When buying and selling is the cornerstone of your culture you have to spend capital whether you got it or not.

It's no secret that auto loans were going to be a next bubble with sub-prime auto getting out of control.

Student loan defaults shouldn't be either. Even at low rates, SLs are difficult to get out from underneath. And they're marketed at kids who will often graduate with more SL debt than they might even have later tied up in a mortgage, kids who don't have the mental maturity to understand what they're getting into and what they're being trapped with for the next 25 years. Somewhere that system needs to change and somewhere along the line we culturally have to become OK again with telling kids that it might be OK if they don't get a degree if it means that they have debt, and we have to do a better job at helping kids and families understand that it actually might be worse for them economically than getting a blue collar job. The cultural elements of that need to change and our high schools need to train counselors away from steering the overwhelming majority of kids toward college as the only option. It'll be difficult, though, because sometimes certain employers only see the degree, even above people with a lot of experience.

I love everything you wrote.

yes people can simply not pay their student loans, but they can't get rid of that thru bankruptcy like you could a home loan or auto loan.

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I miss YaHey

Blame doctors for that... rack up 500K in loans declare BK on graduation .... resident and fellow for 7 years then get a house loan with their first paycheck

Supposedly there are ~125.8M households in the USA, so that adds up to just over $100,000/household. USA, USA, USA!!

BTW, my household is far above that average. Thanks, MID! (from another thread)

If they COULD declare bankruptcy after graduation and discharge their student debt, what would happen to the availability of student loans? There would be none.

Bernie Sanders questions why auto and home loans are lower interest than student loans. What a moron.
https://twitter.com/...381294874624?lang=en

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I miss YaHey

Well that was the case before 2005 and there were student loans sucka

I think not being able to get out from under a student loan by bankruptcy is common sense given what do you have to lose as a strategy if you could declare bankruptcy. I think this applies to a wide variety of situations not just docs. The answer is making university more affordable by lowering the cost (not more grants and loans) and changing the culture such that it becomes acceptable to get a job without a university degree. Universities these days seem to be as much country clubs for kids and highly paid job creators for communities as they are educational institutions.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

Here's the problem with SLs, though: You can default in the sense that you stop making payments for a while, but the debt cannot go away through bankruptcy like credit card & consumer loan debt. They'll garnish wages in a punishing manner, sue the shit out of you, garnish tax returns, and they will get their money, or as much as can be extracted from you. Even if the payments are paused for a while, the interest rate meter keeps rolling, and it is punishing.

I've heard of people who've been making payments for 10 years or more and still have balances greater than the amount originally borrowed due to deferments, the interest stating to accumulate at the time the money is used (like as a freshman), and the way the loan is structured.

It's a mess of a system. I was personally lucky to have less than $10k in student debt, but could have done it with none; it's still something I wish my parents understood and counseled me on, but they were clueless and unaware of how it works.

In other words: You default and you're still fucked. That hook is sharp and the barbs dig deep.

So much I agree with in here BUT an even better solution would be to have universities have skin in the game.

Agreed. Any other approach is kicking the can down the road in a similar manner to Obamacare and the proposed ACHA, where the root issue is not even considered, let alone addressed.

+1

Which is too often what we do these days. I do think that some sort of relief at some point is appropriate. I mean if someone is not able to make payments and is more under water than when they started say ten years out what is the point in keeping them in economic servitude forever. I agree with someone else who said the universities need some skin in the game. Maybe they can make the loans and then they deal with the defaults and only loan appropriately. I graduated from med school 25 years ago with about 10 grand in debt thanks to low tuition and working every summer until I was a clerk in
forth year. One problem now is med schools want you to be a save the world person to get in these days. What, didn't go to Africa to drill wells during your summer? Shame on you.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

What do you have against heated outdoor buffalo shaped swimming pools and all organic fruit smoothies you make yourself by riding a bike blender. These lifestyle choices seem totally necessary to complement long days of boring lectures :-). Not to be all get off my lawn- but we did not have sushi at the college dining halls when I was in school. We had pizza, cheese or pepperoni and a salad bar with iceberg lettuce.

Having lived and gone to universities in both the US and Europe our amenities are killing us in Education and Healthcare. Hospital rooms do not need to look like 4 star hotels and have Peyton Manning selling them on prime time television and offer free massages after labor.

We have lost track of the goals of healthcare and education and care more about the experience than the outcome.

Having a college degree is a lot like owning a home.

Statistics say that people with degrees earn more, kids to better in school, less likely to get shot, are better looking etc.

The same is said about home ownership.

Of course the government's solution is to make it easier to get into college and to buy a house; incorrectly believing that the benefits are derived by just having the degree or owning the home, not by the hard work, discipline, sacrifice, delayed gratification, etc. that it (used to) take to get into college or buy a home in the past.

But people that graduate from college are higher achievers to begin with (in general). It would be safe to assume that they would make more money whether they went to college or not.

More shocking to me than the debt is the very low net worth of the average American. According to a Motley Fool article you can find on your own, the average net worth for someone my age (45-54) is only $85K, and only $25K if you exclude home equity. I guess the average person has earned at least $1M by now, yet has very little to show for it. Geez even a couple of average cars should be worth $25K, so they have $0 invested and are likely in the peak of their earning years.

that, or rich parents.

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https://lshtm.academia.edu/MikeCallaghan

http://howtobeswiss.blogspot.ch/

There are so many problems for young people now. Remember the "brain drain?" The idea was that the first wave of baby boomers would start early retirement in 2008 making way in the workforce for younger people to get careers and promotions. Well, few baby boomers could afford to retire early. Now most people 55 or younger have less than one year of pay saved for retirement so they won't be able to retire at 65 either. You won't take old professional's jobs until you pry their cold deal fingers off of them. Young people will literally have to wait for people to die before good jobs will open up. Most decent paying jobs that don't require a college degree are gone. One of the few that remains are long haul truckers and these jobs will soon go away thanks to self driving trucks. I paid $4/semester hour for tuition in 1979; last I checked it is now $280/semester hour at my alma mater. According to the inflation calculator $4 in 1979 is equivalent to $13.11 today. After accounting for inflation tuition has gone up over 20 times! WTF? Young people are so fucked.

