One of the most important lessons students learn in college is how to get into debt and stay there. It’s crucial to the success of the Republic. An indebted population is easier to control; needing to pay off crushing debt – a debt that if defaulted on has been stripped of many normal consumer protections and rights – graduates more willingly shuttle into cubicles, becoming the square pegs demanded by the square holes. After a few futile years of floundering idealism, their souls have been successfully jackbooted into powder and they’re ready to keep the thumb on the next generation of would-be drones so as to protect their empire of matchsticks. But how did we get here? This chunky infographic examines the origins and (d)evolution of the student loan leviathan.
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Fantastic break-down on the student loan scheme. Good job!
“How did this happen?”
By college students learning not to proof-read what they’ve written on… lol
I was going to say the same thing, it is a pretty poor time to have a typo when you are talking about kids education.
Because there are so many other options for most of those student.
Thanks to exemptions to the Truth in Lending Act, it doesn’t matter what the paper they sign actually says.
Um yea this. My last loan was supposed to be one loan. Somehow it was broken into 2 different loans that they refused to consolidate. So I was expected to make payments each month on both jacking my minimum payment. The entire thing is a joke when less than $5000 in outstanding student loan debt can be jacked to over $12000 and there is nothing you can do about it other than pay for it the rest of your life. I pity those who had loans for their entire 4 years in the 100k plus range.
This whole house of cards is going to fall harder than the housing bubble. Something has to give.
Those loan agreements are incredibly convoluted and difficult to understand. It’s not reasonable to expect an average student/parent to comprehend them. And when the professionals they’re working with are not playing fair, it’s a set up to fail for the borrower.
I
Hey how about classes that make it completely impossible to buy used books, and pass your class if you don’t? Music Appreciation online requires the purchase of a $120 book w/ cd’s inside this book is a one-time use ONLY serial number that you have to enter into the online school site, if you do not enter this number, the tests will NOT be open to you. There is ZERO possibility of using the book from the library (they carefully remove the cover page w/ the serial number), you will not be able to buy a used cheap book (that code is a ONE TIME use), and without it.. you will not pass the class.. even if you COULD have passed the tests
Don’t take the class. Not everything in life is free.
I realize the comment was off topic, but you missed the point by a couple of miles. You might want to update your GPS.
Learning shouldn’t be controlled by DRM. We don’t tolerate DRM in our music, why do we tolerate it in our schools?
Because you commit to a degree program. And then, when you take a required course for that degree program, the professor that semester decides to use one of the every-four-years ripoff books, rather than something cheap. Believe me, I love those professors who look out for our books expenses. It’s not hard to find quality books for cheap, but not everyone does it.
It also keeps students from doing low-paid work that helps those pesky poor people. Choosing between a public-service job that offers no hope of paying your bills, much less paying off your loans, vs. working for The Man and possibly receiving a living wage? Pretty much a no-brainer.
I think Income Based Repayment and Public Service Loan Forgiveness are designed to address this problem.
The problem is that public sector (non-federal, that is) jobs are paying so little right now that even with income sensitive repayment, you may be paying less than the interest on your loan. And the public sector forgiveness program requires 10 years of payments and continuous service for a public sector employer.
Yup. And reduced student-loan payments based on income doesn’t mean reduced loans. It just means you pay less while the interest runs.
Great graphic. Although the numerous misspellings make them lose a bit of credibility.
Nice to see I wasn’t the only nerd here who noticed that. I’m guessing the author, in a bid to be more frugal in his/her scholastic endeavors, skipped the class where they explained proper apostrophe use.
That being said, I took option A. Sure, it may have been easier to call my congressperson than it was to Save, Aid, Work, Frugal, and Wait; however, I don’t think calling my congressperson would have led to my graduating from college debt-free. But maybe I was wrong?
Do both. Option A will help you pay off your loans, while Option B will help bring those bastards to justice, and hopefully make it harder for future students to get fucked like that.
It was the its/it’s thing that bothered me the most.
Haha, wow, what useless tips. “Save? Work?” Cause no college students do that. The other tips are “Don’t go to college! Bill Gates didn’t, and he’s a billionaire!” Go ahead and try it. For the 99% of people who don’t go on to found a giant corporation, you literally can’t get a job past menial labor or serving anymore with just a high school degree.
The fact of the matter is, student loans suck big time, but there’s really no other choice if you’ve exhausted other routes for money.
“The fact of the matter is, student loans suck big time, but there’s really no other choice if you’ve exhausted other routes for money.”
You could go to a school that you can afford. Just like we have to do with every other facet of our financial lives.
I guess you can get an Associates Degree from a community college, but outside of a few professions like healthcare, that’s not much better than a high school diploma.
