I wonder if it was just my social circle or if this trend towards a relaxing trouble free ride through college is a more recent phenomenon.
I graduated college in 1983. Worked and paid my own way. Owed no one a dime. Likewise, didn’t know anyone going on student loans.
I think much of it depends when you went to college. When I went (early 1970s), tuition at my school was around $600 per semester. I could handle that cost by working in the summer.
Now it’s over $9000 per semester.
Cost of University education has nearly tripled relative to the economy. That holds true whether you’re looking at Transportation, housing, food, Etc. Paying for bloated professor salaries and the so-called research University status.
Look at the cost of going to a decent University in 1978, and then look at the same University today. Back then it was literally possible to do it on a pay-as-you-go system.
Today $30,000 University per annum is commonplace, 50,000 is not very rare. So to pay their way through school on a pay-as-you-go basis, a student would need some 50 or $60,000 a year job to pay the tuition, and live.
Of course, there are educational Alternatives out there. But I would easily say 80% of American universities are priced so high that it’s not possible for somebody out of high school to Simply obtain a job and do it on a pay-as-you-go basis.
The biggest driver of this increase of cost is making student loan debt non-dischargeable in bankruptcy, and the federal government taking over all student loans. This ensured that the universities could charge anything they wanted, the banks could loan it out knowing it could not be discharged in bankruptcy, so there is no Force out there that exerts a downward pressure on prices. Universities have no incentive to do so, and thanks incur no risk for making these loans tell the girls studying lesbian basket weaving who will emerge to find no jobs waiting.
The way to fix it is for the federal government to get out of the Federal Loan guarantee in business and turn those over to the private sector. And make them dischargeable in a bankruptcy. Then free market lenders would only give loans to people who had a reasonable chance to pay them back with the degree they were getting, and universities would need to lower prices to attract students willing to take on those loans.
One of my kids recently completed his Bachelors Degree. He had some good scholarships and we loaned him some. He took out a small amount of student debt, about $15,000.
As an Aerospace Engineer, his college job and his current job pay very well, so the debt won’t be onerous. He should have it all paid off within a few more months.
But when he talked to the finance office at school, it was all about how much you qualify for, nothing was said about should you take it.
I heard a guy on Dave Ramsey’s show the other day. He had about $150K in debt for some weird sounding degree that had few jobs and those only paid $35K a year max.
Ramsey was clearly biting his tongue wondering why someone would take out such deep debt for no chance at ever repaying it.
The guy was painting houses because there was nothing close to his field.
Last year I was talking to another friend, an engineer about his kids and college. He was totally ignorant and said his kids could borrow all they wanted because the payoff was interest free. I explained that there are two types, both at 5-6%. One accrues interest the day you cash the check, the other accrues a couple months after you graduate. He had no idea.
The whole thing is a scam. I firmly believe that unless you have a specific path in a hard science field, college is a net loss. One of my kids went into a trade. The others are working full time and slowly finishing their degrees at online schools, which are quite affordable, but you don’t get the vaunted “college experience.” That’s another topic.
When this particular pile of printed, Fed.gov backed, printed Federal Reserve currency debt collapses, you will find A LOT of fraud, just like in housing.
Kids going to America’s top 100 universities are not in massive debt, or if they have a lot of debt, they are not defaulting on it.
This debt will be revealed to be supporting a lot of phony schools, a lot of really bad schools, non-existent degrees, a lot of welfare for America’s urban underclass, and a lot of fraud and criminals.
My older sister (2 years older graduated HS in ‘83), younger sister, and both brothers all had some level of student loans. Compared to today’s standard it was much less and didn’t have the same bite (% of income) once they graduated.
My daughters don’t have any - because I’m paying (expectation is they pay back 50% without interest - my wife will see to that as I watch the garden grow), BUT all their fellow students have loans out the whazooo and many spend it on things above and beyond tuition, books, and housing.
From what I can tell very few have part time jobs and the loans will be taking a big bite of their pay when/if they graduate. I typically pay fresh engineers 50-60k/year depending on the company size and their degree level/internships.
