Student debt is still terrible. So why are students still taking out loans?


Why the hell is this still happening? Here we are in the grip of a long-awaited assessment of the scourge of student debt which is ravaging generations. Here we are, trying to find a way out of a $ 1.7 trillion mess that was already crushing the financial and professional ambitions, personal lives and mental health of millions of former students. Here we are, with debt cancellation a major issue for the Biden administration. And yet here we are, with a whole population of current and future students now returning to school and facing the same overwhelming and predatory situation.

Despite an ongoing pandemic that has made higher education an often still virtual experience for many of us, tuition fees are rising. Meanwhile, a recent NerdWallet analysis from the National Center for Education Statistics reports that this year’s incoming students are taking out more loans than ever. While I can’t personally shake every parent and every member of the Class of 2022 by the shoulders here, I’m just begging you to turn around before it’s too late. We, the aging GenXs and our children, deserve a better future than this.

“Apply online for your undergraduate loan now. It’s quick and easy, ”promises a well-known lender on its site. “Fill out some basic information and find out how much you are eligible to borrow in a matter of minutes.” Of course, that’s exactly what you do, isn’t it? What’s the worst that can happen?

As financial advisor Chris Kampitsis pointed out to Forbes earlier this year: “Unless you win the lottery, there is often no workable alternative for students with limited means to pay for their college education. . These are your options, learners: Powerball or crippling debt. And for what, exactly? So what we have all observed quite clearly over the past year or so that you can very well hear the same lecture you would hear in those ivy covered rooms when you are sitting in your bedroom on Zoom?

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“I will give the unpopular advice,” says Corey Noyes, founder of Balanced Capital Investments. “There is very little data to support that choice of university has an impact on future income. Going to the school of your dreams because of its prestige is probably a waste of money, at least in terms of concerns future income. ” The evidence is indeed contradictory at best. CNBC reports that, according to the State of Working America data library, “College graduates earn about 49.5% more than those with only a high school diploma,” but “This figure did not has increased significantly in recent years, even though student borrowers (and their families) are taking on 116% more student loans than they were ten years ago. ” And if you’re one of the roughly 2 in 5 students who won’t graduate, you are one of that vast population of working Americans with no degree, but with all the student debt of someone who has one.

So if you are thinking about college now, look beyond the freshmen summons and into the future. According to a 2021 Harris poll of adults aged 33 to 40, 68% of those who took out student loans are still paying them off, and 52% say their loans weren’t worth it. Debt, they say, impacted their ability to buy a home, save for the future, and make the geographic and professional choices they wanted.

There are plenty of other paths. Especially now, at this very strange and uncertain time, it is the responsible thing to do to examine them. This week, a friend’s daughter is taking a community college tour, inspired by the example of her older cousin, who is studying online in his sophomore year of community college. A neighbor’s child currently lives at home and goes to college to save money. Another decided to take a year off, and at least one of my daughter’s classmates is going into the military. They can all end their college careers in different places, but right now they’re smart and cautious. They’re a select bunch, sure, but they and their families look at the big picture and decide they don’t want to fall into the same traps their predecessors are still digging into.

I knew from the moment I sent my two kids to kindergarten at the nearby public school that this was probably not going to be a story that ended up in one of them at Harvard Law. Yet even tucked away in our scruffy educational outpost, the drumbeats were deafening. Are we paid for SAT tutoring? Were the children doing “enriching” activities that stood out on the apps?

“You’ll know the right school when you visit it,” a college counselor told us when my firstborn was preparing to graduate in 2018. “She will walk to campus and fall in love.” The kind of love that $ 70,000 a year in tuition can get you.

My daughter applied to reputable schools, fancy schools, and less exciting but affordable schools. In the end, the financial aid offered by the luxury schools came mainly in the form of a “reward” of a little money and a suggestion that an unemployed young person of barely 18 years old and her barely middle-class parents withdraw nearly unlimited loans annually. She cried the day we told her we couldn’t make it work with any of the schools to fall in love – that we, in fact, wouldn’t. She cried for a long time.

Today, she is in her final year in a humble public school in a small town that she loves; and if all goes well, she will graduate this spring debt free. We used up what little savings we started putting away when she was a baby, worked whatever financial help we could get, gone without a lot of home repairs. She held jobs, she transferred community college credits that she diligently accumulated in high school. It was difficult. Has my daughter had the idyllic college experience of every romantic tour she has ever taken? Probably not. Did she make friends, learn new things, gain work experience, and someday be a 35-year-old woman not beholden to a student loan officer? This is the dream. And as my youngest daughter is now entering her final year of high school, this is also her dream.

How do you break free from the toxic notion that loans are inevitable? It starts by flipping the script.

“When I was in high school they punched us with this idea that the first thing you do is focus on where you want to go to school, find the best colleges, and then figure out how to pay. later, ”says Corey Noy. “You’re doomed from the start if that’s your mindset. That’s why we’re where we are now. I think you need to pick a budget first and figure out what fits into it. . “

I am not totally against loans for certain people and certain circumstances. (I didn’t exactly buy my co-op with cash.) Depending on a student’s academic potential and the student’s field of study, loans right now may very well be a smart investment towards a future income potential. But it is essential to be clear-headed, practical and realistic. It’s wise to remember that college isn’t the best or the straightforward path for everyone anyway.

Jack Craig, a certified personal trainer with Inside Bodybuilding, offers an example. “Personal training requires a few certifications,” he says, “most of which can be done online or through some certification programs. There are actually many programs in high school that can teach students how to become personal trainers.”

Bankruptcy attorney Lyle D. Solomon agrees. “Higher education is changing. More and more employers are willing to skip the piece of paper if you still have the experience and training. A lot of tech jobs don’t care about the degree. can put together decent certifications and show proficiency in the skills needed for the job, then a degree is overlooked. Graphic designers, video editors, web designers, salespeople don’t all need degrees, they need skills. “

And with work experience and / or career preparation programs, a person can always decide to go to college later for a more advanced path in their field. There is nothing wrong with taking a professional education course, especially compared to finding out that you hate your major after three years of going to college.

And there are other considerations before signing up for loans. It is worth it to really look for scholarships and financial aid and then remember to negotiate.

“Don’t accept an offer of admission to a school without first applying for an additional merit scholarship,” says Rachel Coleman of College Essay Editor. “It’s entirely possible that the answer is no, and that’s fine, but you lose your influence if you accept the offer of admission without asking for more money first.”

I discovered this by chance last year when I turned down the college program I applied for, due to the costs. They struck up a conversation and ended up giving me more scholarships to make it happen.

None of this is easy. It’s hard to tell our kids that we can’t afford things that they would like, things that all of their friends seemingly get. It is difficult to get financial assistance. It’s hard to take a longer path to a degree and work while studying. It’s hard to live at home instead of leaving. And it’s effortless – so effortlessly terrifying – to sign a form and get what looks like free money. It’s easy to assume that the money will be there like magic later.

I remember the friend who a few years ago had two children at the same extremely exorbitant extra-state university at the same time, both on loan. “The number doesn’t even seem real,” she said at the time. One of them is now on the path to a lucrative career. The other has dropped out, and without a diploma, has difficulty repaying these loans. Think you know your kids? Think you know your own future? Want to take this bet?

It’s obscene that getting an education is so incredibly, stupidly difficult if you’re not rich (or reckless). It is obscene that the system is so corrupt and broken in so many places. I can’t make it fair. All I can do is remind you that you are not helpless in the face of choices that will directly affect the next decades of your life. And that after all that has happened since the terrible edifying tale of American higher education, we still have so much, so much to learn.

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