OT: College loans/expenses

[Ken Robb]

I live near UCSD, my wife works in Pacific Beach and our church is there too. PB is a community that is home to LOTS of students at UCSD, USD, and SDSU. The bars and coffee bars are always BUSY with young people! I have to think many students are spending $2-10 a day on coffee drinks and at least $15 when they pop into Happy Hour at a bar a few days a week.

I just read an article about "the crushing burden" of student loans. Several of the graduates stated in interviews that they really didn't know where all the money they borrowed went. Some stated if they had known how much their repayments would be they could have got by on much less while they were in school.

Shouldn't these students be really well-counseled before their loans are processed as to what repayment will really be like?

I retired 10 years ago but even then the clerical/support staff members at my office was mostly young women. At the start of the day while I was making a decent single-brew coffee from our Ambassador machine that was FREE I would listen to these "kids" complain about how hard it was for them to make their car payments. This was while they were enjoying their $4 coffee concoctions from Starbucks. I pointed out that $4 x5 days was $20 a week. On weekends they often had 2 coffees a day. The bottom line was about $150 a month on COFFEE! How far would that have gone toward their car payments? How about saving for a down payment on a home.

My folks were Depression survivors so I was taught to carefully consider every expenditure and I still do. I can't help myself. Don't we owe young people at least minimal education in simple real-world economics before they borrow/spend more than they really need?

[paredown]

Kids today!!! (Get of my lawn!) :shakes fist:

Actually, I completely agree. When I worked at Starbucks, we had "regulars" who stopped in morning and evening for expensive drinks--so close to $10 a day for fancy drinks.

More than one of them came to their senses and told us (when we hadn't seen them for a while) that they'd done the math and realized that it was crazy to spend that much on coffee.

To the broader point--yes, most colleges (and parents I fear) do a terrible job explaining that frugality is important--especially if your degree is a bit of a flyer--and there are few guarantees that you will get a decent paying job out of the box.

I do think though it is a case of relative deprivation, though--if you have grown up with everything provided, that's your expectation, even if you have to borrow to maintain it while in college.

If you grew up as I did--starting part-time jobs at 14 to buy your own clothes, et alone luxuries--you are more likely to graduate from college owing very little.

[54ny77]

i think kids deserve more credit and its really the parents that need a scolding for enabling life skill illiteracy.

when the kids get a plastic card from mommy and/or daddy that magically gets paid, there's no sense of ownership or consequence.

when those cards disappear, and cash becomes the required currency, it's funny how the random purchases stop.

seen that happen firsthand with some youngsters i know.

[BobC]

I have had the opposite experience. One of the 2 soccer teams which I coach are comprised primarily of High School seniors. Most have part time jobs in addition to school & athletics. Not only do they watch their pennies pretty closely, the large majority of them are very aware of the cost of college (being in Va Beach, many are military dependents). I have a couple who are incredibly bright & get good grades but pretty much decided to either go to the local Community College or a in-state university. When I ask them what about private college X or Y, they pretty much tell me their parents cannot afford it. They don't even consider it.

Just one final note (as I think this is going to spark a larger conversation -- hopefully positive). I went to U of Illinois for my first 2 years of college ('83-'84). I distinctly remember writing a check for my semester for $495 -- and I complained bitterly about it. This year, UVa's yearly tuition in-state is around $16K (and they have a rainy day fund in excess of $2 billion). Kinda mind blowing.

[thirdgenbird]

I rarely want to admit this, but by birth year, I am a Millennial. I struggle with it mainly because there is a massive cultural divide between most people at the upper end of the spectrum and lower end. I've had to explain what a fax machine was and how the internet worked before google to people that were "my generation." Anyway, I only bring this up to help put my viewpoint in perspective.

My wife and I grew up in families that were in a similar tax bracket but how each approached college couldn't be more different.

When I went to college, it was on me. I filled out the paperwork, I applied for the loans myself, and I had to deal with the financial aid office when they messed up my billing. It was about a year before I took a factory job and transferred to a night program. By my junior year, I was waking up for work at 4am and writing a monthly check for tuition. I also leveraged the companies partial tuition reimbursement. They reimberesed after completion of each class with a tiered percentage based on your grade.

