Student Loans - The next bubble?

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[Jaime from Wasilla]

Some of the moderators were having a discussion about difficult student loan experiences tonight, and it seems a good idea to start a topic where those of us facing this can share our experiences, both good and bad.  I'll be sharing more about my own journey over the next few days.  With all the talk about the economy and bailouts and collapsing bubbles, I'm not hearing anything yet at the public level about how education figures into the equation. Here is a place where we can pursue this topic.

Some references to start:

from The Boston Globe in 2002, on the website CommonDreams.org -  Kennedy Rips Bush Plan to Let College Loan Rates Float by Mary Leonard

from the Student Loan Debt Blog in Feb, 2006- Bush Signs $12 Billion Worth of Cuts to Federal Student Loan Aid Programs Into Law

Also from Feb, 2006 ABC News - Worries Mount With Rising Student Loan Rates

from Masspirg.org August 2006 - Bush Administration Commission's Draft Recommendation Would Cost Student Loan Borrowers $32 Billion and Enrich Private Loan Companies

And from Feb, 2008 - Student Loan Info for Parents Blog - Pres. Bush’s FY09 budget makes some student loan changes

Take heart, only 13 more days until we can start fixing this crap.

[Deb aka commando coalfire]

I was very fortunate most of my education was paid for through a series of grants, scholarships and work place reimbursment programs.
Here is one of the problems with student loans no one mentions but was brought up at a recent conference I attended. Companies in my industry consider people carrying large debt including student loans to be security risks which means very simply they will not be hired no exceptions. This is one industry only, big on security and  extremely parnoid. But we are also often leaders in trends. Just a note of caution for you all to take into consideration when making your choices.

[Lani]

I read an article about the cost of education rising far more rapidly than other costs (except housing) over the past several years.  Student loans became easier to get, often with teaser rates.  The article mirrored inflated housing with inflated higher education, predicting that the college bubble would burst, loans would be more difficult to obtain, and ultimately the cost of higher ed would fall -  just like housing.   I think the article was in US News & World Report, but I'm still searching for it.

[Jamie]

Jaime -

every recent Republican admin (Reagan, Bush I and Bush II) has systematically cut student grant programs like Pell. Clinton restored what had been cut, so this is par for the course. Obama will set things right - after all, both he and Michelle must have had financial help to get through Ivy League schools - heaven knows it was the only way I made it through one when Ivy League schools were fairly cheap!

I am also counting on Obama's civil service-in-exchange-for-college tuition as well as programs like Americorps to help foot the bill when and if my son gets into an American college. Thank G*d for Democrats.

[InJuneau]

I think my lucky stars that I was able to get Alaskan Student Loans to help pay for college.  I consolidated almost a decade ago when they offered the opportunity and have it taken directly out of my account, which allowed me to drop a bit more of the interest rate.  Paying more than I owe each month has allowed me to, at this point, be about a year from paying it off!  I can't imagine having to face the kind of loans I know friends who've recently graduated from such things as law school do.  Would be great if the next administration can figure out a way to help people pay them off with service work or other beneficial to the nation/world actions.

[BigSlick]

Take heart, only 13 more days until we can start fixing this crap.

I hope we get this one sorted quickly, my son is a Junior in High School.....

He wants to go to Ivy League or Stanford and might just have the grades, test scores, and extracurriculars to get there.

Save me. 

[Jamie]

Take heart, only 13 more days until we can start fixing this crap.

I hope we get this one sorted quickly, my son is a Junior in High School.....

He wants to go to Ivy League or Stanford and might just have the grades, test scores, and extracurriculars to get there.

Save me. 

That's funny. I remember that my sister told me she subscribed to the pay-in-advance program in Florida where you can, over the years, put money in a college fund to pay for any of the Florida State Schools. She succeeded in putting enough into it to pay for both her kids to get undergraduate degrees many years ago. Now her daughter, a sophmore in high school, told my sister that she has decided that she wants to go to Yale. Good luck, I say!

I gave Simon only one option (unless we decided to move to the US as a family) - a Florida state school, using my mom's address to qualify for residency. And Clément is applying for architecture school - here in France where even the best schools are free. Yay!

[CO Almost Native]

Take heart, only 13 more days until we can start fixing this crap.

I hope we get this one sorted quickly, my son is a Junior in High School.....

He wants to go to Ivy League or Stanford and might just have the grades, test scores, and extracurriculars to get there.

Save me. 

I don't know what state you're in, but my oldest daughter works for CollegeInvest, a quasi-state government entity in Colorado.  You can put money in an account, get a state tax credit, and then your child can take it out for any educational purpose.  There are several different plans, ranging from safe- more risk; check with your state.

