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  1. #1
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    Student Loan Debt: Who is to Blame?

    Some background so you know where I am coming from:

    1. I am a college graduate who was fortunate enough to not require much in loans. I worked a lot in high school and made great money working in warehouse labor. My parents assisted me with a good portion of tuition and the loans I did need to take were incredibly minimal. I haven't had any student loan debt since the day I graduated college. I had minimal experience with the Financial Aid system.

    2. I work in Financial Aid at a for profit college which will remain nameless for contractual and professional reasons. I've worked in civilian and currently work in military financial aid. You got a question, I can answer it. I now have plenty of experience with FA and consider myself an expert.

    3. My opinions of the system changed greatly when I started this job, and of course I am bias.

    There is the background, now to the meat.

    There is no question student loan debt is a serious issue in our country, I don't want to hear examples of what we could do, what other countries do, etc. I'd like to narrow our focus to a few issues that I plan on trying to open up as we move on. So I'd like to sort of ask/answer in sections/questions.

    1. Generally speaking, what do you think the problem with the student loan system is, and who is the blame? Even if you were like me and have no idea whatsoever please feel free to answer.
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  2. #2
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    Re: Student Loan Debt: Who is to Blame?

    One quick reply, financial aid is a heavily subsidized system. Heavy subsidies in any system leads to inflation. It shouldn't be too much of a surprise that we see it here too. More money is available (in the form of aid and loans) for the same set of services, prices are, obviously going to go up.
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  3. #3
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    Re: Student Loan Debt: Who is to Blame?

    That is one of the answers I was looking for. It's created a trend that's been doing some damage to the education system as a whole. Schools know they can do this because aid is available and students will seek it for their education. But what is the education worth? Law school's are a fantastic example of how broken the system is; though it really has yet to trickle down to undergraduate students, yet.

    So a system that is heavily inflated. Anyone else have other thoughts?
    Last edited by DevilPup John; April 10th, 2013 at 10:05 AM.
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  4. #4
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    Re: Student Loan Debt: Who is to Blame?

    I'm not following what the problem is exactly. Are you talking about the cost of education itself? Or are you talking about high interest rates on college loans?

    I have a little college education but not a ton... I mainly just took classes I felt I could use for my job. I never focused on a degree. Anyway, I never had to take out loans since the classes were spread out... maybe 2 at a time on average. So, I'm not sure I can contribute to this thread regardless of your answer. Just reading various threads learning where I can... this topic seems interesting.

  5. #5
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    Re: Student Loan Debt: Who is to Blame?

    No, not the cost of education itself, but as Squatch has pointed out that is certainly a byproduct of the system.

    What I am after is what do you think the issue with the financial aid system is?

    Do we give too much, too little? Are too many schools taking advantage of the system and manipulating it to their advantage? Are students doing the same thing? Is the debt load a student taking on something they can manage to pay off? Is the debt they take to buy this education worth it?

    Are, are there no problems? Has this financial aid system improved the education system?
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  6. #6
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    Re: Student Loan Debt: Who is to Blame?

    My brother works as an adult-reentry-to-education councilor at a regional satellite of a third rate college. He tells me that as grants and subsidies increased, tuition increased, and when tuition increased, they invented new loan vehicles to help those less-than-gifted go to school whereby they can now leverage their parent's credit for financial aid (the student assumes the debt, as well as the student's parents, so they are able to get a hold of even more debt). Thus, the cycle keeps repeating where more money is available in the system, so costs go up, which "necessitates" more money be made available in grants, which drives up tuition, so new loan money is needed to cover rising costs and sustain the system, which necessitates more money be made available in grants, which drives up tuition, so new loan money is needed to cover rising costs and sustain the system...

    Is this what you've seen?
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  7. #7
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    Re: Student Loan Debt: Who is to Blame?

    Yes but the loans have always been there. I believe what you're brother is talking about are Parent Plus loans. They've been around for as long as I can remember because most Title IV government loans aren't enough. The school that I work for has a large population that is eligible for the government grants. Now that those have increased this year tuition has gone up by 20 dollars per credit hour.

    The issue I see extends past the school, and while it's primarily in for profit schools it's also in the regular schools as well. For example a Freshmen's tuition might be 6000 at my school. Their max loans are 9500. They can get this extra money, and a lot of them think they are playing the system. In reality all they are doing is digging themselves into insurmountable debt and reaching their loan limits before they finish their program.

    The for profit industry gets a lot of flak for this. People screaming we force our students into debt, even the Department of Education. But the DOE is the one telling us we MUST give them the extra money. Military students who have their tuition covered are also taking loans for the extra money.