My hires have told me that their loans typically take about 10-15% of their earnings ($500-700/month). Money that should be getting put aside for a down payment on a home. From what they have said there are some that have taken even more out than they have and spent it on partying.
i paid my loans back.
that used to be expected, understood, required, normal human behavior
if things are changed and people don’t have to repay money that other folks entrust, lend to them.........
please so advise.....
so I can rush down to the local Corvette dealer, PRONTO!
Government sponsored student loans started soon after Sputnik. Interest rates were always quite high, so it was an advantage to pay off the debt as soon as possible.
People sometimes forget how much inflation has occurred. When I went to a good private college in the early 70s, the cost was a little over $5000 a year.
The latest issue of the alumni magazine points out that would be $20,000 in today’s dollars, so maybe it wasn’t so cheap as we remember. Of course, they charge much more than $20,000 nowadays, but at least the dormitories no long resemble the barracks at Camp Swampy.
Price vs reward.
I am in cyber security, my BS which I am finishing will likely cost me $30K. Another $30 to $40 K to complete my Masters. With that degree and certifications, I can reasonably expect a salary in the $200 to $250 K range.
So a 2 to 4 year payoff for me.
These days folks use their student loans to live on. They don’t work. They take Minimum loads. It’s really a shell game by colleges to raise tuition costs
When the government became involved universities were no longer required to make education affordable to the average user. They were unfettered to charge whatever they could get. Rapidly, students couldn’t make enough to work their way through and pay their education bills. Thus, education loans became common.
When government redid the rules for pension funding, they redid them for themselves as well. Thus, federal pensions, instead of being paid from the general fund, had to demonstrate where the funding would come from. Raising taxes would have been impossible. So, they decided to fund the pensions from student debt, which averaged $50,000 over 30 years. To do that they had to pass a law making it impossible for a bankruptcy judge to ever forgive that debt. Prior to that law student loans for that course on underwater basket weaving and gender studies were forgive before cars or houses. Now, it’s the opposite.
Went to college in the late 70s, early 80s. Managed to pay for the first few years, but then the recession hit and summer jobs were scarce for college kids. My parents had divorced while I was a freshman in high school, and I received very little financial support from them (low-middle class family). I did end up with a loan balance upon graduation, but it was paid off in less than two years.
All worked out well, and I paid the $500 back well before any part of it was due.
Fast forwarding a bit, after college when I was applying for a home loan, the fact that I had paid off a student loan, and did so early, was apparently a very nice positive for my credit rating as a young dude.
My daughter graduated college in 2010, with a little over $20,000 in loans. She worked as much as she could, and I helped as much as I could, and her grandparents helped. She went 4 years and got Bachelor of Science/Registered Nurse degree. Went to a state university. Fortunately, she understood the need to pay off the loan, and did so.
I was a single parent, no child support at that age, I did what I could.
Uh, yes, you are wrong.
I am opening myself to get flamed here bigly, i went in under the delusion it would get me a job paying 30 percent more than i made for the first decade after graduating in 07 at 29 years old. I bought into society’s perpetual lie about college and my wife graduated s year later and together we owe 6 figures that will not be repaid more than likely as she is filing for disability now. From kindergarten on I was endocrinated that it was necessary and had no reason to doubt. Now i do, and pray for forgiveness or bankruptcy relief but alas no help. Removing the guarantees of student loans would drive the cost back down, as with anything when govt throws money at it it skyrockets the price
I went in the later 70s and I did need to take a student loan although I did work as well. For a 4 year degree I paid back just under $9k. I paid it off in 5 years. At the time that $9k was almost a years salary at the job I took right after graduating. I had an engineering degree. I don’t know how the social studies (I can’t bring myself to say sciences) managed. I worked through getting my graduate degrees.
College tuition is way over priced for what the students get today.
In the late 70’s, my in-laws used the student loans because they were at 4% and savings accounts were higher than that.
With tuition assistance via the Air Force, I accumulated 2 degrees with roughly $6k out of my pocket (1970s/1980s).