If you’re talking about a University, which college, praytell, would be considered affordable? The state school I went to is considered one of the cheapest in the nation, and the tuition is now around $9,000 a year (not including books, fees, room/board, of course). If you work full time at a $9 an hour job (which is probably good for not having a college degree), that’s half of your pre-tax income, leaving you with about $9000 a year to actually live on. Half or so of that will go to rent.
You don’t have to graduate in 4 years. I know several people who took a semester off for two years to work 40 hours a week. Also, you can quite often find jobs paying well more than 9 an hour as a college student in a hard science.
I would expect that in the Venn diagram of “Places with Affordable Colleges” and “Places with Jobs Paying $9 an Hour or More,” the overlap is pretty slim. Affordable colleges will usually be in places where the cost of living is low. Places where the cost of living is low will usually have lower wages.
It depends on how good of a school you can get into. Many of the best schools have big enough endowments and financial aid budgets that they guarantee they’ll meet all of your need with grants, not loans. At a few top schools, even students whose parents make $200,000 a year aren’t expected to pay more than half the tuition. Very few people are actually paying $50k/year for their undergraduate education, unless a) they can afford it, or b) they chose to go to a school with bad financial aid.
You could also move to a state with low in-state tuition for state schools, and apply the next year. Yeah, it’s a pain, but guess what? Money buys options, and if you don’t have it, your options are more limited. Being a great student opens other options, and if you’re not a great student, you’re going to have to work harder for college.
Many of our best schools HAD big endowments. Those were some of the hardest hit funds in the recession. Most schools with large endowments lost upwards of 30% of their value. It’s actually the schools that don’t operate off of endowments that managed to stay afloat and maintain, if not increase, their financial aid budgets. And hire all of the great professors who got cut from the top institutions.
Of course, the ‘affordability’ of schools is pushed up by the assumption that everybody will get student loans to pay for tuition.
After you find that mythical school, can you help me find a yeti and a unicorn?
Look abroad. Mine costs about US$3750 a year. Now transferring credits back if you want to finish off in America and get an American diploma isn’t exactly a piece of cake (My options look to be either the UC system or University of Michigan if I want schools with equivalent recognition in the US) but still doable.
When I see jobs for receptionists and phone CSRs that require a Bachelors there is a very big problem. The 4 year degree started becoming what a HS diploma used to be. So now even low level jobs mandate that huge level of debt just to have a job. We also lost almost all of our manufacturing sector at the same time. So yea, the current set up has made us all slaves to our debt and wage slaves to any job that pays enough so we can…. pay off that debt. This sounds like a dog chasing his tail.
This. Sad but true.
after you graduate, why not take out a loan to pay off the student loan and the declare bankrupcy? the new loan won’t be a student loan.
You cannot consolidate student loans into anything other than another student loan
Good luck finding a bank to give you a loan for such a high value with no collateral.
there aren’t a whole lot of people out there that will lend tens of thousands of dollars unsecured to a recent graduate with little or no work history.
if you find one, please let me know. i’d love to try your tip on some post-graduate work…
That’s a great idea, if you can get someone to loan you that much money straight out of college.
Depending on how soon after you take out the 2nd loan, courts may find that you can’t discharge them – substance over form. Additionally, who’s going to lend a recent college grad enough money to cover student loans worth BK’ing over?
A better idea, would’ve been (during the housing bubble) graduate get a job, get a house and then take out an equity line of credit pay off your student loans, then just default on your house and rent for the next few years.
Shady as hell but hey so are all the banks.
Another thing that could be done (maybe even still)
Get a few credit cards, and keep transferring balances around getting lower interest and no interest and small transfers. Often they will send you checks too to pay for your bills. (their words)
Theoretically you could take those checks and pay off your student loans all while “paying” off one card with another. Most credit card companies send and increase limits all through the computer often never checking your credit history just that you paid off your current debts and they want you to spend more. (my credit line has increased while my salary has decreased over the last 5 years I got a huge increase in credit line last year when everybody was bitching about them cutting it)
Ultimately you could transfer enough times to consolidate all your student loans to the point where no financial institution would’ve been able to track those records easily. It would’ve just been debt from one bank to another. A tad be more timely but hey you build up one hell of a credit run during the process.
If the financial world can create Credit Default swaps I see no difference in the public sector. It’s risk reward right?
Oh that’s right we have to be good little consumers and follow these “moral” codes of not defaulting on our obligations.. Unless you’re a corporation then see they have all the rights of individuals but none of our responsibilities.
F that.
I find your ideas intriguing and would like to subscribe to your newsletter.
http://www.newsletters.com/skankingmike/todaywasagoodday
Very intuitive.
Can we avoid the nonsensical “debt slavery” rhetoric while still addressing the issue? Not to mention the fact that we certainly ought to place the burden on students who choose to get loans to get degrees that will be marketable. It’s fine if you want to study philosophy, but don’t take out loans expecting that you’ll easily get a job that will let you pay them back.
