Explosion in High-Priced Student Loans Sow Seeds of Trouble for U.S. Economic Growth

"This is literally a new form of indenture ... something that every American parent should be scared of," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.



http://biz.yahoo.com/ap/070930/student_loans_the_spiral.html?.v=3

High-Priced Student Loans Spell Trouble
Sunday September 30, 2:14 pm ET
By Marcy Gordon, AP Business Writer
Explosion in High-Priced Student Loans Sow Seeds of Trouble for U.S. Economic Growth

Many in the next generation of workers will be so debt-burdened they will have to delay home purchases, limit vacations, even eat out less to pay loans off on time.

Kristin Cole, 30, who graduated from Michigan State University's law school and lives in Grand Rapids, Mich., owes $150,000 in private and government-backed student loans. Her monthly payment of $660, which consumes a quarter of her take-home pay, is scheduled to jump to $800 in a year or so, confronting her with stark financial choices.

:( :( :(

I hope you've been able to line up employment. If so, then you'll just be chipping away at them for years to come. Eventually, they *will* be paid off.

She will graduate with over $60 thousand dollars in loans. The way student loans work now, you have to start paying on them before you are even out of school. We are making those payments until she graduates and I am sure we will continue to make some of them after she is done to help her get on her feet.
They are doing everything they can to make it nearly impossible for middle class kids to get ahead in life.

I know people who are going to be paying until they are in their 40s and 50s because of deferrals. Just keep making the steady payments.

With 3% interest and didn't have to do anything until I graduated.

Our whole reason for helping is to insure she isn't strapped when she get out and has to get set up with housing and whatever.

didn't realize how lucky I was at the time. Felt burdened with that 120 monthly payment. :-)

deferral isn't a bad idea if you're betting that real inflation is going to shooting upwards.

Better to pay off debt with dollars that are worth a lot less in the future.

Is that the norm? And what is her expected yearly salary benefit from that investment?

Is there such a thing as Pell Grants anymore?

Sorry, I don't have kids and am out of the loop. That figure sound shocking to me - someone who lives in the lower middle class blue collar world.

But average tuition is easily two, three, four, or more times than that. It's only good in states like Mississippi where tuition is still low enough that it could cover half the costs.

But she is expecting a 6 figure starting salary if she is lucky enough to land a position right out of school. Her loans are not covering her room and board, she is working in addition to going to school to pay for room and board. Something I never had to do.

My wife's and my combined salaries make Pell grants out to the question and she is going to school on a couple of small scholarships.

Trust me we were shocked when we looked in to loans, we had started to save money when she was born but it didn't hardly put a dent in the situation.

a whole other perspective. :)

We had time before she met with us to take a look at the loan. The interest rate was high and variable. There was no way we were going to co-sign - if she'd defaulted, it would've been our responsibility and would've seriously taken all of our alloted spending money each month. There was no way we could jeopardize our financial health so that she could attend a private college to become a public school teacher.

She'll be lucky to take home $500 a month when she finally gets a job. It was a foolish move, but we weren't able to convince her not to take out the loan. She'd already maxed out her federal student loans. We tried to point out that she could stay at her parents' house and attend a local public university and be able to pay the tuition by taking on a part-time job.

I'll be surprised if she ever buys a home. Or a car.

getting a job at a law firm.

18 1/2 years of $150 a month, FINALLY finished. It's like a weight off of my shoulders.

:rofl:

Americans.

are an abomination.

The GI bill after WWII basically built the middle class in the U.S. and made this country what it is (or was, before outsourcing and the Dauphin)

...in which I worked summers and went to school three 11 week quarters each year (initially semesters), was able to get a teaching assistantship for my graduate program and came out debt free. I had worked before and began my higher education at 23, but had no savings or possessions to speak of. I was married with two young children. My wife worked full-time at Lansing General Hospital in dietary and she had her BS degree in Home Economics and she had about $1,200 in student loans which which we paid off. We had an older car which she used to commute to her work and we kept that car for over ten years. I rode the campus bus.

It was a hard ship and there were periodic care packages of groceries from home, clothing for the two boys and the occasional modest check from both sides of our families, but we lived by a tight budget and it was not impossible even with out-of-state tuition throughout my undergraduate program. When I started graduate school, my wife was even able to cut back her work to part time and she completed her Masters in Education.

In my last quarter, I bought two new custom fitted suits and accessories including one pair of dress shoes, which cost us $295.00 with tax. I viewed these suits as an investment so I would look presentable for my job interviews and by graduation in December 1969, I had lined up a very good job in the Big Apple beginning January 2, 1970. My wife was pregnant with our daughter by then and the following year we would have our fourth and last child. A year later we have saved enough for a $3,500.00 on a modest four bedroom house. My wife was a stay at home mom for the next ten years. After that we both worked, put all four children through college and I even began my own business. And there was never one single election that either one of us ever voted for anyone but a democrat.

Now, this is not to compare my situation with that of Kristin Cole in the example OP, or the thousands, perhaps millions of young people trying to make a better life for themselves by getting an advanced degree.

So, what in the world has happened with higher education to cause such an explosion in the cost of these programs? And, why in America is a Land Grant College like MSU having to saddle its graduate students with debt of the magnitude described just 37 years following my experience there?

I guess this is why I have become an Independent although it is not to be able to vote for the likes of a Joe Lieberman or a Ron Paul or that other guy who always ran a 3rd party ticket to spoil things for the democrats.....no I can't bring myself to utter his name...... It is in case someone like Dennis Kucinich does not get the nomination and decodes to run that I could send my vote to him.

(forgot spell-check)

and the poor get screwed