So, what kind of SL debt is"typical" these days.
Im not talking about doing a law or medicine degree at an ivy league school, you know, like an engineer at a mid level school??

Here in Oz, SL are provided by the government (no interest loans, but indexed for inflation, for tuition costs only), which is then paid back once you reach an income threshold via the tax system.
Income threshold has just been dropped from $55k to $42k and the cost of courses is increasing to help recover some of the outstanding $70 billion

This article from last year says average debt load coming out of undergraduate education is around $30k. http://money.cnn.com/...e-student-loan-debt/

That excludes students who attend for-profit colleges, which would likely drive the average up if they were included.

That is less than one year at my school

I would guess that students paying in-state tuition at public schools helps bring down the average a fair bit.

You are under informed.

Going by memory here because I saw this in a presentation 2 days ago: Debt as a percentage of household income is almost 50% lower than 2008 (a decade! ago). Student loan makes less than 10% of total debt. CC is like 1.5%. Mortgage debt is 85% or so. Credit scores of mortgage applicants averages around 725, near the highest ever. Personal savings rate at highest point ever and household assets highest ever. In short household balance sheets have never looked better.

AD, view

Debt as a percentage of household income is almost 50% lower than 2008 (a decade! ago). Student loan makes less than 10% of total debt. CC is like 1.5%. Mortgage debt is 85% or so.

Are you saying the information in the times article is incorrect because it seems to disagree with this. Household debt appears to be what it was in 2008. Household income in the US is at ~52K and debt is at ~110K per household. In order for debt per household as a percentage of income to have dropped by 50% that would mean household income would have had to have gone from 26K in 2008 to 52K today. I don't think that happened. According to the article Student load debt is 10.6% and CC debt is 6%. Mortgage debt is 71.4%.

What is the source for your numbers?

~Matt

I thought that was rather low. No way you could get a degree here for that....unless of course you never earn above the threshold so never actually have to pay it back!
Don't laugh, there is reason why the current government is dropping the income threshold :-)

<<No way you could get a degree here for that>>


You don't really get a degree for that here either. If you borrowed the entire cost of university tuition, with no use of parental funds, grants, scholarships, etc. I think you'd be hard-pressed to get through most 4 year programs for less than $40k in tuition now. That says nothing about room & board and other expenses. The $30k average is just the debt load not the total cost of the degree, obviously.

You are going from memory, so I would check your sources, the NYT article has really recent numbers that line up with other sources. Debt ratios dropped to the lowest point in 2013, but were still ~80% of the previous highs. Perhaps you are thinking of CC debt, that plummeted. You are right that the individual debt situation is generally better by many measures. The absolute debt number may be higher, but it doesn't account for growth in GDP. By that measure it is >10% lower today than in 2008. OTOH, government debt is vastly higher, and the combination is at historic highs.

BTW, Personal savings rate is not at the highest ever. It is slightly higher than it has been (on average) over the past 20 years. Prior to that it was pretty much always higher.

This. 30% of students come out with zero debt, and it usually isn't from bagging groceries. We are sprinting toward an increasingly two-tiered society, and burning most of the bridges that allow for mobility.

well my memory was reasonably accurate but I was off about a few things: the source was a JP Morgan bankers meeting. Their source was the Fed.

Household debt service ex-mortgage is 10.0% of disposable income. That is the lowest since 1980. It is 30% lower than Q407 (the high point).

Total Assets are 107.9T, compared to 15.1T of debt. 66% of debt is mortgage debt. Household net worth is $95,500 up from 67,000 in '07 (the pre-recession peek) so up 42%.

AVG FICO scores on mortgages are 740 not 720.

Consumers are way smarter than they were prior to '08 which is why FICO scores are going up. The credit bubbles right now are nothing like before.

Federal Deficits are simple: We spend $2T a year on SocSec, Medicare and Medicaid. We collect 1.15T in SocSec and Medi taxes. $850,000,000,000 deficit. Raise the income subject to Soc. Sec Tax to $250,000, raise retirement age to (including medicare) 70, means test soc sec benefits, singe payer health insurance option available for entire country competing with private insurance. Just kidding about it being simple.

I am on the road on occasion during the day and listen to sports radio. Consistent advertisements run for some company who helps you with CC debt. The reasoning is "Because it's not your fault. Chances are you were tricked. You don't need to repay the entire amount."

I agree with you theory on SL. I think there's been a large shift on how people view their obligations with debt.

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"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

Household net worth across the country correlates fairly nicely with the average savings rate; the less people save and invest, the less they have (duh), and the more money that goes to those with the capital - the banks, CC companies and big corporations that everyone hates these days. People in general just aren't very responsible, economically. I partly blame our culture of consumption, toys and immediate gratification but on this I'll also blame our schools. Parents should be teaching their kids how to budget, how to save, the benefits of compounding interest, the value of capital and collateral, the power of credit, etc etc, but they don't--because they don't know it either. We need a serious overhaul in education in this regard: why are schools not teaching economics and accounting, primers on the stock market, housing market, the pitfalls of credit trouble?

Anyway, if people around this country once again learn how to save/invest and keep their own money we'll all be better off, but there's no magic pill to give to people, they have to want it and be willing to sacrifice a few luxuries and instant gratification to do it.

Oh and something is gonna happen with higher ed, I have no idea what but it can't continue on this trend. I hope people see and understand the impact of federal money in this space though, it's the clearest example of government influence in a market that has terrible consequences, it's as clear as day but people refuse to acknowledge it.

We have a consumption based economy. Remember after 9/11 when people worried about their economic prospects and stopped spending? President Bush admonished Americans to not let the terrorists win by lowering our lifestyle and that it was their patriotic duty to spend money to keep the economy humming. If people start keeping their cell phones 2-3 years instead of 1-2 years the mobile phone industry tanks. If more people start keeping their cars over 10 years the auto industry tanks. If people quit traveling for vacation airlines tank.

Now that the US doesn't make much of anything any more the only way people make a living is from taking their percentage of money as it moves around. If Americans lived within their means workers would be laid off leading to more unemployment which would lower spending even more leading to more layoffs etc. It would be a downward spiral.

Until the fundamentals of our economy are stronger we can't afford for people to lower consumption. High consumption is the only thing that keeps our shell of an economy working.