State of Washington has a plan where you buy "units", and so many units equals one college credit- you are guaranteed the credits, even if the cost goes up.
[fixed quote box - Lani]

[Lani]

I don't have the money to send my son to his dream - UCLA.  I'm not sure he has the grades and scores anyway, as he is dyslexic (which is perfect for being a visionary and out of the box thinker). We've talked about this for awhile.  He has great computer skills (Apple picked him up at age 17 and is training him) and won an award at a UCLA summer school for teens in digital film special effects.  I also suspect that given our economiy, a new place will emerge as THE PLACE for budding filmmakers.  I am encouraging him to CLEP out of freshman courses, get some credits and endorsements under his belt (he's doing PAs for our community tv), and then apply to the "better" schools for a scholarship at a higher entrance level.

I had to work my way through higher ed.  I took CLEP tests to pass all freshman courses and entered SUNY's external degree program in the second year.  If I could pass the course tests above 66% of the regular attendess, I could receive credit.  It was not easy, but I was able to study on my own, test at a cost WELL below the enrolled "normal students", and graudate, while holding down a full time job.  The dean wrote a glowing statement to law schools about what I had accomplished on my own (independent study), and I recieved two acceptances out of four applications.

Think outside the box.

[Jaime from Wasilla]

I started college in 1979, at Northwestern University.  I was accepted there on a pretty good package of scholarships, grants, student loans and work/study.  I was able to complete two years of schooling there, before life intervened. Those two years left me with $8000 in loans, and payments came due as soon as I did not enroll the next semester.  The loans quickly went into default, and I couldn't go back to school until they were paid off. It took me eight years to pay off those loans, but eventually I did.  As soon as the loans were paid off, I again qualified for financial aid to finish school, and I went back to college at the University of Alaska.  I started at Kodiak Community College, to get an Associates Degree in General Education.  This preserved the credits from my first two years of undergraduate work from expiring.  It turns out that college credits lose their transferability after ten years.  By getting an Associates Degree the credits were protected forever. It took one year to get the Associates, using a combination of Pell grants, Alaska Student Loans and Federal Student Loans.  There was no work/study program available.

One thing I am still bitter about is the changes that Republicans made to the Alaska Student Loan program the year before I went back to college.  Prior to 1988, if you stayed in Alaska after graduating, a percentage of your loan would be forgiven for each year up to five years.  By the end of five years, as much as 75% of your loan would have been forgiven.  Republicans canceled that forgiveness program.

In 1989, I transferred to the University of Alaska, Anchorage to finish my bachelors degree program. My original degree path at Northwestern had been a degree in Communications/Theater.  At UAA, this became a two degree program, one B.A in Theater, and a second B.A. in Anthropology. It took three more years to finish all the credit requirements for the Theater degree, and I had one semester of classes needed to complete the Anthropology degree. I was so excited that I had finished one degree program, that I signed up for commencement.  I got my B.A. in Theater in May of 1992, and then got a very rude awakening.  It turns out, when you have one undergraduate degree, you no longer qualify for financial aid for undergraduate credits.  I was left with no way to fund the final semester of my Anthropology Degree.  Three months after graduating, I had to start paying pack my loans.  In four years, I had accumulated about $18,000 in Alaska Student loans, and about $24,000 in Federal student loans, grand total =$42,000 student loan debt.  The payments were nearly $600/month, $238 to the State of Alaska and $360 to the Feds.  After graduation, my income was quite irregular - some years i was able to make payments, and some years not. The loans went in and out of default several times. My fortunes took a severe downturn in 2000, and then a worse downturn in 2003.  Both the state and the federal loans have been at the bottom of the priority list for the past 5 years as I have focused on keeping my home.  In spite of paying over $30,000 towards the loans, my balance owed is nearly the same as it was in 1992.

Over all the years I have experienced what I can only call seasons in the attitudes of the collecting arms of these loans. When there are Democrats in office, the policies get friendlier, and the agents behave like human beings and treat me like a human being. When Republicans are in office,  The collection practices are predatory and mean.

There is more to the story, but this is enough for one night.

[Deb aka commando coalfire]

Over all the years I have experienced what I can only call seasons in the attitudes of the collecting arms of these loans. When there are Democrats in office, the policies get friendlier, and the agents behave like human beings and treat me like a human being. When Republicans are in office,  The collection practices are predatory and mean.

There is more to the story, but this is enough for one night.

I understand that Obama just finished paying off his student loans last year so perhaps this will be helpful to those who are struggling under the burden. I have always found it foolish that they go after people, create black marks on credit reports and then expect payment when in reality they are assuring that the person they are after may not be considered for certain jobs and because of this may never be able to repay the loan.

