Student Loans: a cautionary tale in today's environment

[u/calonmawr10]

I got into my dream school with a decent scholarship a couple weeks after the stock market crashed in 2008. My parents had saved diligently for myself and my twin sister in a 529 account, but we saw that get cut in half overnight. Despite all that, my mom told me to pick the school that would work best for me and to not worry about the cost because "we'd figure out a way to make it work". I applied for hundreds of external scholarships, but didn't get any. So, I chose my expensive private dream school, signed my life away to Sallie Mae (the solution to pay for it after my savings was exhausted, which I didn't know in advance), and started college in fall of 2009.

I was lucky to graduate with a good job thanks to the school's incredible co-op program, but also saddled with $120k worth of loans ($30k federal, the rest private). I met my amazing husband while there, and he was in the same boat. Together, we make a pretty decent living, but we currently owe more on our student loans than we do on our house. Even paying an extra $1k/month (our breakeven with our budget), it'll still take us many years to pay them off. It's so incredibly frustrating watching our friends from school (most of whom don't have loans) be able to live their lives the way they want while we continue to be slaves to our loans for the foreseeable future. No switching jobs because we want a new career, that doesn't pay enough. No moving to a different city, can't afford the hit to the salary in cheaper areas, or the huge cost of living increase in more expensive ones.

I'm happy with my life and that I was able to have the experiences I did (I absolutely loved my school), but not a day goes by that I don't wonder how my life would have been different if I'd made better financial decisions. Parents, don't tell your kids to follow their hearts if the only way there is through massive student loans, particularly if their career will not let them have any hope of paying them off. Students, have those conversations with your parents. If they say don't worry about it, question what that means and what the plan is. Now is the time to be having those discussions, before you've already registered for classes and are looking to pay that first bill. Don't make the same mistakes we did.

Edit:added paragraph breaks

Edit 2: Wow, I did not expect this to blow up so much! Thank you for the awards! It's reassuring (and a bit sad) to hear so many of your stories that are so similar to mine. For all the parents and high school students reading this, please take some time to go through the comments and see how many people this truly affects. Take time to weigh your college financial decisions carefully, whether that be for a 4 year school, community college, or trade school, and ask questions when you don't know or understand something. I hope with this post that everyone is more empowered to make the best decision for them :)

[u/ding-o_bongo]

Why does American education cost so much? Even without subsidies, the cost in the UK for an undergraduate degree and a masters is now about £60k/$75k.

[u/rotten_core → u/[deleted]]

This should be its own post. It isn't that hard to compare a huge tuition bill to a small one. Frustrating to see people choose the school they know is more expensive, then act shocked at the price tag. One round of high school senior refusing to play the game would bring those figures down real quick. But too many worry they're missing out.

[u/danyaspringer → u/[deleted]]

I agree. But on the flip side, in order to make such a business decision, you need experience and information. A lot of families don’t have that and most likely don’t have the money to be sending anyone to school. It’s truly a sticky situation and I agree with your claim, it’s just not that black and white however.

[u/[deleted] → u/danyaspringer]

You don’t need experience and information although yes those those can’t be ignored if you have them already. You just need an escape route for when things go above your head - if you entered into the agreement in good faith and simply didn’t know what you didn’t know, there should be a way to step back from it gracefully. Eduction costs should never have been excluded from bankruptcy law for this very reason.

One third of all businesses fail in their first few years, but we as a society have allowed them to exit out of honest mistakes without forever ruining their lives because we accept that it’s better for people to try and take risks with the possibility to succeed than to paralyze the economy with fear of and/or crippling by bad decisions.

This should be no different.

[u/aw1238mn → u/ding-o_bongo]

You can get an unsubsidized bachelor/masters combo in the US for that too, but some people decide that the private school is more pretty. (Seriously, many people choose a school based on the flowers). Obviously people go to private schools for other reasons too, but the cost is told up front.

That's kind of what the OP is getting at here. YOU have the choice, so don't make the monetarily stupid choice.

[u/ka0812 → u/aw1238mn]

Spot on.

Only point to make is there is a difference between different private schools. Some will give huge scholarships/grants to students they really want. There are of course many that just offer up a mediocre degree and a full $50k/year bill...

[u/ka0812 → u/ding-o_bongo]

In the US, student loans aren’t able to be discharged in bankruptcy and are given out far more easily than other forms of loans because of this. Therefore, 18 y/o kids (and their parents) are getting hundreds of thousands of dollars of loans, irrespective of their actual ability to pay them back.

These kids and their parents have been told the only way to be successful is to attend college and therefore accept these insane sums of loans - not realizing the bill they are saddling themselves with 4 years down the line and overestimating the kids future ability to pay it back.

Colleges know students and their parents will pay to go to their dream school and will have access to hundreds of thousands in loans - meaning they basically have a blank check to charge ridiculous sums. Many schools know students will continue to pay despite year over year increases.

[u/TruthSucks24 → u/ka0812]

Not only this, there are a lot of parents that do not know how to manage money. They weren't raised to understand it and the cycle repeats itself with their kids.

[u/sticky_dicksnot → u/ding-o_bongo]

I went to community college and then the University of Florida. Total tuition was probably less than $8k, and something like 70% of undergrads have their tuition fully covered. Private schools charge that much because people tend to spend what the perceive to be free money really easily-- they're not price sensitive at all.

It's still possible to get a great education for a negligible amount of money. People who don't have no business being at university in the first place IMO.

[u/junque_inthe_trunque → u/sticky_dicksnot]

State school tuition averages 10k .that means lots of schools are twice the cost of where you went for instate tuition

[u/jhobweeks → u/junque_inthe_trunque]

Some states have programs where if you go to community college for at least a year, you pay that same cost per semester for a Bachelors at a state school, which might be what they did.

[u/JESBUSWORK → u/sticky_dicksnot]

Here here. Graduated with my BA and MA for 50,000. Not too bad. Now i take advantage of the government forgiveness program for public workers. I however, was one of those people enrolled in a private school, had 20,000 in savings blew it on tuition that first year. Transferred to a better public school.

[u/Quiddity131 → u/ding-o_bongo]

The federal government getting involved in student lending, the mentality that everyone has to go to college, when for many, it isn't right for them and the massive amount of bloat that is part of the college system these days (useless majors, excessive administrative positions).

This results in a system where the universities can and do jack up the prices to ridiculous levels and can do so because the supply of prospective students is so big, the demand is high, and the government will provide the money for it.

[u/ar9494 → u/ding-o_bongo]

My undergraduate degree cost about 75k, and in my state it would have cost the same to go to a state school as it did to go to the private school I went to, I actually got the opportunity to work in the department I would have majored in at the state school. I got a much better education at the private school I went to. Things like only one lab student actually doing any of the lab work, not being allowed to take more than one of classes that were required at my school.

[u/LeftLegCemetary → u/ding-o_bongo]

Every other comment is also correct, but the biggest issue is greed.

Intentionality confusing, very high interest rates, that are spread between usually 7 or 8 different loans. Those rates fluctuate. Navient also has incredibly bad customer service, which seems very intentional.

Tuition rates are way too high also.

But, yes... community college is pretty damn cheap. My girlfriend went to expensive schools. Could have gotten the same accolades for probably half the price.