Education will have to change. The wealthy will always be able to afford college but for everyone else it is pricing itself out of business. Earlier I pointed out that at my alma mater tuition has increased more than 20 fold even after accounting for inflation. I have a bachelor's degree but in my field it is more important to be an autodidact than to have a degree. My job is completely different than it was 5 years ago and no doubt it will change more in the next 5 years than it did in the last. Very little of what I learned in college is of any use to me now. The only thing it did was help me get my foot in the door.

What are you talking about? If people stop buying phones every year Apple just orders/imports fewer phones from China; do you think these phone companies employ thousands of line workers in the US putting them together? The auto industry is already highly automated, selling fewer cars doesn't impact the auto worker nearly as much as it had 20, 40 years ago. Further, everythign is moving to automation anyway, you act like people are making these widgets that we're consuming by hand still, that's just not the case.

People saving their income is good for everyone, fewer people getting into trouble with health care, defaulting on mortgages, fewer people in poverty who need help from the government.

I agree with you on the cost of higher ed obviously, my university has tripled their rates since I graduated fifteen years ago, that's INSANE. I think online schooling will gain a bigger foothold, at least for many of the pre-requisite type stuff, and my hope is that parents/kids begin to rebuff the entire university complex by finding alternatives, the pushback needs to come from individuals because the government created this mess and they're not about to roll things back, and universities are all to happy to take the extra money and build their palaces and give school administrators massive salaries. It has to come from consumers, unfortunately.

College Costs.......
I have a son who is going to be a senior in highschool next year, and another who will be a sophomore. I have been thinking quite a bit about this issue.

1) Paying the sticker price for a private (or out-of-state public) college would be manageable for 2 children-- IF the parents is making over $400,000 year.
2) There seems to be quite a bit of scholarship money available for excellent students (top 5%), football players and girls soccer players.
3) Good students top (20%) from households with incomes less than $100k income - seem to be able to piece together reasonable packages of student loans, grants and parental money.
4) Average Students (top 60% - top 20%) will receive little financial help. There parents will be expected to pay 100% if the cost. Parents with modest income and assets will have kids that graduate massively in debt.
5) Good students (top 20%) from moderately high income households ($120k - $400k). Will NOT receive the aid that poorer (but equal successful students) will receive.
And their parents will not be able to afford private or out-of-state public.

Divided Society....
Here are the immediate division that this scenario creates:
1) Private College and out-of-state public is populated:
A) by excellent students (top 5%)
B) the children high income/asset parents ($400k income)
C) Good Students (top 20%) from low income (less than $100k income) - who are receiving scholarships + reasonable students loans.
D) Good Students (top 20%) and average students from moderate income homes (100-400k) who are destroying their household finances.
E) Average students from low income homes who are destroying their future household finances

2) Public colleges:
A) Same as above
B) Same as above
C) Good and Average Students from moderately wealthy homes can afford the sticker price, without destroying their household finances
D) Average students from low income homes will destroy their financial futures with debt.


Summary:
1) The rich can afford to go anywhere they can get in.
2) Excellent students and football players can go wherever they can get in.
3) Good students from low income homes can go anywhere they want and graduate with modest debt.
4) Good and Average students from moderately high income comes can ONLY go to public college without destroying someone's finances.
5) Average students from low income homes CANNOT go anywhere WITHOUT destroying someoned finances.

Questions:
1) How unfair is this really?
2) Maybe "Average students" shouldn't go to college at all?
Rich and upper middle class want to pay...
That is OK?
Perhaps the problem is with average students from low income homes and loans...
3) Good students from lower income homes and high income homes, have more choices than good students from moderately high income homes.
Is this fair?


Personally, I am in the moderately high income category (100-400k).
And my kids are in the good (top 20%) but not excellent (top 5%).

Their only choice will be public in state.
(And fortunately, I can afford this).
I think this is an OK outcome.
If my kids wanted better than public-they should have studied more!
Still, similar kids from poorer and richer families seem to have more choices.

My question:
1) Is this college situation actually "unfair."

Here is the "unfairness" I see:
1)Average students from low income homes get screwed.
2) Average students from very high income homes have lots of choices.
3) Upper middle class have fewer choices (but possible less debt) than Good students from poorer homes.
4) Football is only profitable in a tiny minority of colleges, yet football players they receive the same degree of
privileges as basketball players (highly profitable)

But is this THAT unfair?
That messed up?

That has been a theory going back to before you went to university. IDK if it's a stigma attached to it, or education is not truly as good or what the deal is but it obviously hasn't done much yet. I know one or two people who work in college admin. Recently they have mentioned something is going to break soon. The competition to get students is near a breaking level and I think cost was an issue. I think their theory was attendance will soon start to slow and you'll see schools closing. Then maybe the online will pick up.
I know there are some prof's and such on here who could probably speak to that.

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"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

You are missing a piece of the puzzle. At least in Ohio, the local community colleges partner with the state university system, so it is possible to knock out a lot of the standard courses that one has to take (Econ 101, etc) and take only those courses that are required for your major at a university. This makes it possible to cut close to 50% off the cost of a 4 year degree, which makes it a lot more affordable for many folks. So, I think your notion that average students with poor parents cannot go anywhere without destroying someone's finances isn't correct, at least in Ohio. If you can live at home and not pay the room and board costs, you can probably get a 4 year degree for under $50K (assuming you go the community college route). That's a fair amount of cash, but it's not crushing.

Now, the good student and moderate income families....exactly right, because that's the boat I'm in right now. My son, who will be a senior in HS this year, can go to any public school in Ohio, his choice (the costs are all pretty similar for the Ohio public institutions). That will be about $100K for 4 years; I can't afford the $200K or more it would take for private or out of state.

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___________________________________________________
Taco cat spelled backwards is....taco cat.

Uggh, there is so much wrong with what you wrote. 69% of our GDP is consumption. If people all stop purchasing. Apple stock plummets, investors all become poorer, tax revenues drop, deficits rise, folks all up and down the chain get laid off, defaults rise, dogs and cats sleeping together,....

Everyone saving their money is certainly not good for everyone. Saving may be individually positive for most, but is deflationary in the aggregate. Also, just like good and bad debt, there is good and bad saving. You can "save" a lot of money monthly by renting or buy purchasing a very cheap house, or by refusing to buy health insurance, but those may be bad financial decisions.