    This is the problem I see, a system that allows students to burry themselves in debt with minimal regulation. School's can still keep running because they get more student's in. You might say some of these student's need the extra money; which some do. However I've seen too many hitting their limits in an associate's program and a loan history from 4 or 5 different schools.

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  8. #8
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by DevilPup John View Post
    1. Generally speaking, what do you think the problem with the student loan system is, and who is the blame? Even if you were like me and have no idea whatsoever please feel free to answer.
    Would the student loan system and heavy financial burden of loans on students be such a problem if the cost of a decent education at a good college wasn't so high and getting higher every year? To me, this is where the problem lies. Loans for colleges can be reasonable, but we're beyond reasonable now because the cost of tuition is so high. Why? Sure inflation, cost of running the college, along with other factors. But just like the housing market had an adjustment and prices fell, I think perhaps there needs to be an academic college tuition adjustment.
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  9. #9
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by DevilPup John View Post
    There is no question student loan debt is a serious issue in our country,
    Im not so sure I accept the premise that student loan debt is a serious issue in the country. Upon what do you base this assertion?
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  10. #10
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by Someguy View Post
    Im not so sure I accept the premise that student loan debt is a serious issue in the country. Upon what do you base this assertion?
    More Evidence On The Student Debt Crisis: Average Grad's Loan Jumps To $27,000
    http://www.forbes.com/sites/halahtou...umps-to-27000/

    Predicting the next financial crisis isn’t easy but there’s growing evidence that student loans will be involved in the next one.

    Consider this: The delinquency rate between 2005 and 2007 on loans issued shortly after October 2005 is 12.4%. Student loans that were taken out shortly after October 2010 have a delinquency rate of 15.1%–an increase of nearly 22%.

    That’s according to a new study from FICO which analyzed 10 million credit files in search of trends in student lending–a segment of the credit industry that is larger than credit card and auto loan debt. Student loan debt is bigger with total outstanding loans exceeded $1 trillion for the first time in 2011 compared to credit card debt in the U.S. which stands at about $798 billion.

    Part of the reason is that the because the size of the average student loan has jumped since 2005 when the average debt was $17,233. By 2012 the average U.S. student loan debt climbed to $27,253–a 58% increase in just seven years. What’s more remarkable is that the credit card debt in that same period shrunk as did auto debt. So while consumers are paying off credit cards and car loans they’re racking up on student loans.

    The problem sometimes is that students entering college take on huge amounts of debt to fund increasingly expensive college tuition costs with the expectation that their salaries after graduation will be able to cover the loan payments. The ugly surprise after graduation day is that entry-level salaries are often no match for massive monthly student loan payments, or worse, there’s no job available by the time the first payment comes due.
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  11. #11
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by eye4magic View Post
    Would the student loan system and heavy financial burden of loans on students be such a problem if the cost of a decent education at a good college wasn't so high and getting higher every year? To me, this is where the problem lies. Loans for colleges can be reasonable, but we're beyond reasonable now because the cost of tuition is so high. Why? Sure inflation, cost of running the college, along with other factors. But just like the housing market had an adjustment and prices fell, I think perhaps there needs to be an academic college tuition adjustment.
    The issue, at least in my mind is a catch 22. Schools can continue to raise costs because they know student loans will always be there.

    What incentive do I have to change my costs or lower overhead when I have guaranteed loan money?

    Schools can charge so much because everyone wants a college education. Or I should say it's a very common goal. The demand is there, loans are available to anyone needing them. You can go to college today without an immediate out of pocket cost.



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  12. #12
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    Re: Student Loan Debt: Who is to Blame?

    Student loan debt isn't a problem. The problem is that students get good-for-nothing degrees in fine arts or liberal arts, can't or won't find a decent job, and then can't or won't pay the money back. As one commenter at the end of a web story on student loans said: "F*$k! why did I major in continental philosophy? I’m an idiot!"

    A 27k debt isn't that big for someone who gets a degree in a decent paying field such as engineering, medical, or finance. But graduate with a degree in the arts, and you will likely regret it for a very long time.

    Here is a Wall Street Journal story/analysis for those who want to read more. http://online.wsj.com/article/SB1000...Tabs%3Darticle
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  14. #13
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by evensaul View Post
    Student loan debt isn't a problem. The problem is that students get good-for-nothing degrees in fine arts or liberal arts, can't or won't find a decent job, and then can't or won't pay the money back. As one commenter at the end of a web story on student loans said: "F*$k! why did I major in continental philosophy? I’m an idiot!"

