Student loans surpass auto, credit card debt

[mbwright]

The student loans should really be at about 3%, not 7-10% interest.   The more going to interest, the less going to retirement savings.

[Tacachale]

The banks don't issue the loans any longer all they do is service the loans for the government.  The federal government took over the student loan program and placed it under the Department of Education around the time health legislation was passed.  Before the feds took over, student loans were much lower than the 6+% they are now. 

http://www.nytimes.com/2010/03/26/us/politics/26loans.html?_r=0

http://www.huffingtonpost.com/2013/04/09/student-loan-rates-debt-economy_n_3048216.html

Yes, that comment was several years out of date. The feds have taken over loans, the banks just service them now. We still have the problem of federally-backed loans going to for-profit schools and other rising costs.

[mbwright]

There are plenty of rising costs at the public/state schools, not just for-profit.  FSU and others keep going up 15% plus per year, significantly more than the CPI.  if it was 100/credit to start, after 4 years, at 15% each year, by the time you graduated, it would be over 150/credit.
100
115
132.25
152

[Tacachale]

There are plenty of rising costs at the public/state schools, not just for-profit.  FSU and others keep going up 15% plus per year, significantly more than the CPI.  if it was 100/credit to start, after 4 years, at 15% each year, by the time you graduated, it would be over 150/credit.
100
115
132.25
152

I mean, the amount of loan and grant money that gets pumped into for-profit colleges (with little to no return) is a big part of what's driving the costs up across the board. There are other factors. The Florida schools' tuition is already very low, it's going up because the state keeps reducing its contribution.

[carpnter]

College Financial Aid Isn't Going to the Neediest:
By Karen Weise
May 09, 2013


When faced with questions about rising tuition, colleges have long responded that yes, tuition has skyrocketed, but many students don’t actually pay the full list price because of financial aid. In a new paper, the New America Foundation reveals that while students do get aid, the poorest students increasingly aren’t the ones getting the help. Instead, colleges are using their often limited resources to give students merit-based scholarships, which don’t take family finances into account. For the schools, it’s all in the name of “their relentless pursuit of prestige and revenue,” according to the paper.

Schools are “working hard to bring wealthy students to their campuses,” the authors write. “After all, it’s more profitable for schools to provide four scholarships of $5,000 each to induce affluent students who will be able to pay the balance than it is to provide a single $20,000 grant to one low-income student.” The students getting “merit aid” aren’t necessarily betters scholars, either. For example, the paper cites data that show 19 percent of freshman with SAT scores under 700 (out of a maximum 2,400) received merit aid, as did 27 percent of freshman with scores between 700 and 999. The term “merit scholarships,” in other words, is a misnomer, the report says, because schools can distribute the aid however they please.

The result is that poorer families face a chasm between what they can afford and what they are being charged. Nine of 10 private colleges charge students whose families earn $30,000 or less a net price of more than $10,000; three of five charge those students more than $15,000. There are gaps at public colleges, too, though the spreads are smaller. Faced with a price tag they can’t afford, students turn to other solutions, such as taking out loans or working full time in addition to classes.

Some private colleges have made strides in helping the neediest applicants. Harvard and Yale, for example, leave a small gap cost for students to cover. But they still have small (albeit rising) enrollment of low-income students. At Harvard, 11 percent of the student body receives Pell Grants. (Check out the report’s interactive graphic to see how different schools fared.) The report calls out Amherst College for leading the pack, both providing close to the full need for poorer students and actively recruiting diverse applicants.  Almost a quarter of its student body receives Pell Grants. While Amherst has built its program over the past decade, the situation for needy students at scores, if not hundreds, of other schools has grown bleaker. http://www.businessweek.com/articles/2013-05-09/college-financial-aid-isnt-going-to-the-neediest

There is nothing wrong with merit based scholarships.  In many cases merit based scholarships are awarded to the high school students who were very good in high school whose parents have an income level too high to qualify for grants but really do not have the funding to send their child or children to college.

[NotNow]

So....the country has a system that was once the envy of the world.  But government regulation has resulted in third party involvement and wildly inflated prices, now resulting in shoddy service and many being priced out of the market.   

We should make it a civil right to have a college degree.  Our massive Federal program to ensure that everyone has a degree shall be funded by everyone!....well, at least those who can pay.....taxes.   The Federal government shall ensure that the third party lenders treat everyone equally and will ensure their profit.  All institutions must follow the Federal guidelines for education in order to control costs.  We shall call it...Obamaploma!

And if it doesn't work, we will institute single payer government provided education, just like they do in more civilized countries.   

[officerk]

I went back to school at 30 since I was laid of from an industry that was not handling the fiscal climate well. I managed to find a job that paid a whopping $18k a year, but it worked around my class schedule. As a single female with no children I qualified for nothing but subsidized student loans. I was out right told that if I had a child it would be different. I fought the debt for as long as I could paying out of pocket for as long as I could but as my degree progressed my classes and books got more expensive and I had to get the loans. As I went back to school at 30, the student that I was in high school is not reflective of the student I am in college, my first degree I obtained with honors.  There are many of us that have had to or decided to go back to school because of being laid off in our last careers and having to find new paths. This is something that has hugely affected the market and universities.
I am currently looking at a healthy student loan debt. I have a better job now. Which means that in working toward my Masters it is steadily growing. I am still single and childless. I will never qualify for the "free money." My first student loan was at a 4% rate my last I believe is at 6% (and no longer subsidized). I do owe more on my student loans that I do on my car and credit cards combined. Because of my employment I am not considered a "hardship case" for scholarships and while I am an honors student I am not a genius. I am just a bit above average. I apply for the scholarships that millions of people apply for every semester. Competition is brutal. To date I have not gotten any.
Higher Education is not a right. It is a privilege. You have to work for it and you have to earn it. HOWEVER; the cost of tuition, text books and fees is crippling. Add to that the ever increasing interest rates and it is making that privilege harder and harder to earn even for those of us that can simply because we cannot afford the price tag.

[JFman00]

For the high school students out there, be aware that the military is one of the few organizations left in the country that gives out full rides to just about every school of your choice (sometimes room and board included). Graduating with a guaranteed 40k+ job (80k at 4 years) with no debt is a pretty good plus too.

[ChriswUfGator]

I have a couple friends who went to school on the GI bill lately, and it ain't what it used to be. They have debt. Less than average, for sure, but not a blank check anymore either. That changed around 2006/7 from what I hear.

[NotNow]

He's talking about ROTC.  The GI Bill was never a free ride.  The old GI Bill, which did not require any contribution from the service member and was a true benefit, ended in 1977.  The newer Montgomery GI Bill requires contributions from the member.  BOTH GI Bills required serving your country in the Armed Forces.

JFmann is correct in pointing out the educational advantage of the military.  Just remember the obligation that goes along with it.