During this time, I was a coffee shop junkie. If you didn't know any better, you would have thrown me in the category depicted above. While it may have been partially true, it was a calculated decision. I didn't pay for internet. In my rural area, this meant a $50ish a month savings. The remaining $50-75 a month I was spending at the coffee shop was for the study environment. My living costs were cheap but not ideal for schoolwork. I also found I functioned well in this environment. There was enough isolation that I could focus and it wasn't quiet enough to make me go crazy. I was such a regular that I was on a first name basis with employees and they would often take breaks in my booth. Sometimes we would chat, sometimes they would see that I was busy and they would just sit down and eat in silence. I graduated with debt from my first year or two, but it was minimal compared to my peers.

My wife maybe represents the other end of the spectrum. She was a few years younger and had no comprehension of he tuition costs and loan amounts. We married just after she graduated and despite asking her parents, we had absolutely no idea what the debt load was until several months after we married. None. I made some educated calculations on a high and low and the actual fell somewhere between but it was a pretty big range.

I usually resist blaming the parents, but in these situations, it's hard to argue that it's a contributing factor. I was somewhat on my own by 16. I was living at home, but it was on me to pay for gas, insurance, and other auto expenses. If I didn't want to eat at home, that was on me as well. By 17 or so, I was basically buying all of my clothes and other possessions. Mom did pay the cell phone (much cheaper in the day) but it was made clear that would get cut off if I did not answer her call/text. It was a tool for her, not a toy for me. I was taught about finances through practical experience before I was truly on my own. It wasn't without mistake, but as I look at my peeers, I'm thankful I made my mistakes early.

[jimcav]

Now that i have a job, it isn't a true financial issue, but even before i retired the principle bothered me. She rarely is more than 5-10 minutes from home (her day is taking kids to school, volunteering at said school, meeting other school moms to walk/talk, grocery 1 mile away, YMCA 4 mile away)--yet she will buy a coffee vs waiting until she is home (or planning ahead and taking a coffee with her). and i think we are on our 3rd or 4th keurig thing--seems expensive to me. i don't drink coffee, and it seems a waste to buy the pods and machine(s). It is a slight time saver, but not that much, plus she forgets to drink the coffee and reheats it anyway, so it isn't about some quality of the fresh coffee.
but, as a guy who will drop several $k on a bike, i can't ever discuss this, which i understand. But it is like leaving the lights on or water running when brushing teeth--so wasteful...

[thirdgenbird]

This may be a regional thing, but I also think our school systems share in the blame. As early as elementary, I remember being taught that I had to get good grades to get into college and I had to get a degree if I wanted to be successful in life. They also celebrated when a graduating class after me had all 200ish students planning to attend some form of post-secondary education.

I don't want to downplay education, but that message can be dangerous. I bet it is safe to assume that not all of those students finished or utilized their degree. My wife doesn't use hers. She found a job that she loves (ironically running a coffee shop) and I think it is great that she can do what she loves. She said that college was not a choice for her. It was an expectation.

Locally, I have started to see the pendulum swing. Skilled trades are getting s better reputation and our local high school and nearby community college have teamed up to make a career academy. It sounds like they are doing a better job at helping kids get the skills they need for the career they want, not just dumping all into the college bucket.

More on coffee:
I still do a purchased coffee about once a day. I don't have cable, I don't consume alcohol, we rarely eat out, it's really my only vice. It may not be the most sound financial decision, but I enjoy it. It also helps that my wife runs the place...

[batman1425]

Some people have a hard time seeing the cumulative effects of small purchases. I think this is especially true in the "modern" financial climate where is the norm to buy things with plastic. It makes it harder to feel the expense when it is just number moving around. Numbers that lots of people don't actually look at. This also isn't restricted to college kids. I see plenty of grown up professionals living paycheck to paycheck spending ridiculous money on superfluous things then complain about making the mortgage, their credit card debt, crappy economy, etc.

I was fortunate enough to be debt free out of undergrad and grad school. Wife's undergrad and med school was out of her and then our pocket. While we were doing our respective graduate work, we lived on an absolute shoe string. My graduate stipend paid the rent and car insurance. Student loans covered the rest. We were astutely aware that we were using borrowed money to exist. But many of our friends didn't get that what so ever. We watched every penny that went out the door and I did mental math for everything that I spent. Weighting need vs. want vs. value. Making a lot of small habit changes - brewing your own coffee instead of the cafe, buying the store brands instead of nationals at the supermarket, finding the "free lunch" seminars on campus can make a HUGE difference in the bottom line at the end of the month and freed up cash for us to "splurg" every now and then on a meal at a restaurant or a trip to see family.