I am not fully disagreeing with you. Anecdotally, we love to point out the rich profligate, and the person on disability with the new huge TV, but that's too easy, and doesn't fully explain our present situation.

 
With kids 4 and 9 and our income we fall under #5 but maybe have a puncher's chance for a kid falling under #2. We'll provide each kid to $200,000 $250,000 for college providing decent grades, behavior, maturity and understanding related to type of schools/ majors and work prospects. Colleges have affordability calculators for what you need to save for 20+ years to afford them. We started setting aside $500/ month per kid around birth which will increase next year once we're done with daycare costs. With kid number one, I went from 1 IM and 2-3 HIMs a year to local races only and this absorbed the costs. Income growth since kid number one and driving cars for 10-12 years have enabled us to find the money to set aside for kid number two. My sperm, my responsibility.

Good synopsis...my wife and I are abuot to have kids, I'm dreading being in this situation in two decades.

The rich and upper-middle were always and will always be able to send their kids to whatever school they get into. Forty years ago when higher ed cost peanuts people decided that low income students deserve a chance to make college choices like everyone else, which is admirable and a good societal goal in theory. In practice, that additional government money increased tuition for all, which necessitated more gov't money, and eventually the grant money was overtaken by loan money and thirty years later you've created a heavy debt cycle for middle class and upper-middle class kids. The government has no recourse now but to continue issuing these loans because the group that necessitates them has expanded and an expectation has been created: if your child has the grades to go to college, the means to do so will be there (through crippling debt, but it'll be there).


This is where bleeding hearts refuse to acknowledge that the system is broken, and it's broken largely because of government policy that put billions more into higher ed than belongs there, which artificially inflates the market. Now low/low-middle income students can get loans but take on crippling debt; middle/high-middle income students are totally fucked and need to go public or deal with even worse private loan options, and high income/rich students haven't been effected other than writing much bigger checks.

Teh solution, as with almost everything, is for the government to get the fuck out of the market. People don't want to hear it or acknowledge it but it's true, and these policies are putting a massive handicap on young kids from low/middle income households who generally don't know any better. In the past you did some dumb shit as a teen/young adult, learned your lesson and paid the small penalty. Now you fuck up your education decisions without much guidance and you're sitting there with $150K in debt and zero chance of getting out from under it in less than 20 years. It's fucking awful, I feel terrible for the kids who didn't know any better, didn't have proper guidance and are royally fucked through their 30's.

Agree with much of what you wrote, but the $400K is too high. Lots of folks in the $200K-400K range pay for college, through a large combination of methods (529, HELOC, grandparents, work, delayed retirement, ROTH, obscure grants, etc.).

BTW, my kids are in the same situation (senior and sophomore to-be).

I wouldn't say it fully explains our present situation but I think it's a huge, huge piece of it.

I'm not talking about going from 4% savings to 20%, which is what your example necessitates. As a country, save a few percentage points more and be smarter with shit, that's all. Instead of buying that tv on credit and paying 19% interest for two years to pay it down, how about saving up enough to buy it? You're still buying the tv, just not on credit like an idiot.

It'd be a slowdown of the economy in the short run, GDP would suffer, fine whatever...but in the long run you have fewer people in debt, fewer people going bankrupt, fewer people owing money to creditors, when people are laid off they're not as likely to lose their home, go on welfare, etc etc. This isn't rocket science, it's just simple economics.

There is a question of how much you want to and how you should sacrifice...

Say you make $220,000 a year.
After all taxes, healthcare, 401k etc....you end up with net $90,000- $120,000.
You could pay $50,000 per year for one child to attend college.
You could pay $50,000 per year for two kids to attend college.
But more than that- you will have to raid savings. And a lot of people at age 45 (with that income) will not have a lot of savings outside of 401ks, home equity, business equity.

That said:
You live in CA. Your kids could go to UC Berkeley, UCLA, etc. - at a somewhat reasonable cost.
I live in AZ so I my kids can go to U of A at a reasonable cost.

There is also the Western Tuition exchange program- where all of our kids can go to any western public university (except UC, CU, UW, UO) at a somewhat reasonable cost.

So, it is probably unreasonable to complain too much.

I also have one child who should get a partial soccer scholarship, and another who will probably get a partial academic scholarship.

Accepting that my kids cannot get into Stanford. That we cannot afford Reed, Gonzaga, University of Portland, UC or CU.
We still have a lot of choices.

"Their only choice will be public in state.
(And fortunately, I can afford this).
I think this is an OK outcome. "

-----------------------------

Agree, this sounds like an OK outcome. With the exception of a few very prestigious State U's, I have never seen much justification for going out of state to attend a public university. It seems that it is frequently a frivolous decision with little or no economic basis.

Most colleges have gotten ridiculously expensive to the point that economically the degree isn't worth it. Once the govt stops giving everyone SL's or students and parents stop choosing colleges for emotional reasons the price will have to come down or we'll only see students going for STEM degrees.

Two good examples, my wife's cousin is contemplating going to USC at $69k a year for a degree in journalism. If she graduated in four years she's have $276k in studen loan debt for a career with an average salary of $44k. It makes no sense but she's an only child and it's such a good school that the parents don't want to crush her dreams.

A guy I work with is paying for his daughter to attend American University. With room and board it costs over $60k a year. He's so proud of her that she got into such a prestigious university that he's footing the bill, but the real rub is that she's majoring in opera!

This stuff makes no sense.

Even if we want to be frivolous, there are choices.
There is this thing called the Western Tuition Exchange program.

My son cannot go to Reed College (too expensive).
But he could go to Humboldt State.

He cannot go to University of Colorado.
But he ould go University of Montana.

He cannot go to UC Berkeley.
But he could go to the honors program at the U of A.

This is all that matters. Bear Down!

It's about making good decisions or bad decisions. We've known people who have 130k in student loans for a palentology degree only to be a pharmacy tech making 35k a year.

College costs have gotten stupid and a lot is due to student loans being so easy to get. Incredibly stupid. But that doesn't mean you have to absorb it all. Stay in state or community college for Bachelors. Don't go to the big name schools just because you got accepted.

I could have gone to USC on a half tuition scholarship and still spent $30k a year. Or gone to UA on a full ride. It was an easy choice then and I'll be guiding my kids down the same path (they're 5 and 2 so we have a while thankfully).