I make my own student loans at home.
Here’s a novel idea: pay back your loans! There’s no such thing as a free ride.
Personal Responsibility.
Did you read the part where college costs are rising 4 times as fast as inflation because there’s no market force on the other side holding them down? This is not as simple as “people should be responsible”. Even responsible people can be screwed by this. You’re stuck between a life of terrible jobs and accepting a loan that you may not get a job good enough to pay.
Uh… student loans being easy to get doesn’t absolve students from understanding that they’re actually spending the money they’re borrowing and will need to pay it back. The market force is the students’ willingness to pay the tuition at expensive colleges.
Having student loans exempt from the Truth in Lending Act made everything you just said irrelevant.
Wow…way to miss the point of the article.
Way to miss the point of LIFE. People need to take personal responsibility for their decisions and quit blaming other people. Despite tuition inflation there are still affordable ways to get an education. The total cost of my education was $60k 7 years ago. I suppose that is a lot of money, but I make easily $30k per year MORE than I would make if I didn’t go to college.
Some people SHOULDN’T go to college.
Some people should go to less expensive colleges.
so, the point of life is that a teenager who makes the mistake of attending school when s/he shouldn’t have or attends a more expensive school than s/he could have should be subjected to a life of bad credit, monthly payments they can’t afford, harassing phone calls from collectors, wage garnishments, court appearances & all the other lovely stuff that comes along w/ defaulting a student loan?
i’m all for people owning up to their decisions, but come on. the point of life isn’t to pay the consequences for a poor decision your entire life. & if you think it is, maybe you didn’t get such a great deal on your education after all.
I used to say that we needed to switch to an entire private system, treat it like any normal debt and have the government step away. Credit card abuses are bad, but not as bad as a permanent debt.
Now with the government doing all the loaning… I don’t see how to really fix it.
I would have said that we need to change how we loan the money – someone who is majoring in “Prehistorical Icelandic Art” probably does not have the earning potential as someone who is studying Engineering or Accounting. Maybe factor in the five/ten year average salaries for graduates with those degrees, somehow. Maybe its still possible – have the IRS collect what degree (if any) the taxpayer holds, cross reference it to their career and use that data. Its possible.
The other thing that could be done is to get away from the idea that we want “well-rounded students.” I took two years of relatively worthless classes way back when to get my degree. I’ve yet to use anything I learned in my astronomy class in my career. And while “Communication” seemed to be something I could use, half the class was wasted making me watch other people give speeches. We didn’t learn how to write or communicate better, we learned about the history of speech… waste of time.
Most schools are already implementing a “differential tuition” scheme for engineering students. They’re getting charged more. It’s also pissing them off, because engineering colleges are usually the biggest moneymaker in a university. English departments aren’t bringing in multi-million dollar research projects. Engineering departments are. At some level, the work the students do is already subsidizing the existance of these other departments.
As far as “well-roundedness” goes, that’s generally up to departmental requirements. If your degree program has two years worth of useless classes just to “round out your education”, then maybe your degree program should be a two-year degree. My four-year engineering program had an entire one semester of social sciences and humanities electives. Why so few? Because we had a bunch of other stuff that was really relevant that we needed to take. A lot of people took pretty easy courses for those credits, because they wanted a break, but you could still often find a way to utilize them in a way that was beneficial to your future work.
Engineering *schools* may bring in a lot more research funding, but that has little to do with tuition. It takes a lot more money to train a chemical engineering major than it does to train an English major; at most schools, the tuition from English majors and pure mathematicians is subsidizing the training of engineers and scientists.
And for grad school, business and education schools are the real money makers.
Except that research money does things like pay large chunks of salaries for faculty members…. and purchase equipment that is then later used in coursework. Ya know, the two reasons why engineering students are more expensive to educate.
And yes, in grad school, business and education students actually pay money for their education, while engineering students have their education paid for. Why is this? Because engineering grad students (at least, of the PhD variety) are the ones responsible for bringing in the aforementioned multi-million dollar grants. In addition to doing all the work on the papers that give faculty members the clout to bring in such grants, they often do the actual writing of the proposals for such grants (my grad student officemate just recently wrote a large Army Research Office grant… do engineering grad STUDENTS get credit for this? No, faculty do). So yea, there’s a good reason why engineering students hate LAS students for getting all the sympathy. Especially grad students. We could make more than twice what we’re getting in grad school if we just went into industry…. because, ya know, we actually learned something useful in our education.
Not to mention, engineering students subsidize departments they have to take classes in. Money to cover service courses is how those departments cover the gap in grant money. Those engineers complaining about a mandatory writing class (that they usually desperately need) are making their TAs’ grad school possible.
