Another ridiculous college debt story

[flintlock]

http://finance.yahoo.com/college-edu...ady-to-explode

Kelli Space, 23, graduated from Northeastern University in 2009 with a bachelor's in sociology — and a whopping $200,000 in student loan debt. Space, who lives with her parents and works full-time, put up a Web site called TwoHundredThou.com soliciting donations to help meet her debt obligation, which is $891 a month. That number jumps to $1,600 next November.

I'm not sure if this is simply a matter of our terrible education system when it comes to personal finance or the fact that these kids keep getting terrible advice from parents, high school advisors, etc. Common sense is dead in America.

[jpatter666]

Re: Another ridiculous college debt story

http://finance.yahoo.com/college-edu...ady-to-explode


I'm not sure if this is simply a matter of our terrible education system when it comes to personal finance or the fact that these kids keep getting terrible advice from parents, high school advisors, etc. Common sense is dead in America.

Both. It's a matter of indoctrination, over-sized expectations -- and of course, our old friend FIRE.

The indoctrination is that in order to achieve "the good life" in America you *absolutely must have* a college education! The best you can afford! The value of a college education can *not* be measured!

...and other such twaddle. The fear tactics and manipulation in the college loan industry put the housing bubble to shame. And unlike housing, no walking away from student loans!

And of course, colleges do *not* want you thinking about the costs -- or whether your degree in advanced basket weaving really will get you that 100K/year salary. Value for your money is *never* discussed because a college education is by *definition* an immeasurable experience (just sign here in triplicate please)!

My wife fell into this debt pit getting her MBA (this was before we met). She would have paid off the loans just before she retired. We paid them off (finally) this year by buckling down and putting every saved dime against the amount. She now hates debt worse than me -- her eyes are fully open -- and it's been very interesting seeing the change.

People just don't think they are being taken -- this is just the way it is, everyone does it this way.

[thriftyandboringinohio]

Re: Another ridiculous college debt story

I looked up the tution at Northeastern - it's $50,000 / year.
Folks of modest means should shop elsewhere for education.
Caveat Emptor.

[don]

Re: Another ridiculous college debt story

Both. It's a matter of indoctrination, over-sized expectations -- and of course, our old friend FIRE.

The indoctrination is that in order to achieve "the good life" in America you *absolutely must have* a college education! The best you can afford! The value of a college education can *not* be measured!

...and other such twaddle. The fear tactics and manipulation in the college loan industry put the housing bubble to shame. And unlike housing, no walking away from student loans!

And of course, colleges do *not* want you thinking about the costs -- or whether your degree in advanced basket weaving really will get you that 100K/year salary. Value for your money is *never* discussed because a college education is by *definition* an immeasurable experience (just sign here in triplicate please)!

My wife fell into this debt pit getting her MBA (this was before we met). She would have paid off the loans just before she retired. We paid them off (finally) this year by buckling down and putting every saved dime against the amount. She now hates debt worse than me -- her eyes are fully open -- and it's been very interesting seeing the change.

People just don't think they are being taken -- this is just the way it is, everyone does it this way.

Well done, 666. This is a rich vein, indeed, seldom explored.

A few observations:

The NAR mantra on home ownership- "they aren't making anymore land...everyone needs to live somewhere"...that we all know so well wilts in the face of the moral hammer used by the education industry.

This is a mother lode on the National Psyche. "Who could possibly be against getting an education", fueled by "if you don't, forget getting a decent job (fear)". The use made of this education is rather strictly prescribed. America's distrust of its elite is not referring to the actual ruling elites but rather Americans that read books.

Putting it in a crude nutshell, it reads out as seeing a degree as a tool of employment .... get the job ... then collapse in front of the MSM nightly fare.

Or put another way, how many friends that don't read cite "all the reading I had to do in school" as the reason.

I may not be doing it justice but it's a fascinating insight. Thanks again, 666.

[Serge_Tomiko]

Re: Another ridiculous college debt story

http://finance.yahoo.com/college-edu...ady-to-explode

I'm not sure if this is simply a matter of our terrible education system when it comes to personal finance or the fact that these kids keep getting terrible advice from parents, high school advisors, etc. Common sense is dead in America.

Northeastern is well known as a mediocre school. How can it possibly cost you $50K a year there?

Clearly, Kelli should have been spending her weekends working rather than whoring around. Or at least, if she was going to whore around - do it the old fashioned way so you make some cash!

I would ban education loans in a second if I were dictator, but this is just ridiculous.

[Serge_Tomiko]

Re: Another ridiculous college debt story

I looked up the tution at Northeastern - it's $50,000 / year.
Folks of modest means should shop elsewhere for education.
Caveat Emptor.

Wow. I stand corrected.

I went to a decent second tier college with two scholarships that took care of most of my tuition. I worked to pay for living expenses, and took out a few loans later on. I did this because I had no credit and federal loans in the late 1990s were for very small sums your 1st and 2nd year - it must have been about $3,000.

