I totally agree with much of your post. It’s so spot on target the part about seeing what major you will go into. I see it all the times including with my brother and sisters which I’ve had heated arguments over the years in the past.
I’m one of those kids that graduated with over $100,000 in student loans (and keep in mind this was a while ago!). It’s actually not hard to do when you’re going to a top school or even a not top school that is private or if it’s a State school and you are paying out of state tuition. Add in room and board, books/supplies, just every day living stuff, fraternity/sorority, etc. Not hard to rack up over $25,000 a year or much more!
Fortunately upon graduating I found a great job and worked to climb up the corporate ladder. I made some pretty phenomenal income and my goal was just to pay off the student loans ASAP in as few years as possible.
All my friends found pretty decent jobs that paid well. Several of them also had student loans. But instead of trying to pay them off early they were buying a $50,000 car out of the gate, living in a super expensive apartment, traveling and just pretty much still living paycheck to paycheck when it is was all said and done. (Kind of how BG mentioned).
I kept the same car I had from college. I lived in a fairly mediocre (i.e. affordable) apartment for a few years, even though I was making amazing money and could afford more. But I know I was the exception not the norm.
It’s wicked the system of these student loans because lenders are lined up to just dole out TONS of student loans. Maybe things have changed today but back when I was going to school it was VERY easy to get student loans. You wanted more? No problem. Because they aren’t dischargeable in bankruptcy the lenders were practically throwing money at you.
And it was NOT just college loans. At the time, credit card companies weren’t barred from coming on campuses and they would pay students to try to get other students to sign up for credit cards. (I believe that is illegal in most states now). Well, I had a part time job at the time. I remember how crazy it was because I kept signing up for credit cards because at the time they were typically giving away some freebie. I think I graduated with something like $100,000 in available credit if I wanted to spend it. I always thought it was INSANE to give someone young with not much income that kind of available credit. I’m sure that doesn’t exist today thank God!
I’m sure today is probably different but I know people that are totally screwed and can’t buy a house and a good example. My best friend’s sister in law graduated from a no name private university (i.e. pretty crappy quality education but extremely pricey). She didn’t get a worthless degree. I believe she got a business degree and works in a bank now.
Nothing high level or anything. I believe she also got an MBA degree (at the same private expensive university). So here is a girl that is in her mid/late 20’s that has over $180,000 in student loans! Keep in mind she didn’t get some worthless Art History, Sociology, Anthopology, Fine Arts, Psychology, Communications, etc. She got a business degree with an MBA degree.
However, she didn’t study to become a doctor or lawyer or another profession where she can make really significant income. She lives in a small town in the Midwest where there are barely any jobs and struggled to get that job.
She has so many different student loans with so many different lenders. My best friend sat down with her and tried to make her understand which she needed to pay off first as some were higher interest. LOL.
I thought it was comical because she works at a bank! Seems like common sense to me. Some of these loans were VERY high which seems absurd for this extremely low/no interest environment that we are in.
And the real kicker and something telling is although she works at a bank, she could only get a VERY small portion of it refinanced at a lower rate. Some of the rates are shocking. Her own employer a bank, didn’t want to touch refinancing it. LOL. What does that say?
She makes ok money and her husband works a restaurant job. They probably won’t be able to buy a house any time in the near future. Not with $185,000 student loans.
Pretty ugly what the trends are with costs of some of these college and universities. I’m just wondering what college will cost in 12-15 years when my kids have to go off.
I don’t agree with BG’s point of “don’t get a college loan”. Not at all. I just think that you have to really take an intimate look at what field of study you will go into, the prospects for employment in that field, how much your education costs vs. typical salary levels in that field.
I’m a good example how college loans can and do work. Same thing with many of my close friends my age that also got lots of student loans (albeit in decent fields like law, medicine, accounting, engineering, etc). NONE of these people could have gone to college and became or achieved what they have in life without borrowing for college.
So the answer is NOT to say, “Don’t borrow for college”.