This is really a two-edged sword. Take math departments for example. The biggest complaint I heard from all variety of engineers was “the math classes are too theoretical, we don’t learn how to apply things”. I personally really disagree with that sentiment, but there are a LOT of engineering students who complain about it. I know of one engineering dept that started offering its own math classes, eventually spinning it off into an entirely separate applied math department. For writing, my undergrad dept used to require a technical writing course in the english dept. They finally dropped it, saying “we’ll require more pieces of technical writing throughout the other required departmental courses”. These types of things make a huge difference to the amount of money flowing into these LAS departments. They may hate engineers for getting paid more after college, but the last thing they want is for us to go away.
Interesting thought. If school costs are going to be inflated, then perhaps they need to cut out the crap class requirements that have no bearing on the degree. Did I really need to take 2 philosophy classes, 2 religion classes, a public speaking class, and social science classes to get a biology degree? No. The biology degree could have been completed in two and a half years tops. If I am paying a lot of money for a degree, don’t force me to take a bunch of irrelevant and expensive electives. Its like if I want to buy a car, I shouldn’t be forced to get a higher trim package than is necessary.
The most perverse part is that this money is part of what leads to skyrocketing tuition at private colleges (and, to an extent, at state colleges, although those are subject to the outrage of the taxpayers who subsidize them to some degree and can’t get away with it as much). There’s no reason NOT to boost tuitions if you can fill all your slots, as the government will pay what the students can’t.
And there’s no reason for lenders to give anyone a break, since they can’t declare bankruptcy.
With any other kind of loan, you can say “well, either my rate goes down, or I have to declare bankruptcy and you’ll probably only see a fraction of this” and they have to work with you. Without that bargaining chip, they have absolutely no reason not to just milk you forever.
People like to talk a big talk about personal responsibility, but there are 2 parties in a loan agreement and allowing one of them to be a total douchebag is not “personal responsibility”
Yay, let’s have the government help us more! They obviously know what they are doing.
Because the privatized sector has done so well thus far!
It’s not the private sector that made student loans non-dischargeable in bankruptcy.
True. The private sector just lobbied like hell for the exemption. So, of course, they have no responsibility whatsoever.
Yes, the government just does things for no apparent reason. Lobbying has no effect on legislation.
/sarcasm
The private sector has sprung up to take advantage of the virtually guaranteed profits from Government guaranteed loans.
I think part of the point is that the government has created huge incentives for companies like Sallie Mae to profit from student loans with NO RISK involved.
Risk is a critical element of capitalism. Companies profit because they undergo risk. When risk is removed (by government guarantees of loans, government bailouts, government regulations that give debt collectors almost unlimited power) then there’s no natural market force to control the behavior of corporations.
So many student loans default because the student loan companies will loan to almost anyone! They’ll loan to almost anyone because the government has removed any risk of failure.
TL;DR? = Government social engineering has led to high risk lending practices in the student loan market, which are bad for everybody except the company doing the lending.
Work a part-time job during school and full-time during the summer. That’s what I did to earn a bachelors degree with only $1,500 in student loan debt, which I had paid off 6 months after I got my degree.
Work a full-time job during school. That’s what I did to earn a masters degree with $0 in student debt.
Best way not to get stung by student loans? Don’t take any out in the first place.
My wife’s now in the same masters program I just finished, and is re-using my textbooks. She will also finish the program debt-free, because we won’t take out any loans to pay for schooling.
Yeah…I did that too…in the eighties. If you haven’t noticed, tuitions have skyrocketed and hourly pay has…not.
Just curious – in what decade did you manage this? I went to a private 4-yr, with FinAid, grants, etc., PT job all 4 years of school (3 simultaneous ones going my Senior year), was an RA, and worked FT all 4 summers, and I’ve still got about $12k of debt left 8 years after I graduated.
Not sure where you’re getting your degrees and which PT/FT jobs you’re landing to net you enough money to completely glide your way through school, but the truth is it’s just not as easy as you make it sound.
LOL. Yea right. That is not happening today no matter how hard you work and how well you pinch a penny. Our oldest is having a hard time finding any job at all. You can’t “work your way through school” when there is no work.
What is going to happen when all these people who went back to school because the economy stinks graduate in 2-4 years if the economy isn’t better?
Who has time to work a job?
The rule of thumb is that per 1 credit-hour, you should be studying three hours outside of class per week. I’m taking 14 credit-hours this semester, a slightly-less-than average workload, and therefore the time I need to study per week is 42 hours a week. Plus the actual time I’m in class, that’s 56 hours. Every week. That’s not counting the time spent on the bus, in transit to and from class (I don’t live on campus.) And, lucky for me I don’t have any labs this semester; those are “1 credit-hour” classes that, in fact, meet for 4-5 hours every week, usually.
I could take less credits and graduate in a much longer time, of course, but going under 12 hours means I’m no longer a “full-time” student, and therefore no longer eligible for grants and scholarships, which would just make school all the more expensive for me.