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speedySTATES

Yeah, if your kid has a 4.2++ GPA they could go to Cal or ucla for a reasonable cost. I've got two seniors next year. Looking at admit rates at most UCs they're probably not gonna get in anywhere moderately desirable even with around a 4.0 weighted GPA. Maybe Riverside or Merced. Son is seriously looking at WUE schools because he probably going to be excluded from most schools for engineering.

Admission to UCs is crazy competitive.

Fartleker - the problem with the U of A for my kids is that they have spent their whole lives in Tucson.
I chose to live in Tucson.
They did not.
Going to the U of A will feel like an extension of highschool.

But the U of A is one of the best Universities they will have access to.
And my oldest will even get a 40% break on tuition (for high ACT scores).

So as a parent, what do you do?

You don't bankrupt yourself to send you kids go to University of Colorado, USC or Gonzaga..

But, do you spend a little extra in travel do they could go to Northern Arizona University or University of Montana?

Erin C - amongst WUE schools the U of A is probably the pick of the litter.

The University of Montana tuition is only $6,000. (That makes WUE tuition only 9,000).
I have a friend who's son went there.
Seems like a good choice.

He hates the heat. U of A would not work for him!

WSU, Colorado State, or Wyoming are on his list if he doesn't get into Cal Poly.

I am financially minded and look at college from that view point.

If it is an extra $5k/year to go to another school, is it worth it? Is the degree or department that they want to specialize that much better at a different school? Will it open up that extra door where it would be easy to pay of the $20k of extra student loans. Or, is it worth it for you as a parent to pay that money due to their desire to get out of Tucson?

I see nothing wrong with staying in Tucson or whatever hometown somebody is in for an undergrad degree. They can always look to move elsewhere for a masters or their real job if they want. I also grew up in Tucson and don't think it felt like an extension of high school. My freshman roommate was a good high school friend but that was the only time I saw anyone from my high school. It's a large enough school that there wasn't any overlap.

It just a business decision to me and I don't plan on paying a crap ton of extra money just so my kids can be somewhere else. Well, unless they want to go to ASU. I'd pay $60k a year for them to go out of state over a free ride to ASU. That, to me, is worth it.

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speedySTATES

No she won't, they don't give out that much.

Where I work has been hiring a lot of very impressive Colorado State Grads. They seem to be really capable and hardworking. Both business and engineering grads. Not to mention Fort Collins is a fun town (and I say this with a degree from CU so it hurts a little).

Good to know! There's been a mini-trend the last couple of years of kids from my Bay Area high school heading there. (and lots to CU as well)

You live in CA. Your kids could go to UC Berkeley, UCLA, etc. - at a somewhat reasonable cost.

Are JC's still decent in California? My niece went to christian school through high school where the science they learned mostly involved god, then she went to a JC while living at home(because that's what her dad allowed), then she went to a UC with her senior year at Leeds, and now she's finishing a PhD (in a science) at Cal Tech. She was an extremely good student and probably could have gone anywhere for minimal costs, but instead went through in a weird way with her only cost being a room she rented . It's possible to get through college with very little debt and still get an excellent education.

That we cannot afford Reed, Gonzaga, University of Portland, UC or CU.

At least based on my daughter's friends, top 20% and good SAT's/activities should lead to a partial (~40%) scholarship to at least a few decent schools.

But yeah, anyone who has to pay full tuition better have some bucks as it's more like $65-$70K/year when you throw in room and board at nearly every top 100 school. What's ridiculous is they charge the same room and board for a 110 lb female as they do for a 300 lb football player (although athletes are probably getting it for free) when their diets are quite a bit different.

Both for ErinC and myself the problem with CSU is that, in the WUE program, our cost would be 1.5 x in-state.
CSU is one of the most expensive -$15,000.
That's $22500 for us.
Compared to U of A - $6000 (for me)
Or University of Montana- $9000
Still, a lot better than CU ($35,000).

Someone has to pay the bill.

Even though Americans do not assemble phones and automation is replacing workers, people have jobs doing something. I work in the marketing field. Coke might hire one of our companies to help them sell more sugar water than Pepsi while Pepsi might hire another company to help them sell more sugar water than Coke. Harley Davidson might hire us to convince middle age accountants that they need a loud bike to reclaim their manhood and Apple might hire us to convince people that they are unique and creative if they buy a Macintosh. If people quit buying as much iPhones, Pepsis, Cokes and Harleys the respective companies won't spend as much on marketers, salespeople, space for stores, etc.

Of course, but you said that the student would be saddled with 276K in SL debt. That's simply false. Parents pay for college bills all the time, and schools give the weirdest aid packages. I agree that it is really broken, but folks in the top 10% find a variety of ways to cover the bills.

American? Prestigious? Pink?

Look into South Dakota School Of Mines & Technology, though I am partial as an alumnus.

ETA: I have forgotten my own schools name, been a long day in the office...

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Pactimo brand ambassador, ask me about promo codes

that's the rack rate she'll probably pay 40 a year

I don't think it's that much. CSU is a little weird in that it prices tuition based on units taken. But I poked around the website and saw an average course load was 15 units. Based on that WUE tuition&fees would be $9393. (here: http://registrar.colostate.edu/...Tuition_and_Fees.pdf).

UC in-state tuition is somewhere around $14,000 (and going up).

This doesn't count room & board, of course.

Or books, books can be killer.

My senior year I took spanish, already signed a job offer all I had to do was finish my last semester. I walked into the book store, found my spanish book and work book and they were $300. I promptly turned around and winged my way to a C in spanish. WTF, how can they charge $300 for a spanish book?

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Pactimo brand ambassador, ask me about promo codes

Books were a ripoff when I was in school .... books are a even worse today

Wouldn't there simply be more pressure on marketing because sales would be lower across the industry, so more incentive to corner the market?

This is all drastically oversimplifying the issue. What I said to oldandslow is what I'll say to you: people won't start saving 20% overnight; across industries if people went from 4% savings (on average) to, say, 7% there wouldn't be much more than a ripple across Wall Street. ESPECIALLY if the 'savings' were simply smarter money management--i.e. saving $400 for a new phone THEN buying it, instead of financing it at $25 a month at 5%. Why the fuck are people FINANCING TELEPHONES?!?