Interesting aside - Navient - the company that we an millions of others use/d to administer student loans is now being sued by the federal government for predatory behaviors like discouraging individuals from seeking out income based repayment plans because they stood to make more money by keeping them on standard repayment schedules.

https://www.nytimes.com/2017/01/18/b...suit.html?_r=0

[Bob Ross]

Originally Posted by thirdgenbird

I don't want to downplay education, but that message can be dangerous.

Well... If the message is simply "It's Important Just To Get A Degree" and that message is completely devoid of context, responsibility, or consequence, then yeah, sure, I'll agree it's dangerous. Or misleading at least.

But I would never agree that getting a higher education is dangerous. The danger comes from expectations, and various parties not communicating what those expectations -- or the context, responsibilities, or consequences -- are. Which is sort of what the OP is really talking about: Communicating.

[thirdgenbird]

Originally Posted by Bob Ross

Well... If the message is simply "It's Important Just To Get A Degree" and that message is completely devoid of context, responsibility, or consequence, then yeah, sure, I'll agree it's dangerous. Or misleading at least.

But I would never agree that getting a higher education is dangerous. The danger comes from expectations, and various parties not communicating what those expectations -- or the context, responsibilities, or consequences -- are. Which is sort of what the OP is really talking about: Communicating.

Yes, I didn't mean to send the message that the education itself is the issue. It is the expectations and consequences that can come as a result. I've seen many peers believe that a degree is a ticket to success. Many people also don't understand the implications of the debt.

54ny sort of speaks to one of the examples that comes to mind. My wife was required to go to a private school rather than pursue an education in a field that she would have used. The result was massive debt for a degree in a competitive field that she really didn't expect to use.

[Nooch]

Man, I'm a classic example of screwing the pooch with regards to college.

I partially blame my folks, partly because it's easy to, but partly because they were (and still are) too self absorbed to have been any help in the decision making process.

I had ZERO idea what I wanted to do with my life. I still don't, at 32. I knew a few things -- I wanted to make money and be comfortable, I wanted a family, I wanted all the things I was told I could have, but as far as how to get there? No freaking clue. Oh and I loved cars... more on that later.

I left high school and went to an out-of-state-state school. I was able to use my mother's address to get the in-state, so that was okay. I studied journalism, and realized quickly, that journalism wasn't what I thought it'd be.. I had a miserable experience due to the dorm situation, so I detached and worked 7 hours a day at a grocery store, 5 days a week.

I'd started seeing a girl over the summer between HS and College, and spent a lot of time visiting her at her school (state school, state I had previously lived), and decided that I should transfer.

The week after getting my acceptance, she get's the boot. Young and naive and in love/lust/what have you, we came up with a plan to get an apartment off campus and she'd go to the community college, I'd go to school, we'd work at the grocery store, and all would be hunky dory.

We broke up like, two months into it..

I took out loan after loan after loan. Loans went to tuition, they went to rent, when my car died not only did they go toward that, but using the remaining balance I decided to build the new car into a show car.. I fell into the VW scene to escape the 'loneliness' I'd ended up in..

Ended up dropping out of that school. Living 20+ minutes from campus, oversleep a little and you're screwed.. Left that school with over $35k in loans outstanding, no degree, nothing. Went home, got a job, loans came due, couldn't pay em making $8.25/hour, deferred, forbear-ed, etc...

Interest has capitalized and I'm finally just getting down to the original balances. I ended up getting my degree at night, taking out only $5k in additional stafford loans, and paying the rest out of pocket. Loan's are going down slowly, but it's just part of life for at least the next ten years.

I'm in a job that pays well enough, I have a family, i bought a house -- but I can't help feeling that I'd have been in a much better place is my parents stopped and said 'Listen, you don't know what you want to do, work for a year or two until you figure it out.' I very easily would have ended up in the same place I'm at without the debt..

My kids will learn about trades, will spend their first years at a community college, will figure out what they want out of life.

My sister and I discussed it, because she's in a similar boat, and she says "Mom and Dad told us we could be anything we wanted. They just never gave us any sort of direction as far as what anything actually was..."