Working your way through school made sense in the world where you could pay your tuition at a state university by emptying out a couch, or on the capital gains from your aunt’s birthday Savings Bonds. My parents continue to freak out at the notion of how expensive a college education at a state university has become, and I’m in my senior year. Tuitions are rising at four times the rate of wages. Ruminate on that notion before you tell someone to “get a job.” Would your part-time job have paid your bills if your tuition had been four times as high, and you’d had half the time to work? I doubt it.
1) Nobody who actually belongs in college has to spend 3 hours studying for every hour in class. It’s a rule of thumb to make stupid and lazy students think that they’d do better if they could just stop playing Madden for 9 hours every day.
2) You could take “fewer” credits. Credits are numerable. Maybe if you could write English correctly, you’d be a good enough of a student to (a) not need to spend 3 hours studying for every hour in class and (b) find the right combination of jobs and scholarships to make your way through college without insane levels of loans.
Nobody who actually belongs in college has to spend 3 hours studying for every hour in class
Yeah, that’s actually not what I said at all. Maybe you need to spend a little less time falsely claiming that I can’t write English and a little more time learning to read English.
Just a thought. Also, the “fewer” vs. “less” thing? Strunk and White’s suggestion, not a rule of grammar.
Setting aside the other good points that have been made, I did go to school (in the ’80s) with people who did this. Funny, but their grades weren’t quite as good as the kids whose parents paid the full load. Something about having time to sleep, I think.
Well at first I worked full time and went to school full time and it was a bit much for me. The second I switched to part time, they wanted me to start repaying the loan (So regardless of what you may read, they do not always wait for you to graduate to start repayment). The other problem with the subsidized loans deals with the fact they will not give you control of the money *you* are borrowing but rather let the school control everything. What a headache! Some semesters I would pay the bill myself yet the school would refund my money and use some of my loan money without asking or even telling me they had done this. Other times, when I was expecting them to use the loan money they actually refused it and the only way I found out was due to the note from student loans letting me know. I then had to pay out of my own pocket at the last minute as the bone heads at the school FA office did not bother to tell me.
Got tired of their meddling so I just starting paying it myself on my credit card. Sure enough Capital one who I had been using for years without a single problem decided to jack my rate from 6.99% fixed to 17.9% Variable. I have them almost paid off and will close the account when I do just out of principle. My other private lenders have not given me any problems but I will still be in debt for years. Those of you just starting out, just be sure and read all the fine print and watch the F/A people like hawks as they do not have your best interest in mind!.
Would be a lot more interesting if it didn’t butcher the English language so badly.
hahaha, like the typical dropout note.
I worked at GRC around 2000-2001 and we had everyone we talked to refinance through consolidated loans (which was some goverment education program) and we would get big bonuses.
Every month there was a party on the 1st floor because we had the bext month ever.
what really grinds my gears is that the bankruptcy protection is not only on the loan itself, but also on any fees or interest levied against the loan. personally, i don’t think people should be able to bankrupt student loan debt. but uncle sam also shouldn’t be protecting interest payments.
furthermore, when i went to school, an UNSUBSIDIZED stafford loan was ~4%. FIXED. & now it’s at 2.75%. FIXED. today, they’re at 6.8%. where do they get off charging almost 7% for a loan with virtually no risk. & the private loans are even higher – 10-12% or more!
i say keep the no default provision, but strip the interest rate down to the 91-day t-bill plus a small margin. allow private companies to seek protection under the no default provision, but ONLY if the interest rate on the loan is less than or equal to the corresponding stafford rate. & stop protecting their interest & fees. protect the principal only.
This is actually a fantastic solution, to one part of the problem. Higher interest rates are supposed to account for increased risk. If risk = 0, then how can you justify a high rate? However, it doesn’t take care of the skyrocketing tuition problem (or the fact that somehow, universities are still going broke under the careful watch of very very highly paid executives).
well, i have an answer for that as well, but it’s sure to be met with a lot of resistance. federal aid to schools would be dispensed based on a school’s efficiency in providing education to its students. the more a school spends on educational programming (this would have a very narrow definition, btw) in relation to other expense areas (administration, construction, sports programs, etc.), the more aid they would receive.
student aid would be dispensed based on that ratio as well. qualification would still be need-based, but aid would be available in larger amounts to students choosing to go to schools with a higher efficiency rating. this would encourage students to attend these schools, which would in turn encourage schools to become more efficient in their spending.
i’m not sure if i’m explaining that very well, so to give an example: two students, all other things being equal, choose to attend two different schools. student A chooses to study at a school that has an “A ” efficiency rating. student B chooses to study at a school that has an “F” efficiency rating. student A would qualify for 100% of the federal loan limits whereas student B would only qualify for 60%. student B could be awarded as much as 100% of the limits if s/he chose to attend a different school with a better efficiency rating, but if his/her heart is set on “university of hookers & blow”, then s/he’ll have to pony up more money from another source.
sorry for the book.
