My Opinion

Student loan ripoff

Read this from a NYTs op-ed 2-11-18

I’m not dismissing my responsibility for this. But along with many other 17- and 18-year-olds, when I went to college, I didn’t know anything about student loans, interest rates or rude private debt companies that hound the living hell out of you. All I knew was what I was told: College was the ticket to social mobility, and good students deserved to go to schools that matched our talent and ambition. Folks like me, who come from working-class backgrounds, are told to chase down a bachelor’s degree by any means necessary. But no one mentions just how expensive and soul-crushing the debt will be.

I can’t resist a glib remark. Isn’t that what parents or other responsible adults are for; to guide children in these decisions, to be knowledgeable about these issues? What parent allows a 17- year old to make these decisions? Apparently quite a few or they are simply not part of the process. So, what’s the real problem?

College is not the ticket to anything, except maybe, just maybe the first job. The only ticket you can count on is yourself.

Our concept of college and work is screwed up. Many jobs claiming the need for a degree; don’t require a degree. The idea that getting a degree (necessary skills) takes four years is nonsense. Many of the skills required for most non-professional jobs including simply thinking, can and should be part of a high school education. Maybe we should think about an extra year of high school. Advanced education in specific skills needed on a job such as finance, communication, etc. should be provided by employers as many already do.

Our focus is on the cost of college and on student loans. Our focus should be on evaluating and restructuring the entire education process and how it actually works in the real world of jobs. We may need to teach students about critical thinking, but we also need to teach informed decision making and how to evaluate life choices.

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8 replies »

  1. I agree with your Post 1,000%.
    College has failed the nation. College is obsolete when there are 21st Century options.
    I’ve put together a Gap Year program for my grandkids that gives the time, maturity, & opportunity to evaluate options.
    “Learning” is a lifelong experience. “Hard Skills” are critical to give a Student options, freedom, & the opportunity to make informed choices.

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  2. I apologize for the typo in there. My last sentence got pasted into some random spot in the middle of my comment by accident.

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  3. Something to consider when talking about the student loan crisis is not the actual dollar figure owed per month, per student, on average. What are the terms of that seemingly small monthly payment? Is it being spread out over 30-years or 10-years? $200 per month for several decades actually is a lot of money. The real problem comes from the fact that student debt is the “gateway debt” to making all other debt acceptable, even normal. Once you have student loans then come the credit cards and the auto loans. Next is a mortgage payment for too much house when the young adult is nowhere near financially solvent or mature enough to handle it. Our students are being sold a bag of goods from our whole society, even teachers in my experience and are walked into tens of thousands of dollars of debt when they are still for all intents and purpose, children, by well-meaning adults that also don’t understand personal finance basics. The real task then becomes educating the parents so that they can better guide and advise their young adult children. I don’t like the victim mentality or the entitlement that is becoming so normal today any more than you all do. “I have crushing student loan debt! I’ll always have debt! I need the government to fix me!” I hate it. My husband and I are not even 30 yet and we have a toddler, and we did it. We paid everything off and never acted like we had been victimized or owed something. It was our mess to clean up. Parents need to educate themselves plain and simple. Your job of teaching your kids doesn’t stop when they go to college, so regardless of whether you went to college yourself or not, you need to seek knowledge from reliable sources. Probably most importantly, we need to stop making debt so darn “okay” in our culture. I’d also love to see the resurgence of trade and vocational schools as another option for young adults. Check out my blog post for ideas on avoiding student debt and paying cash for college, Something to consider when talking about the student loan crisis is not the actual dollar figure owed per month, per student, on average. What are the terms of that seemingly small monthly payment? Is it being spread out over 30-years or 10-years? $200 per month for several decades actually is a lot of money. The real problem comes from the fact that student debt is the “gateway debt” to making all other debt acceptable, even normal. Once you have student loans then come the credit cards and the auto loans. Next is a mortgage payment for too much house when the young adult is nowhere near financially solvent or mature enough to handle it. Our students are being sold a bag of goods from our whole society, even teachers in my experience and are walked into tens of thousands of dollars of debt when they are still for all intents and purpose, children, by well-meaning adults that also don’t understand personal finance basics. The real task then becomes educating the parents so that they can better guide and advise their young adult children. I don’t like the victim mentality or the entitlement that is becoming so normal today any more than you all do. “I have crushing student loan debt! I’ll always have debt! I need the government to fix me!” I hate it. My husband and I are not even 30 yet and we have a toddler, and we did it. We paid everything off and never acted like we had been victimized or owed something. It was our mess to clean up. Parents need to educate themselves plain and simple. Your job of teaching your kids doesn’t stop when they go to college, so regardless of whether you went to college yourself or not, you need to seek knowledge from reliable sources. Probably most importantly, we need to stop making debt so darn “okay” in our culture. I’d also love to see the resurgence of trade and vocational schools as another option for young adults. Check out my blog post for ideas on avoiding student debt and paying cash for college if you know someone going through this process, https://lifetastesbetteronabudget.wordpress.com/2018/02/22/10-ways-to-graduate-from-college-debt-free/

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  4. I feel lucky to have had great high school teachers in 1970s Southern California.
    My 12 grade english teacher on the first day of class said, if we did not have a good understanding of english by now, what she could teach us in a semester would not help us much. She taught us life skills, balancing a checkbook, creating a budget, including food purchase and creating a menu, renting an apartment, purchasing a car, including applying for loan and understanding the total cost of of owning a car. Job interview skills, including going to a local business and interviewing with an employer. We had plenty of “field trips” to local stores and business, since it was our last class of the day. It was the most valuable stuff that I learned while in high school.