Anyway, tuition at my college was $15,000 a year, and I graduated in 2000.

[flintlock]

Re: Another ridiculous college debt story

Just like with housing, EZ credit leads to higher prices. If they'd apply more strict lending standards to education we'd see those prices drop also.

The other day a customer was going on about how much her daughter's education at NYU cost. Also something like $200k if I remember correctly. Degree in some sort of photography. She said within days of getting there her kid didn't like it and wanted to transfer! Meanwhile this woman lives in a home that is run down and needs $100k in work. She went on and on about how I should start applying now so that my kids could get into the best schools. With three kids to educate, no thanks. I'm not sure how much of this is parents wanting the best for their children vs wanting bragging rights at the next party. It's cheaper just to buy the sweatshirt and lie about it.

[zoog]

Re: Another ridiculous college debt story

Wow. I stand corrected.

I went to a decent second tier college with two scholarships that took care of most of my tuition. I worked to pay for living expenses, and took out a few loans later on. I did this because I had no credit and federal loans in the late 1990s were for very small sums your 1st and 2nd year - it must have been about $3,000.

Anyway, tuition at my college was $15,000 a year, and I graduated in 2000.

Bear in mind that using the official government data, college tuition has increased almost 100% since 2000. And about 260% since 1990. And nearly 800% since 1980.



Anyone think the average salary for college graduates has doubled in the last ten years?

[dbarberic]

Re: Another ridiculous college debt story

Just like with housing, EZ credit leads to higher prices. If they'd apply more strict lending standards to education we'd see those prices drop also.

Bingo. If easy credit for school loans did not exist, colleges would not have been able to raise tuition prices exponentially as they have been doing.

[radon]

Re: Another ridiculous college debt story

Just like with housing, EZ credit leads to higher prices. If they'd apply more strict lending standards to education we'd see those prices drop also.

We should also get rid of the undue hardship clause as a barrier to discharging the debt in bankruptcy. That aught to make them a little more reluctant to enable a kid to commit financial suicide.

[don]

Re: Another ridiculous college debt story

a campus engulfed in flames....


this bozo is not the prime suspect...

[mooncliff]

Re: Another ridiculous college debt story

I agree that college education is in a bubble fed by too easy financing. However, I think that maybe half of the increase in cost is because of FIRE, but the other half is due to actual increases in costs.

After having attended three universities and having taught at three, I would say that the differences among the educational experiences were enormous. Differences in the students, what they discuss in and out of class, and unbelievably huge differences in the faculty. I have worked with faculty who don't know basic things in their own field. I am not joking. Like medical school graduates who do not understand sterility, don't know how to use a computer (I mean at the level of using it as a typewriter, not programming), don't know that humans have 46 chromosomes not 48, PhDs in physics and from CalTech who don't know basic things about what is happening in physics that could be gleaned from casual flipping through a science magazine and insist on what they learned out of a textbook 20 years ago being correct, political science professors who don't know anything about oil and insist that cars that run on water will solve our problems, and on and on, all day every day. Couldn't make this stuff up if I tried. On the other hand, I have had courses taught by Nobel laureates. So these differences can be huge.

The other thing that is different is that what is being taught now, at least in the sciences, is vastly more complex and much more expensive to do research in. I once flipped through science PhD theses from the 1960s in the library. They were less than 50 pages and were what would be an undergraduate paper today. I don't say that to disparage the theses; I say that to illustrate the 10 to 100 fold increase in complexity of what is being studied. A new biomedical research complex can easily be over 1 billion dollars. Even the non-research-grade microscopes used to teach are $2,000 each, and we needed 100 of them.

When I finished graduate school, I had what would be now, adjusted for inflation, about $100,000 in loans. Grad school was 15 hours a day, 360 days a year, so going to work was much better. I worked 10 hour days 6 days a week, lived in a small apartment in central Tokyo, and after two years, wrote three checks and that was the end of the loans. Of course my experience is unusual, but I can understand how someone 18 years old wouldn't understand what they were getting into (I certainly didn't). And since everyone has been taught or learned from experience that economic growth "goes on forever", there was no problem believing that future earning power would allow the loans to be paid off in a reasonable way, just like there was no problem in believing that all the pension promises were reasonable and would be paid. I know people with student loans at 9% interest, and the issuers refuse to adjust the rate.

[c1ue]

Re: Another ridiculous college debt story

Clearly, Kelli should have been spending her weekends working rather than whoring around. Or at least, if she was going to whore around - do it the old fashioned way so you make some cash!

Clearly, you didn't actually read the full article.

Ms. Space did apparently work part time during her education.

But then again, just how much money are you going to make at $10/hour (or less) after FICA?

Of her $189K+, $20K is interest. I doubt her part time work would have done more than equalize the interest costs.

Plus there are those little niggling things like everyday survival.

Obviously paying $200K in tuition for a sociology degree is not a good investment, but equally so she as a first time college attendee from her family and very likely also not from a financially astute family, was almost certainly victimized by an unscrupulous FIRE economy student loan system.