Friday, July 15, 2011

College Ain't What it Used to Be

I started my undergraduate college in 1967. It was a revelation, and I can honestly say it opened my eyes to a whole new world outside of the small, homogenous, working class coastal town I'd grown up in. I was the first one in my family to even consider higher education. Heck, my mother was the only one who finished high school.

Thanks to scholarships, my college education cost me $54 a term.

But clearly it's a different world out there now.

This article from CNN just makes me sad.

Sad and angry--especially angry that an education could possibly cost anyone that much money, and sad that anyone would really think it is worth it to incur that level of debt.

I have five daughters, only two of whom have yet tried college. One started at age 30 and put herself through three years with Pell grants and her own earnings. She quit when a summer internship led her to the job of her dreams with the state. Another went for one semester, borrowing a small amount to supplement what her mother (Ahem! That would be Grace!) had saved for her. Had she not dropped out to be with her boyfriend (a whole other story, and needless to say, the boyfriend was history shortly thereafter!), I was prepared to sell my rental property in order to keep her in school.

But to incur $50,000+ in student loans? Or $100,000? Wow! Where were the parents? Didn't they offer any money or advice along the way? Where did these young people think their loan payments were going to come from?

I can't help it. I'm just shaking my head.


Anonymous said...

I don't think 50K in debt is too bad. That's about a down payment on a house in a reasonably sized town, so something that could be saved up for in a reasonable amount of time (even if it means putting off a house purchase for a while). It is doable for most college graduates even if it takes a while to pay back the loans. It might be tough the first few years out, but with low interest rates, it will be able to be paid off once a person is more settled. Some sacrifice is worth it for the greater earning and employment power, and 50K due over many years isn't crippling for the average college grad. It might even help teaching discipline early on when the debt payment is a larger chunk of take-home pay than it will be later, before all those other mid-career expenses hit.

But yes, lots more debt than that seems to be pretty insurmountable.

DeeDee said...

My oldest did two years, all paid on her own, and is now a SAHM.

My next? Her dad ticked of a family court judge and ended up awarded with a mandatory order to pay for college. Since he's a much better money manager than I, and had better salary and fewer obligations, he did it without loans, and her education cost over $200,000 (Cornell with semesters abroad). Many of her classmates either had well-to-do parents, scholarships, or crippling debt.

With the rest we'll have to see. We are paying for community college and more or less refusing to cosign loans until they prove they can manage that much (one has dropped out and we'll see on the next one!)


slugmama said...

We discovered 3 years ago that today's higher education finance scene is nothing like when Hubs and I were students in the late '70/early '80s!

There are lots of reasons people are racking up what I call "stupid" amounts of student debt.....from having no parents who are savvy about the college process to advise them, to insisting on going to the "right" school no matter the cost, to not even looking at the price tag, and on and on.

I am of the school that no parent "owes" their child the cost of a college education. If you have enough to pay all your bills and to adequately fund your retirement AND there is extra money, they put it aside for their college. After all, no one will loan you money to fund retirement but if needed they are more than happy to loan it for college, right?lol

My son picked his school with how much $ we had to put toward his college expenses in mind. He's 2 years down with 2 more to go and between working and a very small scholarship he just might finish with no debt. He is getting a fine education(it's all about what you put into it, not how much it costs)and won't have to settle and take a job he hates just to afford to pay his loans AND eat and can take the job of his passion and grow a career.

My daughter is entering this Aug. She had to choose between the school she set her heart on and her back-up school(she applied to 5 and got into all 5). The 1st choice pricey school gave her no scholarship $, just loans and the back-up school gave her a small scholarship and a guaranteed seat in an affiliated medical school once she graduates(if she keeps her grades up). With what we can afford to give her toward school, she would come out of 1st choice with $60K+ in debt or she 'might' have $2K in debt after 4 yrs. at back-up school.

There were many family discussions about school and money but I left it in her hands to choose where to go, since she was the one who would have to live with the financial consequences.
She chose the back-up school. We are very proud of the level of maturity she showed in doing so.
Especially since once she hits medical school, she is on her own coming up with the $250K+ in tuition for that!lol

Grace. said...

N & M--I think $50 is a heck of a lot for UNDERGRADUATE studies. I could maybe see it for graduate school, but even then. . . I'm thinking that unless one is going for an MD (even those with law degrees aren't earning what they used to right out of school), large amounts of debt are not a solution. One of those students in the article was an engineer--I thought those graduates had it made, but apparently NOT!

Rita said...

It cost me $28,000 with all the grants I received and a small loan I had to pay back of $2,000 I think it went pretty well. That $28, was paid over time with grants mostly. When there was a debt to the school used my tax return to pay on the bill. So glad I did not have major debt since it took me two years making only $5,000 a year to find a good teaching position. After I acquired a position I paid off my house, car and began saving nearly half of my income. So glad I did. I am being forced out at 60 instead of 63 like I had planned. Sometimes things go well if you have not over spent. If you do it's nearly impossible to dig out of the hole.

Neil said...

There is no doubt the cost of quality education is on the increase and requires forward planning from the moment children are born. However, the financial planning aspects of life, and retirement, are one small reality of the complexities of life. What is needed is an intergrated approach to building your Life Portfolio to ensure you establish balance and harmony across all the key elements of your life, not just finance or your children's education. Take a look at the blog posting on "Replacing Retirement: Building Well Being & a Balanced Life Portfolio" for a more comprehensive perspective of this.

Bob Lowry said...

I guess I'm from a different system, but I was raised with the idea that part of being a parent is doing everything in your power to pay for a child's basic college education. After all, there is 18 years to save for it. The expense shouldn't come as a surprise.