[jensenn]

i must have been 12 or 13 (i'm still in my 20s), i remember walking out of our corner gas station and i saw a couple pennies on the ground and i stopped to pick it up. an elderly man saw and he complimented me and said something alone the lines of "can't get to a dollar without a penny, can't get to a hundred bucks without a dollar." from then i've always been critical of where my money goes and how i can make more with what i have. i've worked since i was 15 years old and haven't asked my parents for money since then.

for college, i had gotten accepted at all the big name colleges with the goal of becoming a doctor, lawyer, etc. but at the end of junior year of high school my mom sat me down and told me that if i was to go to one of those big colleges, she wouldn't be able to help since we just couldn't afford it. she gave me the option to go to a local state school, live at home, and we can figure out how to help each other pay for tuition and books. i took a part time job working graveyard shift as a front desk at a hotel. this is probably one of the best things that happened to me. i was able to max out my class credits, have a social life, and be able to study and do my homework while getting paid. i also applied and received a bunch of private scholarships that i kept in a savings account whenever we were short of funds. graduated on time, debt free. fast forward a few more years and i was able to get my work to pay for my masters degree in full.

on the other hand, my wife went away for college at one of the schools i actually got accepted to. she left with a ton of debt and was a major source of stress for her. but the coffee issue comes up again. she used to buy 2 cups of coffee a day while i made coffee at home and kept a thermos to bring to work. i sat her down one day and did the math with her and shes gotten better. i also helped her set up a payment plan for her loans that allows her to save a little bit every month just in case there is an emergency.

the past couple of years she's shown me that she has gotten better with money. she also just went back for her masters and what she's saving is going to her tuition. so i went ahead and dipped into my savings and paid off all of her student loans. since that money was going to be used for a down payment for a hour, but since were not sure where and when we want to settle down, we would be losing out on a ton of money due to interest.

[oldpotatoe]

Originally Posted by jimcav

Now that i have a job, it isn't a true financial issue, but even before i retired the principle bothered me. She rarely is more than 5-10 minutes from home (her day is taking kids to school, volunteering at said school, meeting other school moms to walk/talk, grocery 1 mile away, YMCA 4 mile away)--yet she will buy a coffee vs waiting until she is home (or planning ahead and taking a coffee with her). and i think we are on our 3rd or 4th keurig thing--seems expensive to me. i don't drink coffee, and it seems a waste to buy the pods and machine(s). It is a slight time saver, but not that much, plus she forgets to drink the coffee and reheats it anyway, so it isn't about some quality of the fresh coffee.
but, as a guy who will drop several $k on a bike, i can't ever discuss this, which i understand. But it is like leaving the lights on or water running when brushing teeth--so wasteful...

https://angelinos.com/

And for the OP, it's the parents job, next the school counselor's job. Altho when I went to college, my 'counselor' was a waste of time.

Not 'our' job, as old fart's, IMHO.

[tuscanyswe]

Originally Posted by oldpotatoe

https://angelinos.com/

And for the OP, it's the parents job, next the school counselor's job. Altho when I went to college, my 'counselor' was a waste of time.

Not 'our' job, as old fart's, IMHO.

Do i misunderstand you?

Don't you think it would be very beneficial for young ppl and society as a whole if all were taught some basic idea of personal economics in their schooling?

I mean lots of things are down to your parents, there is no way of getting around that. Some ppl are blessed with parents who have time, love, know how and also better habits then other parents. Some of these things will always be unfair and are very hard to even out amongst everyone but this seems like a very easy topic to teach everyone to a certain extent and a whole lot more educational in todays world than knowing dates of certain events in ww1 or similar stuff.

[oldpotatoe]

Originally Posted by tuscanyswe

Do i misunderstand you?

Don't you think it would be very beneficial for young ppl and society as a whole if all were taught some basic idea of personal economics in their schooling?

I mean lots of things are down to your parents, there is no way of getting around that. Some ppl are blessed with parents who have time, love, know how and also better habits then other parents. Some of these things will always be unfair and are very hard to even out amongst everyone but this seems like a very easy topic to teach everyone to a certain extent and a whole lot more educational in todays world than knowing dates of certain events in ww1 or similar stuff.

Basic ideas of personal economics? You bet, but I think the parents job. And in later stages of HS? Sure, but as a general statement that 'older' folks 'ought' to teach 'younger folks' about personal finance..don't see it as 'my job'.

If the parents or school aren't up to the job, there are many online and in person resources to give training/insight/schooling about this.

MY point was if young somebody at a Starbucks, slurping down a $5 whatever, complains about not being able to afford their rent, I'm not going to 'give them a talking to'.

IMHO