I get what you’re saying. It keys on a critical issue: the fact that much of the increase in tuition in the past 10-20 years has been due to increased administrative costs rather than education costs. While it looks like it could be a decent mechanism, I’m not really sold on it being the best mechanism. You can always find qualifying things to spend ridiculous amounts of money on, but if you’re not finding the right combination of equipment and professors who can explain things well, you’re going to fail. It’s a similar problem to what plagues putting a measure on research efforts…. it’s simply really hard to formulate an objective measure of what knowledge is being discovered or passed on.
yeah, i can see that. perhaps the answer is to provide an affordable alternative – that was the goal behind establishing state university systems & community colleges. unfortunately, many of these have become unaffordable for the average student as well (not so much CCs, but definitely many state U systems). maybe it’s time to re-evaluate administration’s dedication to the core mission of these institutions & either rein them in or set them free from the public dole.
As a taxpayer I fully expect the government to collect on the loans that it guarantees. If a borrower doesn’t pay SLM and the govt. has to pick up his tab I would be furious is the govt. just ate the payout and let the borrower skate away.
I agree. If you want to be able to default on a loan the government is backing you’re saying you think the taxpayer should be on the hook. No thanks.
“Addition” instead of “addiction,” “it’s” instead of “its,” the use of “LOL,” the implication that all college drop-outs can be as rich as Bill Gates, and the credibility given to Gates’ futurist speculation (who really hasn’t had a great track record in that department) all take away from this presentation, in my opinion.
Besides, it’s not about the lectures, it’s about the degree and the accreditation behind it. As interesting and informative as they may be, you can’t put “I watched some random guy’s YouTube videos on this once” on your resume and expect to get anywhere.
(Speaking as a dropout…) It’s also the hard work of doing research and understanding the concepts well enough to apply them in the lab or at work. There are some things you simply cannot learn by watching a TED or Fora lecture, as high-quality the content may be.
If it really were as simple as Gates described, all university courses would be in the seminar format, and graded Pass/No-pass based on attendance alone. As with many things Bill says, it’s simply not realistic.
Fascinating breakdown.
I went to a community college for two years to be able to seamlessly transfer to UVA. I knew I’d save a ton of money also. I figured I would probably have to get loans while in UVA, but it turns out that they have a program that essentially grants me my full tuition because my EFC is too low.
I took out the max Federal subsidized loans and put those in a high-interest checking account where it won’t get touched until I graduate when I’ll pay them back in full. Is that stealing from taxpayers?
Interest Checking accounts usually offer very small returns. If you know your graduation date you know when the loans come due… you could earn more on the money in a long-term CD.
And my family wonders why i’m so reluctant to go to school
I told them if they wanted to help pay, then by all means, but I’m not about to go take out tens of thousands of dollars in debt at the moment. Bad enough I had to finance a car. I mean, sure I can come up with the money for a community college degree in a few years, but then what do I do about my bachelor’s at a real school?
I’ve been contemplating going back to school, but currently I can’t afford it and do not want to put myself in debt to do so
“Defaulting students *is* a money machine.”
Grammar, Grammar, Grammar…..
The act of defaulting students is singular, so this could technically be correct. I’ll agree, however, that the overall piece is sorely lacking in proper grammar.
this info-graphic simplification does not include economic hardship deferments, which is a legit way for grads who can’t afford to pay to put it off until they can, thus avoiding default.
All that does is slow the bleed. Sure, it might help in the short term, but the “juice” is still running – interest is accumulating.
Yeah. I’ve got a job with the federal government. Not only are they paying half my repayment bill, but if I stick around for 10 years, it’s forgiven.
I call that a win.
Life is gonna rock when we all work for the fed. :-/
Are they hiring where you work?
They’re always hiring. It just depends on if you currently do drugs, you have a degree in something they want, and if you have a criminal record.
Srsly. The government is hiring.
Like everything else in our world, the game is changing. The days of graduating high school and running off to a big university 3 months later are gone if you can’t outright pay for it.
The bottom line is this: the student loan program is a giant trap. Avoid it at all costs. If that means you have to work full-time and go to school part time, then so be it. If it means you have to work 2 jobs over the summer, then so be it. If it means living at home and going to community college for 2 years, then so be it. If it means putting off college for a few years till you’ve saved up enough money, then so be it. If you can’t find a way to pay for college without student loans *then you don’t go to college until you can*. Yeah, it sucks to be without a degree and have no money, but it sucks more to have one and still have no money.
Student loans aren’t free money. And with the cost of tuition skyrocketing while entry level jobs are non-existent or are paying 20K a year taking one is going to bite you on the ass unless you have a REALLY good plan.