This thread is about household debt. I'm telling you what I see as the issue: Americans are taking less personal responsibility (in general) of their finances than ever before, putting themselves in super tight situations where one illness, injury or lost job would mean ruin--and gov't intervention, through welfare, public housing, etc.

Quick aside, my wife and I are attending a first-time homebuyers class, you need certification in MA for any of the low-income housing assistance programs, we're taking it just to cover our bases and learn as much as we can before we buy in the fall. You wouldn't believe some of the questions people have about credit, insurance, the loan process. 40, 50 year old people who are completely lost about any of this stuff. Thank god they're at least getting the basics before jumping into a house but more than anything it's this total lack of accountability around finances and debt that's fucking things up in this country.

Thanks Erin
I don't know where I got that bad information.

CSU looks good.

Yes, that's on my list too (though possibly not on the kid's)

My daughter wants to go to USC. It's tough because her dad went, and both my maternal grandparents went, and it's got a great program in what she wants to study. But the price . . .

It is a great school, with a high placement and they have cleaned up Crapid Shitty (rapid city) a lot since I went there only 5 years ago.

The joke for women meeting men there is, Where the odds are good, but the goods are odd...

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Pactimo brand ambassador, ask me about promo codes

We got that same joke on the Cal Poly tour.

I was on the women's swim team in college and was just over 120 pounds. Eventually they gave us a special late dining hall since we couldn't get out of practice and to dinner in time. It was just us the football team and the basketball team and they lodged numerous complaints trying to get their own diner because the swimmer girls ate too much of the food.

One thing that has never changed is the way to save is to live beneath your means. Folks are trying to maintain a standard of living when wages have stagnant or declining for 40 years. They say late baby boomers are the first group of Americans to be worse off than their parents but sadly they won't be the last. It all seems downhill from here.

Yeah, buying a house is insane. I rented most of my life and bought my first home at 40. A family friend was a realtor and she helped a great deal. I remember at the title office the clerk bringing an inch and a half thick stack of documents to sign. No time to read them so the clerk briefly explained what they were as she slid them to me to sign. Luckily they streamlined the process by the time I bought my second house and there were a lot fewer forms but it is still pretty involved. Good luck!

Agree on living beneath your means. Unfortunately a lot of factors go into people simply not caring, if they even know what it means to begin with. Sacrificing? Not me!

Relax, all. I got this. College should be free for everyone. At least it should be free for all the poor folks--you know, those scraping by on less than $250K a year. The government will pay for it.

I won't promise that come tax time you won't feel the Bern.

I'd never heard of it but he talked it up like it was a big deal.

Agree, BUT it isn't sufficient. "Your means" have to change also. One can certainly spend one's way to the poor house, but one cannot save one's way to wealth without earning/investing improvements. One of those MAY BE to get a degree, but the costs have become prohibitive and the pay back meager for lots of people. OTOH, it's amazing how many kids I see that happen to marry someone from college in a similar major.

Same was happening in VA, bit there is an outside with this. System finding was being cut to public universities. And these same institutes were losing revenue since folks were opting for two years cc before enrolling. End result, huge jumps in tuition rates, fewer local students admitted, more slots going to our of state and foreign. Turns out for in system school the savings are less than what was anticipated, as the lady two years ate rising at over 10here
% a year.

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Jim
"In dog beers, I've only had one"
http://www.shakercolonial.com/
Creating custom made furnishing to your requirements

You can't save if you spend more than what you earn. Bottom line. Saving/Investing needs to be thought as an expense more important than pretty much everything but putting well balanced, homemade food on the table. Successful people understand Or at least something in that ballpark.

Something else that doesn't even get talked about is one's social network. Surround yourself with successful people. Life becomes a lot easier that way.

 


... and you really can't save any significant nest egg if you don't increase your earnings. Not disagreeing, but there are two parts of this equation, and for most folks, a single working-class job is insufficent, even with savings.


Like the people who you go to college with? ;). You're right, hardly anyone is talking about that.

It's not

No, not like the people you go to college with. Well, the majority at least. Going to college and getting a piece of paper doesn't mean you are successful.

Is their a tuition break for legacy family ?

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"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

There are scholarships for scions (what they call legacies) but they're really just a drop in the bucket.

My daughter wants to be a vet. I'm trying to convince her to go to school in Germany, where there is no tuition even for Americans, and the vet schools are accredited here too.

If not, she'll either go public-out-of-state (Michigan, where her dad and grandma went), or private in state (Tufts is the only vet school in New England)

Yes, a few years back the Germans tried imposing fees for university -- I think it was about $1000 euros per year. People complained so they dropped it back to close to zero. I'm pretty sure foreigners have to pass the German language exam and that is not easy. My German is pretty good and I looked at at on line sample questions and it looked very tough. I couple of friends of my daughter are in school in Montreal (McGill and Concordia) as it was cheaper for them compare to US.

Someone with a modest income living below their means will save more money than someone with high income living above their means.

The problem is a lot of people are not willing to lower their standard of living. My dad worked hard and with a high school diploma had a high standard of living. I have a computer science degree and am in the top 1% in pay in my field but in most ways I'm not doing as well as my dad with his factory job. I would be up to my neck in debt if I tried to live the lifestyle my dad enjoyed. I got into computers in '89 and rode the internet wave. When kids today grow up they probably won't be able to live the lifestyle I have. America is in decline. It is all downhill from here.

Replying to no-one in particular:

It seem indicative of "something" to me that nobody on here with kids going into college has mentioned ROTC or other military service as a way to pay for college. Maybe military cuts are making this a tougher option? I haven't looked into it. But I have a sneaking suspicion that there may be a "kids these days" factor that this generation expects mom/dad, "the gov", or SOMEBODY to pay their way, vs looking for a route to make their own way.

Military was certainly part of the plan for me (in 1986) and a lot of others with similar economics - I was a very good student but not #1 in my class, and from a solid middle-class income family that couldn't afford to pay anything. I was very lucky to get a full ride to a private college so I didn't have to go that route, but since Air Force ROTC rejected me, I probably would have gone into the enlisted service if not for the scholarship.

As for my kids, I've been saving in a 529 since they were born and will hopefully have what we need. Meanwhile my wife is going to community college, which is affordable, and may transfer to the state university, which is still affordable.