    Until we get back to a skills based education system and realize that college is not for most people, not much will change.
    This does not mean that you cannot have a middle class standard of living without a college education.

    My 30 year old son works for a paper mill, started with a temp company, 7 years on the job training, now makes $65 K per year.

    My nephew now 50, started installing tile for a home remodeling company in 1995, in 10 years he had his own company, employing several sub contractors, making $75 K per year from other people’s labor, as he put it, because he learned how to bid and manage remodeling jobs and work crews.

    Where are all the plumbers, mechanics, electricians, A/C and Heating, appliance repairman etc. going to come from, College???????

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  5. Perfect example of unintended consequences brought on by government trying to fix one thing, repeatedly. I have always blamed running away college tuition on guaranteed federal student loans starting with GI loans after WWII. This paper shows that credentialing-up job qualifications in answer to various civil rights rulings pushed it along too.

    Thanks for the link.

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  6. In terms of student loan debt, according to the Cleveland Federal Reserve Bank study of a couple of years ago (citing 2nd quarter 2015 data), the average student loan payment was $351 per month. That is not minimal, but, it is not overwhelming either. We’re are talking about ~$4,400 a year.

    But, as I always say, averages can be deceiving. Turns out that the same survey shows that the median monthly payment was $203. That means, half of the student loan debts had payments equal to or less than $203. ~$2,400 a year as a burden?! Give me a break.

    To give you a feel for the impact of the small percentage of truly significant student loan balances, the 75th percentile loan payment was $400 – only $49 more than the $351 average!!!!

    See: https://clevelandfed.org/newsroom-and-events/publications/forefront/ff-v7n02/ff-20160516-v7n0204-is-there-a-student-loan-crisis.aspx

    Bottom line, the largest outstanding loans were those incurred by individuals who pursued graduate and professional degrees. So, it wasn’t some 17 or 18 year old kid who incurred substantial debt, it was a 22 – 25+ year old (or much older) individual who decided the additional degree was worth the investment.

    Bottom line, when the writer of the comment says “… no one mentions just how expensive and soul-crushing the debt will be …”, she/he is misrepresenting those who have true student debt burdens that are not affordable – those are the students for whom college was not appropriate, for those who did not complete a degree, or whose degree did not add marketable skills, where the individual is left with sizable debts and no valued credentials.

    Consider, for example, today’s students who borrow $60,000 a year to obtain a theatre degree at NYU. See: https://www.investopedia.com/articles/personal-finance/010915/cost-studying-new-york-university-nyu.asp

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  7. I cannot blame the parents 100% on this one. The colleges, politicians, and high schools are still using a false figure that college grads earn $1m more than non-grads. Parents are told the way to middle class is through a college education. Schools are passing students to make their graduation rates look good so the students are deceived that they are prepared for college. Parents and students are told to get a degree at all cost, you’ll make the money back working.

    The problem is as a parent, who never went to college, has no idea, they believe what they are told. Kids are told they can be anything they want but nobody helps them with the research to prove that a degree in basket weaving is worthless and they may owe that $1m instead of earning it. Trade schools have not been part of the discussion for decades. States have cut funding for vocational schools and they also could not keep up with the changing technology. Private for-profit trade schools got a bad rap because they just wanted the student loan money.

    It used to be a high school diploma meant that you achieved a basic level of education. In the late 1970’s, New Jersey had to start testing students to ensure that high school seniors actually could read and write. They also mandated that all New Jersey colleges test incoming freshmen to ensure that they could read and write because of the joke that public schools have become.

    An online article at USA Today (2-17-18) reported that the FBI was investigating Washington DC Public Schools for changing test scores to pass students. Last year in DC, 10% of the graduating class missed 50% of their classes. The same article reported in Camden, NJ that 50% of the 2014 class failed the NJ exit exams but still graduated.

    At the end of the 1980’s, the NJ State Police used a college degree requirement to limit the number of applicants. This also help end the federal affirmative action lawsuits against them. Why? Because colleges had all the money to give scholarships to minorities and it put the burden on all of American colleges instead of NJSP to see who is qualified. If not enough minorities applied, it wasn’t the NJSP fault that minorities were not going for criminology degrees.

    Government has always given extra promotional points to college grads to help civil service distinguish one worker from another. I think a lot of private employers also have done this with the flood of college grads. The internet has also flooded HR in boxes with resumes and college checkboxes is another way to reject applicants.

    To prove my point, I applied for an operations position at the airport within a mile of my house in December. I had checked all the boxes that they wanted. I worked years in operations. I had Air Force experience. I worked at Atlantic City International Airport. I have a bachelor degree. I got turned down. Why? Everything matched except that I did not have an associate’s degree in “any avionics related” fields. So, I looked into getting the degree. It would have cost over $36k to get the degree and the job paid less than the factory workers get paid in my area without a degree. I wish them luck, the job was to keep the runway lights on, not to fix aircraft avionics.

    Until you check off all those boxes you do not get a chance to prove you can do the job. More importantly, just because you checked off that box, does mean you can do basic high school math.

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    • Dwayne – with respect to your comment about the NJSP, note: See:

      https://www.jamesgmartin.center/acrobat/Griggs_vs_Duke_Power.pdf

      In developing the legal process known as disparate impact, the courts did stretch the actual statutory provisions which had been included in Title VII protections. Following Griggs v. Duke Power, according to these authors, one result was to credential-up a variety of minimum qualifications for positions to include a college degree (or a specific college degree).

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