Just don’t do it.
I would argue that, since tuition costs are rising at four times the rate of wage inflation, you should be working 4 jobs over the summer, not 2.
They forgot the part where college tuitions rise so much that it is virtually impossible for any non-rich student to pay for college, even with part time work. This is the most despicable part to me.
In 1985, I was able to (just barely) pay most of my way through school by working around 20 hours a week. The tuition at my alma matar is now four times what it was, while pay for the sort of work I did then has gone up buy about 50%. In 1987, I graduated mostly debt free. If I were in school now, with the same parents, same jobs, going for the same degree at the same school, I’d likely graduate up to my eyeballs in debt.
Very appropriately, I just watched the International.
“Control the debt…and you control everything.”
What is there to say about Income Based Repayment as well as Public Service Loan Forgiveness?
They don’t apply to private loans, but I’m curious as to what others have to say about the programs.
I am hoping to find work in the public sector or non-profit sector.
Last I checked, the federal government does not have a mechanism in place to track when you are making qualifying payments from qualifying employment for public service loan forgiveness. People thinking of this should keep meticulous employment and payment records.
Yeah, I’m getting my master’s in social work, so finding qualifying employment should only be as difficult as finding employment itself. But I was rather concerned when I read that the guidelines were basically “Well, since the first qualifying payments couldn’t have been made earlier than 2007, we have until 2017 to figure out how we’ll do it before we need to have anything figured out. Check back later.”
I’ll have about $90k in student debt, but it is ALL going to be federal loans. Loan forgiveness or not, there’s Income Based Repayment, so when I inevitably can’t find work next year it shouldn’t be the end of the world (husband works, just doesn’t make much).
Student loans are a double edged sword. You need to be careful and analyze all your options before getting one and make sure your degree will be worth it in the long run. The fact that many protections that other loan recipients have are not available for student loans is sad and should be corrected. They also enable colleges to raise prices because the students can always takes loans to cover the price raise.
I knew that student loans could be a shady business, so I decided to avoid them at all costs. Instead, I worked my butt off in high school so a university would pay for my education.
No loans. No payments from my parents. Good grades and hard work paid for my tuition, housing, food, and other fees at a university.
I worked during undergrad and graduated with very little debt. I went to a University of California school 10 years ago and could not have done the same today because the tuition and fees have gone up so much.
Just graduated from law school with a lot of debt. Unemployed. Loans coming due in November. Scared, but working hard on job search.
Student loan wouldn’t be to out of control if colleges controlled THE PRICE OF TUITION. Going to college has gone up way faster than inflation, faster than real estate. Going after student loans would do nothing since the main cause of the problem is runaway cost of college education.
This looks like one of those spam infographics used to direct traffic to a questionable education related website.
Wow. Considering the number of typos and grammatical errors in that flowchart I’m guessing the creator never went to college, and possibly never had any student loans to pay back.
Oh, the irony…
When did school loans creep up to such a high interest rate? Mine is like 3%
I got into an elevator at work and this man followed in after me. I pushed ’1′ and he just stood there…I said, “Hi, where you going?” He said, “Phoenix.” So, I pushed ‘Phoenix’. A few seconds later, the doors opened, two tumbleweeds blew in…we were in downtown Phoenix. I looked at him and said, “You know, you’re the kind of guy I want to hang around with.” We got into his car and drove out to his shack in the desert. Then the phone rang. He said, “You get it.” I picked it up and said, “Hello?”…The other side said, “Is this Steven Wright?” I said, “Yes…” The guy said, “Hi, I’m Mr. Jones, the student loan director from your bank…It seems you have missed your last 17 payments, and the university you attended said that they received none of the $17,000 we loaned you. We would just like to know what happened to the money.” I said, “Mr. Jones, I’ll give it to you straight. I gave all of the money to my friend Slick, and with it he built a nuclear weapon…and I would appreciate it if you never called me again.”
– Steven Wright
I feel compelled to point out that student loans are a good way to build up credit history. I’m not saying you should take out $100k in loans or anything, but they do help with getting an auto loan, mortgage, etc down the line. A part of what goes into credit scores is the length of time you’ve had an account, and student loans are generally taken out by younger people. Student loans are easy to get if you’re a student and have little/no credit history. Certainly much better than getting sucked into the credit cards that are pushed so hard on college kids.
A conversation with a parent of a HS school senior….”soAnd so is going to Ithaca to be a dietician, she’s really smart”. The response in my head…”no, she’s really stupid, she could have gone to the instate university and saved $100,000 over four years”. And I know that smart girl’s parents don’t have that $100,000, hope they enjoy paying off the load for a job that starts off at under 35,000/year. Go community or go state, unless you are uber smart or uber rich, it’s just dumb to have that loan.
School loans are like a marriage….til death do us part.