I agree. I think we have a generation of kids who for the most part have been given everything. Instead of working a summer job mom and dad pay for their kids to be on traveling sports teams. If they don't get a good grade in school or don't get the playing time other kids do mom and dad call the teacher or coach and complain. I think these parents have good motives but they're creating co dependent monsters.

I went to school out of state because my grandpa picked up the tab as long as I kept a 3.0. I'm not sure what options will be available for my children but I'm not taking out a bunch of loans so they can go to a fancy school.

Perhaps college savings should come before travel sports??? This is on the parents. I also think college saving should come before manicures and pedicures, brand new limited edition SUVs and granite countertops. The idea that families making 250k can't save to pay for college is somewhat rediculous to me unless they live in a handful of crazy real estate places like the Bay Area (and I guess depending on how many kids they have).

It's crazy the amount of money spent chasing college sports scholarships. It's got to be 50x the amount of money available for sports scholarships. Plus, it's sad to see the fun taken out of sports for kids. It constantly amazes me that kids have fly places to play common sports like ice hockey- you can't find a bunch of other middle schoolers to play within a 5 hour drive?

With most scholarships being partial they probably don't even offset the 20 (yeah right) hours the NCAA allows you to practice if the student got a 20 hour a week job instead. (20 hrs*$10*4wks*10month=$8000!)

I have a friend and her daughter is using ROTC to pay for school (Princeton). Military service can work out well, but from what I have seen, works out better for kids when there is less combat.

Are you joking? 8k is a drop in the bucket compared to a half scholarship and room and board

This. See my post above. Simply saving what I was putting into 3-4 triathlons a year pre kid #1 should cover most if not his costs of undergraduate. Driving modest vehicles 10+ years should cover kid #2 costs for the most part. Its amazing how many people live above their means and want to place blame else ware. I had a conversation yesterday with someone complaining about upcoming college costs for a kid on "elite" travel soccer half the year. Elite means traveling out of state every other weekend.

Super cars, major investments in youth sports, kitchens, big ticket vacations, triathlons and saving for college are all choices you make. If you make $150-$200K or more a year, you should be able to find $6,000 to set aside annually per kid for school if it is a priority. If you do this from birth till college education, you both should be relatively debt free.

http://www.scholarshipstats.com/...age-per-athlete.html

It's not that far off- plus you are not considering the time practicing in the off season, club fees and the investment most parents make from age 8-18 to get them there.

I'm not convinced that even for the average scholarship recipient it is a good financial investment. It may be good for other reasons.

Then add in the probability of a kid becoming the average scholarship recipient. And I say this as a past D1 athlete and someone who worked for a D1 athletic department.

The D1 scholaships were 14 and 15K plus IIRC you get room and board. Plus with layering you can get close to full value at a lot of places. Also you forgot taxes in your 8K.

Of course, but demographically that isn't really how it works. Folks who make a lot are very commonly living well, but saving vastly more than folks with modest incomes. We've asked this here, and almost everyone in the LR is saving 20-30% of their income. This isn't some crazy frugality zone (we all bought tri gear, for god's sake), it is directly tied to higher incomes. My family saves more each year than the US median income, not even beginning to count investment appreciation.



Really, in most ways you are not doing as well? I would say that the two biggest shifts is that 2 job households and jobs that call for higher education have become the norm. Those represent massive paradigm shifts which people have problems coming to terms with. Otherwise, technology has led to an enormous number of improvements. Those improvements are unequally distributed in the extreme, but I question if you are doing as abysmally as you say. As a student of history, I guarantee that "America has been in decline" and "It is all downhill from here" have been sentiments for a couple of centuries now.

The raging stupidity of extracurricular blows my mind. I see kids being pushed into them and they watch their parents spend tons of money on them and I don't questions these kids making stupid decisions. We are a stupid nation.

I'm not doing "abysmally." I'm doing quite well. My dad bought a big house in the country that he paid off before turning 30. We had "toys" like mini bikes, go carts, motorcycles and snowmobiles growing up. I can't afford to do any of that. My mom worked part time as a substitute teacher but she didn't really need to; we could have done quite well on my dad's pay.

I think America has been in decline for decades but not centuries. For a long time every generation did better than the last. That ended around 1980. Before 1980 most households got by on one income but after 1980 most families needed two breadwinners to get by. Ever since 1980 wages for all demographics except the wealthiest percentile or two have been stagnant or declining. This coincided with when demand side economics was replaced with supply side economics. We were promised that if corporations and the wealthy had more money it would fuel an economic boon and everyone would prosper because a rising tide lifts all ships. 40 years on we are still waiting for all that money to trickle down to the rest of us.

Thoughts.....

I think the most important thing a person needs in life is a reason to live.
And I don't think a spouse, a child or a parent is a sufficient "reason."

A person's "reason" could be religion.
It could be triathlon, bird watching, film.

Once one has a "reason" to live, THEN one needs a "means to make a living."

A career, is at best, "a harmless, and tolerable way to make a living."

The "career" cannot be the center piece of life. Or one will become a mindless drone! Obviously, the career will occupy a large portion our waking hours. But it is what you do after work that matters.

So....
I am a big believer in extra curricular activities.
I just hope my kids develop their own passions. Not relive mine.

That's true for most student loans today. In addition, there's no need for a judgment to garnish wages at 15% of income. Once a borrower defaults on a government guaranteed loan, there's I believe a 30 or 90 day opportunity to appeal (on very narrow grounds) before the wages can be garnished. And unlike a lot of garnishments or withholding orders, which expire after one year unless renewed, a withholding order on a defaulted student loan remains in effect until the debt is paid off. Further, depending on income, 15% can be a larger payment than what would have been the monthly payment had the borrower never defaulted.

I agree. I was taking about the ridiculous levels kids are pushed during extracurricular activities. Families where three activity become the center of the kids life. I have seen what my sister spent for my nephew to be in high school marching band and am stunned. I know little girls who practice dance 20 plus hours a week for compitions that cost the families crazy money.

I am all for kids and adults doing things outside of school or a career but when so much money and time are put into a kids activity they are taught to make huge sarifices that aren't so smart

It is a complex problem.
Who knows what the "right" answer is.
There are obviously lots of wrong answers.

I have problems with both of my kids and extra curricular activities.

