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Student Debt in America: No limits on lending

Stashed in: Young Americans, Best PandaWhale Posts, Education!, Awesome, America!, Personal Finance, Student Loans

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Truly mindboggling story of how a quite ordinary American mom racked up $410,000 in student loan debt. She is 48 years old, a school teacher who seems to have spent almost her entire adult life at least partially supported by student loans, and has never made a single payment. You can see how each individual step in this odyssey made sense at the time, but also that neither she nor anyone else ever sat down and really confronted the totality of her debt. 

What a sad story. 

Is there anything she can do to climb out of that hole besides pay $2700/month for the next 30 years?

Apparently there is a program to forgive debt if you work for 10 years in the public sector? It's not well explained in this article.

Yeah, it's not well explained in this article but that makes sense. 

I wonder what would happen if students just refused to take out student loans for a couple years?  Would government and maybe the private sector have to react, as the future workforce trended towards becoming less educated?  It would create a crisis.  Would people be encouraged to delay retirement?  Would we need to step up the importing of educated workers from overseas?  Of course some of the degrees that people take out student loans for are pretty worthless, and the loss of them would have no impact ie many of the for profit university degrees, but not all.

It would create a crisis, but that would help change the environment. 

When I started teaching I was going to send all my students to Harvard and Yale.  Now, the opposite.  I sit them down and make them justify why they need college.  If "yes," then years ahead I hard-sell value-based choices, and programs like Reserve Officer's Training Corps, which leaves them with 0 loans and a commission as an officer in one of the four armed forces.  College needs to be marketed as a value-based decision, not an ego purchase.  I can't afford a Ferrari, but it'd be nice to have one.  I drive a Subaru. 

That's the story I tell students, and I write about this stuff because it's criminal--yes, the onus is on the borrower, but we're in the middle of a financial literacy crisis. There are consequences.  This will be the next financial fallout. People think you can discharge this money, but you can't. Ever.  It's a financial death sentence. 

I drive a Subaru too! :)

I laugh at the potholes, Janill:) 

Me too on the Subaru! Still rolling in my 2000 Outback, represent!

I am torn on education because I was lucky enough to have a perfect ego-driven liberal-arts education that transitioned smoothly to a lucrative technical career in Silicon Valley -- and I'm not gonna lie, if money is no object it's the bestest! But I didn't pay for any of the education myself, in cash or loans, and I guess that's the big difference. I feel sorry for kids today who I feel are being cheated of their long-term potential.

I would never be able to afford the type of education I have if I had to redo it today.  I have debt left still today.  Kids are deciding against it, but I'm advising against getting a degree just to get a degree.  I am all for following passions, but I want them to have a plan where this fits.  That said, I've changed careers several times, and everything I've learned along the way has done something for me... college helped both with my network and my skills, determination, level of analysis... I just would have had to choose a value college if I had a redo. 

I like that you customize the program to the student. 

I would choose a value college if I had a redo, too.

I thought you went to a value college, Panda! William and Mary is public and gave you more $$$ than Stanford...

That was true when I went but William and Mary is no longer a value college. 

Now it's super expensive. 

I looked at William and Mary for history... I ended up not going for a history Ph.D in the end.  I'm glad... I have one masters, halfway to another because I needed to fill in some holes to get to the Ph.D program, and in the end I couldn't find the ROI.  We can learn anything, anywhere, at any time. I don't need it. The Ph.D would've been a really expensive ego trip for me... especially since I had an undergraduate advisor (one of two--the other was great) who told me I wasn't smart enough to go to Michigan like I had decided. (I had a 3.3 because I had to work full time/overtime as an undergrad--another product of choosing an expensive place).

I have learned any kid'll do great things if you set up those expectations and teach to passions. You wouldn't turn away a prodigy engineer who learned on their own rather than in a class... I, myself, have learned the last two careers I've been in on my own by listening to very smart people and working hard. With no additional debt... a deep lesson. 

Is the lesson to listen to very smart people? Or to work hard? Or to have no debt?

The lesson is to be a savvy consumer when it comes to education... and for people to start to recognize and credential different forms of learning, not just college. 

The thing is, it's foolish and next to impossible to have NO debt -- especially when it comes to education. As a bunch of articles on PandaWhale have stated, education does in fact help you get a better-paying job with less unemployment... and it is normal for young people to invest in themselves this way. I think what this article is pointing to -- via an admittedly extreme case -- is that the costs of investing in yourself have gotten WAY bigger; and it is no longer just a one-time expense at the beginning of adulthood.

Most of the teachers I had throughout my life were not from wealthy families, and yet their parents were able to send them to college (there weren't even student loans in the 1950's!). The GI Bill or a working spouse were sufficient to put someone through graduate school. And then a combination of tenure and real skill -- plus the always-expanding economy -- kept them employed throughout their working lives with a comfortable pension at the end.

Contrast that with the experience of the woman in this article. She came out of college with a higher than average debt load. Then she tried two different careers, each of which required graduate study in her estimation. In the meantime she got sick, married, had a bunch of kids, bought a house, moved a couple times, lost her pension, lost the house, divorced rancorously... all of which seems to have been partly paid for with student loans. It seems like she didn't even really get started on a stable full-time career until her 40s. And she's not that unusual, there have been loads of articles on PandaWhale about how a lot of Americans live with their parents until well into their 30's now!

I don't really know how young people today learn about financial planning, and in particular how to balance risk versus reward... but it seems like there are too few caring adults like Dawn who give them the straight poop. :/

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