. My 1st thought was, sure, but it's long road to get to that level. Stories like that and the pilot shortage I'm sure pushes some into bad decisions.

I tried pretty hard to educate my kids on financial matters. Every now and then they still shock me. Just the other day I was telling my daughter now that she has some money and that interest rates are no longer near 0, where she parks her money now makes a difference. She asked my why she has to pay interest to someone to hold her money

If she was in Switzerland she would have to pay someone to hold her money. Interest rates in some places are negative.