[quote=Scarlett]Then I think a first step should be changing those rules. Somehow they remind me too much of the income-stated loans for houses…How about documenting all that?
I understand even if family helps them it may not be enough, but, then loan amount should be correspondingly less. I guess it is impossible to know how much the familly helps.
But anyhow loans for living expenses should really cover bare minimum – like for housing an average rent in student housing or half the rent (you get 1 roommate) of a 1 bdr place close to univ; for food – just the equivalent of 2 meal a day at the cafeteria. A small transportation allowance if not living on campus. Really, if he needs more, then the student can take odd jobs or tutoring. or help from family.
Actually the first thing the high-school students should be taught is the compound interest calculation and how much debt they would acquire in college and how long it takes to pay it off, and how long it takes to save for retirement (I know, who think about that at 18?) – so they are not completely duped and avoid college loans like the plague they are.[/quote]
I agree that financial literacy should be taught in HS.
These “Perkins” loans and others are made privately and some are backed by the Federal government thru “Sallie Mae.” The lender of government-backed loans doesn’t really CARE if the student is able to pay them back or not. They get paid by Sallie Mae right after making the loan and then service it. No one can predict ALL college living expenses in advance, especially if the school is located in a high-cost area. Gas fluctuates in price and a student could move 3-6 times in the course of their university stint. When one or more roommates move and the remaining roommates can’t readily find another one, they often separate and move if they are not bound to a lease. Cars break down and a student could end up in a hospital emergency room or have a dental emergency and incur a large co-payment to be deposited immediately with the provider, even if insured. A new roommate or a guest could eat or steal your student’s monthly stockpile of food. Campus “cafeteria” cards are very, very expensive and the student has to be there during certain times of the day to eat the meals. In UC/CSU, they currently average $350-$500 mo but are paid for by the quarter/semester whether they are used often … or not. If your student works, they can’t possibly show up for even half the meals in the cafeteria. The vast majority of “dorms” do not have private bedrooms and one bathroom is typically shared by 2-4 students (or 20+ students if the dorm is 50+ years old). Dorms cost about $650 – $900 mo at CA public universities. Students can share apartments and houses and buy food MUCH cheaper than this (yes, even in SF, SD, Berkeley, Santa Barbara, Orange Co and West LA) and have a lot more privacy.
The full cost of attending college full-time (esp in a high cost area) is often unknown to the student until they actually settle in and figure everything out. It is not uncommon for them to have to take a job when they weren’t planning on doing so. Such is life.