If the child wants (or needs) an advanced degree or decides to go to an expensive college then that is the time and place for loans. But, a basic 4 years at a public university or reasonably priced private school is part of a parent's responsibility.

That being said, college isn't for everyone. Just like being told we all need to own a home, we are conditioned to believe everyone must go to university. Not true. There are careers and employment paths that don't need that piece of paper. There are kids just not ready for the college experience.

Like you, Grace, I started college in 1967. My parents paid the cost, though I did work full time my senior year and paid much of my own way. But, beginning life with massive debt is starting out in a huge hole.

Living Almost Large said...

$25k loans for my DH's MBA years 2007-2010 part-time at night. This is because it cost on average $1k/credit (started at $950-$1100) and it is 66 credit to graduate. You do the math what that is!

I honestly don't think we'll be paying for private school for any kids. We will try to pay for public school university.

Grace. said...

Bob--I agree. My working class parents gave both my sister and I what they could while we were undergrads, then told us we were on our own. I had scholarships but my sister didn't. (In one of life's many ironies, my 'dumber' baby sister wound up with a degree in economics and a career as a bank executive, from which she recently retired after many years with a 7-figure income.) My children's failure to go to college was not based on my unwillingness to help fund it, but rather some of their emotional and intellectual limitations. The next generation, my grandkids, ARE getting help or WILL get help from me with their higher education.

LAL--Only one of my kids was in a private school, though I do have to say that it was private middle school and high school that saved her--I do not regret spending her college money early; The truth is, she's not really college material.

Anonymous said...

You're just now coming to realize that higher education is a B-U-S-I-N-E-S-S?! I guess that is the sad part to me. :(

Florence said...

We were able to put our DD through undergraduate without taking out loans. She worked part time to help out. But law school was done on student loans for which she will be paying until she is 50 years old. She was able to get a good job but the thought of that much debt makes me cringe.

Anonymous said...

My student debt from my bachelor's degree was about $11k and honestly, most of it wasn't for school, it was for living expenses since I was out of work taking care of babies. I still wish it hadn't worked out that way. I worked hard and had gotten scholarships which I later lost thanks to being stupid.

For my kids, I know I can't count on their father, and i know I can't get a job that's going to pay me enough to pay for three tuitions. So I did the next best thing, I got a job at the best local university. If I can hang on to my job long enough, my kids will get free tuition. If they want to do something else, they're going to have to do scholarship only. No loans allowed.

Super Saver said...

When I graduated in the eighties, tuition room and board was $12,000. The salary of an engineer was $23,000. The were few if any government grants. I only had $8000 in student loans and was able to pay 25-50% of the costs from summer jobs and campus jobs.

The cost to attend my Alma Mater is now $50,000 and the starting salary of the same engineering job is $70,000.

Cost up 4X, salary up 3X. Why are the multipliers different.

To me, one issue is the involvement of government in paying for education. The more government subsidizes education, the more schools can raise their prices, since payers only think about out of pocket costs.

Nevertheless, our plan is to pay for our daughter's undergraduate education.

Anonymous said...

quick backstory: came from an impoverished background and community. grade 9 education. decided to go back to school at age 23. It took me 5.5 years. I accrued $50K in debt. With my part time jobs, that equates to living on approximately 15K a year.

I have no regrets; in fact, the total opposite.

Because of my education, I have a great job and my education remains priceless for so many reasons, most of them intangible.

I reason that if you can live on 12K a year as a student with loans, then you can easily pay off debt once you secure a decent salary. Even a 30K entry level annual salary will afford you more than 15K to live off while you use the rest to make loan payments for a few years.

(this is CDN dollars btw)

Elizabeth said...

It is ridiculous how much college costs these days, there's definitely no argument about that. But for people who want to pursue professional careers, there really is no alternative, unfortunately.

Living Almost Large said...

anon, how do you get $15k from $30k salary to pay off? I mean paying taxes and stuff you should only be walking away with $25k, so living on $15k will leave $10K without any emergencies? I think it could be mighty difficult. Depending on where you live. $15k where I live would barely cover rent, even with roommates my old roomie pays $800/month which is considered a deal to live in a basement with pipes through the room. And he has to bend his head and be careful all the time.

Savvyworkinggal said...

I like Clark Howard's rule of thumb - Don't incur more student loan debt for a 4-yr college degree than you will earn in your first year of employment post graduation. He also recommends attending a community college for the first two years. After you have earned a degree what matters is what school you graduated from not what schools you attended.

Anonymous said...

Hi Living Almost Large, It would indeed be difficult, as is living off a student loan and pt earnings. However, remaining where I was and not going to school would have me living off a low salary indefinitly. An education affords a future higher income. In any case, I would hope one's first job would be more than $30K (that was mine 10 years ago - its much more now of course) and that considerable salary increases would be arriving regularly.

I live in Vancouver, BC where rent can be very high. I lived with 4 roommates in the west side (a good area) for several years. 5 people total and a few cats between us. My rent was $400. Later, when I earned more money, I moved into my own suite in Kitsilano for $625 (now is $750 several years later). it's a deal and rare to find, but if you look you can find such places. I cruise craigslist regularly and they are out there - and I have specific needs as I have pets (pet friendly house, yard, quiet 'hood). My place is high off the ground, I can stand up straight lol, and its great for cats!

My apartment and financial standing etc is not perfect by the standards of others but my point in my last point was that going to school was an vast improvement to my life and worth the debt. Living frugally in order to pay off the debt is possible. I would hate for a young person in a hard spot to decline an education based solely on the idea that they can't do it due to fear of some loan debt.

Again, this is CDN$ and I did not go to an expensive school for my degree.