My oldest son has little that he likes, and nothing he is good at. He is pretty good at school. (And got a 98% ACT score) What should I do with him?
I spent a ton of time introducing him to stuff. But he would quickly want to quit everything. Finally, I just made him do stuff.
But now he is too old for that.
His principal activities are eating, pretending to workout at the gym and making up stuff about himself online.
I suppose teenagers find our exactly what their parents hate most.
And become that thing.

My youngest is probably the best soccer player in Tucson for his age. (His club and HS coach say so).
But Tucson does not have a development level soccer team.
The only development team in AZ is a private soccer academy is a 1.5 hrs drive away. The academy want $45,000 for him to attend (that includes a 25,000 scholarship) for him to attend.
So, needless to say that child also has unresolved issues related to his "dreams."

Fortunately, though these things are their problems not mine.
I guess I can just advise, assist and watch.

I didn't buy a single book for my last semester of law school. Every single class I had was using a new book, so I couldn't take advantage of the typical discount for used books, one class had 2 different books and another had 3. I went to the bookstore, sorted, through all that, and said "eff it". My GPA was worse that semester than any of the other 5, but not that much worse.

You say you are in the top 1% of your field for pay and you can't afford a mini-bike or a go-cart? What are you spending your money on? Also, how does the home you live in compare to the one you grew up in? I'm old, but my house is a freaking mansion compared to what I grew up in, which was a typical house for the time.

Books for college are a hack. I had several professors never reference or use the book. The book had nothing to do with the tests. I even had one professor who make sure everyone had the book and purchased it brand new....because he wrote it!

There were times where I bought a book online (early years of amazon) and I sold it back to the book store for more than what I paid for it for a small profit!

The one guy I had directed all his profits to a trust that donates to the school. I've had friends who had asshole profs that profited off their sales

I can afford to buy some of the things but I can't afford to buy everything my dad did. I have to choose. My house is much larger than the one I grew up in. I only have as large a house as I do because my in-laws live with us but they also own 20% of the house and pay half of most of the bills.

Certain luxuries we enjoy now weren't available in the 1960's like flat big screen TVs, Internet connected computers and smartphones. Hard to factor that in to the equation.

I don't know exactly how much my dad made (he was always secretive about this sort of thing even to us) but I know he made less than $36,000 because that is the pay he demanded if he was going to move and manage a department in an out of state plant. If he made $20,000 in the mid 60's that would be as much as my my wife and I make combined (I work full time my wife works part time) in today's dollars. He had a high school diploma and both my wife and I are college graduated professionals.

There have been other periods where previous generations were better off, and other eras where economic disparities seemed to systemic.


Generally true, but you are overstating it a bit. The upper quintile has been doing okay, with at least some measure of mobility. Here is a graph back to 1967. Over a 50 year span, wages have only gone up ~20% for the bottom 60% of households. As I said, you don't really have much chance to move up unless your earnings change (and then you still have to save).

One of my kids has a summer only job and the other one is working year round (since December). What they make is almost irrelevant to the cost of college. It might pay for their books and supplies. This seems to kinda like the guy saying people can't afford health insurance because they're buying iPhones.

Plus they have to take a full load of AP classes and participate in extracurriculars to pad their application for college. In may ways it's a much shittier life than I had as a teen. I didn't have to be 'perfect' to get into a UC school.

This fear has been "growing" for the better part of a decade. I remember way back in the chainpin days in the midst of the Great Recession that student debt was going to be the next shoe to drop.

It could still happen. Maybe it's just really hard to predict when.

Whenever I interview new people for jobs, I judge them almost entirely on extracurricular activities. E.g .what they did with their lives outside of the institutionalized learning machine. I interview engineers, and the engineers who like to build shit on their own time for fun almost uniformly kick the shit out of 4.0 GPA cum laude types who only walk the line.

Maybe this isn't what you meant by "extracurricular" - haven't read this whole thread. I just think it's really good to do stuff outside of school.

Summary:
1) The rich can afford to go anywhere they can get in.
2) Excellent students and football players can go wherever they can get in.
3) Good students from low income homes can go anywhere they want and graduate with modest debt.
4) Good and Average students from moderately high income comes can ONLY go to public college without destroying someone's finances.
5) Average students from low income homes CANNOT go anywhere WITHOUT destroying someoned finances.

This is pretty much how our entire society is structured. If you're making 400K+ a year you really aren't all that worried about tax rates, paying for health care or college tuition. However if you have a household income in the 50-100K range you don't "Qualify" for assistance on much of anything. You pay taxes at a significant rate, you pay for your health care and college tuition. However if you make 20K or less, you get health care covered to the point of not even needing to cover co-pays or deductibles, you get college tuition paid for and pay significant less in taxes.

It's been this way for decades. The middle class is the easy target because they get a weekly paycheck and they make a good portion of the total income. The rich pay more, but their level of disposable income is much higher so they aren't as highly impacted if costs go up. The poor are "Taken care" to a large degree.

Point being that it's a general mentality that is threaded throughout our society, why should college tuition be any different?

~Matt

This fear has been "growing" for the better part of a decade. I remember way back in the chainpin days in the midst of the Great Recession that student debt was going to be the next shoe to drop.

It could still happen. Maybe it's just really hard to predict when.

Over 90% of student loans are held by the federal government. I believe that number owed is ~1.3T. Let's say we simply have one massive "Student loan debt forgiveness" law passed and every taxpayer now owns a chunk of the debt. We'd be looking at ~11K per household. The more disconcerting thing is that student loans now account for almost half of the federal governments assets.

My point here is that there are two possible outcomes to a complete student loan collapse. Tax payers pick up the bill and we move on...or the government folds. While I think this would be another nail in the coffin I seriously doubt it would be the straw that breaks the camels back.

~Matt

LOL. Dude complaining about irresponsible youth who have been given everything and are too entitled to work a summer job then follows up by revealing his grandpa picked up his school costs.

Bit of a head-scratcher. Contrast the enormous generosity of his grandpa, and his response to the possibility of the same type of need....

As long as I made the grades I was going to get financial help from my grandpa. It was not an expectation but a gift. I worked throughout high school and college and had a partial football scholarship to a reasonably priced private school.

In the end I had the pleasure of paying off my wife's student loans.