[Whichferret]

I am currently stuck in the nightmare created by sallie mae being allowed to run amok/ruff shot across people.  I don't want to go into details, but they have tried all kinds of dirty tricks including setting up plans which they then destroy and blame me for and the latest is not accepting my payments and then telling me it is because they chose to write off part of my debt as "bad."  Which is an accounting trick to make them look better.  It makes me look like sh*t, but it makes their books look like they balance.  They don't actually balance of course, but they LOOK like they do.  They love to play games where every few months they send your file to a different office too so they can say that you are not paying because you sent the money to the "wrong" place.  Or crap like that.  Cause that is how the free market works right?  Except that sallie mae isn't actually supposed to be a free market...it is quasi-governmental.  Which truly explains how Chimpy was able to f it up so bad I guess.  

Seriously even getting my name changed has not worked....and from what I am hearing/finding out sallie mae may not even be the worst one....and that frightens me cause they s*ck

[InJuneau]

One thing I am still bitter about is the changes that Republicans made to the Alaska Student Loan program the year before I went back to college.  Prior to 1988, if you stayed in Alaska after graduating, a percentage of your loan would be forgiven for each year up to five years.  By the end of five years, as much as 75% of your loan would have been forgiven.  Republicans canceled that forgiveness program.

Yeah, this ticked me off too, since I started college in 1988, and, obviously, eventually ended up back here in AK where this would have helped me immensely.  Oh well...just about a year left of student loan payments, then I'll have the rest of my life to pay off the mortgage...   

[CO Almost Native]

I don't have the money to send my son to his dream - UCLA.  I'm not sure he has the grades and scores anyway, as he is dyslexic (which is perfect for being a visionary and out of the box thinker). We've talked about this for awhile.  He has great computer skills (Apple picked him up at age 17 and is training him) and won an award at a UCLA summer school for teens in digital film special effects.  I also suspect that given our economiy, a new place will emerge as THE PLACE for budding filmmakers.  I am encouraging him to CLEP out of freshman courses, get some credits and endorsements under his belt (he's doing PAs for our community tv), and then apply to the "better" schools for a scholarship at a higher entrance level.

I had to work my way through higher ed.  I took CLEP tests to pass all freshman courses and entered SUNY's external degree program in the second year.  If I could pass the course tests above 66% of the regular attendess, I could receive credit.  It was not easy, but I was able to study on my own, test at a cost WELL below the enrolled "normal students", and graudate, while holding down a full time job.  The dean wrote a glowing statement to law schools about what I had accomplished on my own (independent study), and I recieved two acceptances out of four applications.

Think outside the box.

Keep thinking outside the box for your son- contact Financial Aid at UCLA and see what might be  available.  Don't forget to fill out the federal form (FISA?), I think you can do it online now; you'd be surprised at what you/parents can qualify for.  Check at his high school for oddball scholarships: unique ones that fit something about him- perhaps dyslexic.  Or, encourage him to start at a community college, get great grades for two years- and then transfer. (I'm sure you've thought of most of this-)

Where there is a will, there may be a way...

[Lani]

Gone through all that.  It's not as difficult to transfer into UCLA as it is to be accepted as a freshman, and more emphasis is placed on life experience and less on grades and SAT score.  Freshman courses are similar everywhere, so I don't see the need to pay for an expensive university (nor can I) for the first year or two.  Hopefully, he'll knock those credits off with the CLEP tests anyway.     Meanwhile, our country is undergoing major changes, and that might not be the school of choice in a couple of years.

[futurexpat?]

I wonder how many people in this country realize that in most of Europe and in other developed countries around the world, higher education, even through Ph.D., is free. It's paid, of course, by higher taxes, but people don't go into debt to get a college education. I understand the extra taxes generated by college-educated workers earning more money more than pays for the college costs.

My daughter got a degree as a civil engineer, worked for several years for the Government as one, and put money aside all those years to go back and become an architect. Even with her savings, our help, and grants and scholarships, she came out owing more money than we ever had a mortgage for on our house. She has a 20-year loan, which is like a mortgage. She went to University of Michigan, which is an expensive university, but there are no cheap architectural programs.

If there's a bubble, I won't be at all surprised. 

[www]

In Canada.  One of our sons, is currently in his second year medical school.

He was 'more than encouraged' to take out a line of credit to bankroll his next four years.  Given our family policy of fiscal conservancy, we've contributed about half of his yearly expenses for the past two years.

 The other half is he has from 'student loans'.
Certain terms and conditions.  He'll start having the money to pay these loans back, in time, once he's an intern and then later, as an MD.







Different , from taking out a  'line of credit' which we told him to avoid at any cost.