Try even after death. My sister passed away over three years ago with about 20K in student loans, and we still periodically get “pay up now or else” notices from Sallie Mae. I’ve faxed and mailed them umpteen death certificates, and all will be well for about six months, until the next go-round.
Out of state veterinary college tuition is probably one of the worst offenders when it comes to tuition increases. In one year alone my tuition rose $4k. It costs $46k a year for me to go to University of Minnesota, and it’s not too much better anywhere else and in many states worse. The kicker is that med school costs half as much, and when you get out as a vet you get paid half as much as a doctor.
It is ridiculous!!! Why are student loans not forgiven especially when there has been such a roblem getting jobs in the recession yet people were able to get forgiven for their home loans or rack up credit card debt with little consequence. I am not sure I will ever be able to use my degree for what was promised…what a scam student loans are. I struggle still to just pay my bills having gone to school as a single parent with the promise of a better life from school, now I have to keep deferring!!! Please help us struggling new grads out here the economy is very challenging and the fields we studied are oblivious. I studied non profit work and then the whole of the fundraising for non profits tanked w the recession. Please give graduates a break, let us build the economy again.
I paid off my college loans – and I’m glad for it. I had the very rare “when are you going to pay for this month?” call and the check was in the mail the same day. I lived at home until they got paid off; there were also plenty of times when my bank account was pretty lean. That final check you write is the sweetest thing you’ll ever experience.
One was from MEFA (four year college from ’90 to ’94) and was $225 per month. I paid that from 1995 to 2005 and the interest rate was 8%; the whole shebang was forgiven in March 2005. The one I had from Sallie Mae (one semester of graduate school in ’94 – long story short, it was a very bad decision) was $100 per month at an interest rate of 8.50%. I paid that from 1996 to March 2008.
If you’re talking about a University, which college, praytell, would be considered affordable? The state school I went to is considered one of the cheapest in the nation, and the tuition is now around $9,000 a year (not including books, fees, room/board, of course). If you work full time at a $9 an hour job (which is probably good for not having a college degree), that’s half of your pre-tax income, leaving you with about $9000 a year to actually live on. Half or so of that will go to rent.
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9000 a year? Wow. I must be lucky, my tuition is going to be 3500 my room and board and books will total 10k( if I sell books back).
I don’t have to pay a cent of it either. Federal aid+scholarships total more then my costs so I have extra money in my bank account for school expenses. Summer/winter breaks when I move back home I have a job averaging $10 after taxes.
Never thought I’d say this but I love Kansas. FHSU FTW!
Great article. Contains the same advice I’ve been giving my college student son. Don’t borrow, especially as an undergrad. Wisdom I learned the hard way by making all the the mistakes mentioned above.
I am wondering where they got that 8.8% interest rate from. I graduated in 2004 with $30,000 in student loans and my interest rate is was 3.5% over 20 years. Signing up for an auto-pay feature lowered that by .25% and 3 years of on-time payments lowered it another full percentage point. Today I only pay about $20 per month in interest on a payment of about $130 per month.
My student loan is not what they describe, mine is very affordable.
I love the completely worthless ‘helpful advice’ bit at the bottom.
Save – thanks, I wasn’t doing that, and it is useful to me now.
Aid – this might work for the minorities, but five years experience trying to find merit-based grants as a caucasian male has led to some interesting experiences. On average, for every 100 merit-based scholarships available, 50 will be for specific minorities, 30 will be for women, 15 will be for very specific educational programs, and 5 will be for everybody.
Work – this is also very helpful. I did not know that I could get use my income from my full time, menial job (which is essentially all that is available for those without a college degree) for things other than giving me a place to live, or buying food.
Frugal – Again, this is very helpful – most grants and scholarships are never concerned about financial need, and pay you the full amount regardless of how much your tuition costs, so you are able to stash that money for later university attendance.
Wait – Probably the only real advice here, give up. College is for the rich, and your ignorant plebeian kind are not wanted.
Wow, so glad im not studying in the US. I’m looking forward to a 6 year degree without needing to pay a cent until i start making some actual money. No reason why the US cant adopt a similar system.
http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Australia
It really would have sucked to be in debt for my liberal arts undergraduate degree–but I had a scholarship, and graduated with no debt. On the other hand, I did take out student loans for my graduate degree, and this degree DID result in a financially good outcome–so the loans were absolutely worth it.
I feel so sorry for those kids who owe +200K for their art history degree.
They can, as best as I can figure, not garnish Social Security payments below a certain level. SSI is below that level, but SSD isn’t. It can still accrue interest though, so if you get better they will get you. The process to discharge a loan for disability is a joke. All the reasons in the graphic illustrate why they won’t do that. The requirement for discharge is a disability that will persist and prevent employment and will not improve until death, so if you are on disability and hope to get better, don’t bother. By then your loans will be so big that only China will lend you money.