    A 27k debt isn't that big for someone who gets a degree in a decent paying field such as engineering, medical, or finance. But graduate with a degree in the arts, and you will likely regret it for a very long time.

    Here is a Wall Street Journal story/analysis for those who want to read more. http://online.wsj.com/article/SB1000...Tabs%3Darticle
    Yes, this is exactly right. Plus, there are tons of scholarships and programs available to people to help ease the burden of school. I got my AA and it cost me absolutely nothing in student debt. That was because I qualify for the Post 9/11 GI Bill. I think that too many students now-a-days arent mentally or emotionally prepared for college and need some real world experience to be able to appreciate and earn their way through school as opposed to simply rack up debt for degrees that are worthless because they are in bad fields or they didnt really display any interest in really learning something.

    If you want to lay down fault, I lay it with the students.
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  15. #14
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    Re: Student Loan Debt: Who is to Blame?

    Can you name some of these programs? The benefit you mention requires 3 years of active duty military service. Also it has a yearly cap of I believe 18,738.77 or something strange like that.

    It's almost impossible for a student to go to school without taking on debt. Loans are almost always necessary. Many students don't qualify for free aid from the Department of Education.

    Had it not been for family and a few loans I would not have gotten a college degree.

    I do agree though the choices made are a huge factor in this. But don't forget the student isn't the only one. The government is giving away your tax dollars and some if it isn't even in loan money.

    The student may be making a bad choice but don't forget you don't need to do much to qualify for federal student aid. It's not like you need to justify your school or degree choice.

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  16. #15
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    Re: Student Loan Debt: Who is to Blame?

    Getting a loan is not a problem in itself, it is not being able to pay it back. 20K in loans is not very much and would amount to a $200 a month note (for 25-30 years).
    To me it is the over-hype of the importance of college. For example instead of starting a business a person will feel they need to get a degree in business. The evidence for it is so many people not working in the field that they have a degree in. Taking classes that are irrelevant to a given field or other useless info.

    “Some of what you learn in college may be worse than useless.”


    60% of grads can't find work in their field.


    To me the general problem is people making a very bad investment choice or purchasing a product that has a diminishing value. This is a lemmings problem. People are following ,without thinking, the masses.

    Personally, I went to college for about a year and a half and loved it. I disagreed with the idea of taking a foreign language for a psyc degree, unless the material that I would be studying was written in that language. This is a form of inflating the product IMO. With the best example being "student development".. basically a class to teach you about going to college.
    I couldn't afford the inflated product, so I stopped going.
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  17. #16
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    Re: Student Loan Debt: Who is to Blame?

    MT: do you think the government should have more limiting standards on student loans?

    The VA has an aid program called VRAP. Veterans Retraining Assistance Program. One of the conditions for getting assistance is pursuing a degree that has actual job potential. IT business accounting math, etc.

    Should federal student aid follow a similar standard?

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  18. #17
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by DEVILPUP JOHN
    MT: do you think the government should have more limiting standards on student loans?

    The VA has an aid program called VRAP. Veterans Retraining Assistance Program. One of the conditions for getting assistance is pursuing a degree that has actual job potential. IT business accounting math, etc.

    Should federal student aid follow a similar standard?
    Well I think that is the common sense answer, but then I don't want the gov picking carriers for people.
    I suppose if the gov figured that there would be 30K engineering jobs, then they should give 30K engineering grants. .. if they were going to give grants at all.

    Personally, I don't think the gov should be lending money at all. I do not consider this a valid "providing for the general welfare"... because it doesn't apply to everyone.
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by MindTrap028 View Post

    Personally, I don't think the gov should be lending money at all. I do not consider this a valid "providing for the general welfare"... because it doesn't apply to everyone.

    How so?

  21. #19
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    Re: Student Loan Debt: Who is to Blame?

    Quote Originally Posted by COWBOY
    How so?
    How is it not a valid application or How does it not apply to everyone?
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    Re: Student Loan Debt: Who is to Blame?

    I think there's at least two problems at play here.

    1. America just has a debt problem in general. We have no idea how to manage our money. I got lucky because my parents were very careful and frugal while I was growing up. My education was fully paid for and I didn't pay one cent towards any student loans. And we weren't exactly a rich family. People are incredulous when I tell them this.
    2. People are going to college that can't afford to go to college and in many cases aren't even smart enough to go to college. The Bachlor's Degree has essentially become the new High School Diploma. I think Mike Rowe is on to something. Nobody believes in blue collar jobs anymore.
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