Author Topic: This is why you have so much student debt...  (Read 12488 times)

DebtDerp

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This is why you have so much student debt...
« on: June 15, 2013, 12:54:18 PM »
Take it from someone who knows, the quickest way to rack up debt is to put your living expenses on the loans.

http://www.nytimes.com/2013/06/15/us/in-luxury-student-housing-gym-tan-and-study.html?pagewanted=all&pagewanted=print


Dee18

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Re: This is why you have so much student debt...
« Reply #1 on: June 15, 2013, 01:11:16 PM »
Yes.  I teach at a university and cringe when I hear students that I know are living on loans talk about which restaurant to drive to for lunch.  Not to mention that almost every one has an iPhone.

DebtDerp

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Re: This is why you have so much student debt...
« Reply #2 on: June 15, 2013, 01:43:28 PM »
Yes.  I teach at a university and cringe when I hear students that I know are living on loans talk about which restaurant to drive to for lunch.  Not to mention that almost every one has an iPhone.

I know someone who bought a brand new Jeep and used money from their loans as a down payment and then took out more loans to cover the monthly payments. Absolute insanity.

netskyblue

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Re: This is why you have so much student debt...
« Reply #3 on: June 15, 2013, 01:54:29 PM »
When I was in college, I didn't even know you could use loan money for anything outside tuition and books.  Had I known, I probably would have racked up another $4k in loans just for groceries.  But I made it out of college with only 8k in loans (half my college costs, parents paid the other half). 

This was by taking as many gen-ed college courses in high school as I could (paid for by the school), getting as many scholarships as I could (I was valedictorian at my high school, and pretty good at writing scholarship applications), taking as many courses as I could at a community college the summer after high school, before fall college started, and taking 21 courses a semester, plus summer & winter courses in order to graduate in 2 years.

Of course, I graduated 9 years ago, and tuition was cheaper then.  But it never escaped my attention that it was a LOT of money to go to college, and that was money that *I* was going to have to come up with.  I don't think enough parents instill a real sense of "this is how long you have to spend working to pay for X."

ETA: resident tuition is now just about double what it was when I was in school. 
« Last Edit: June 15, 2013, 02:02:45 PM by netskyblue »

innkeeper77

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Re: This is why you have so much student debt...
« Reply #4 on: June 15, 2013, 01:55:50 PM »
Putting that on loans is stupid, but the sadder part is that many of those upscale housing options are cheaper than the dorms the students could otherwise live in. At my college I moved off campus to a townhouse shared by 3 others, we each have our own room, there is a huge kitchen, etc. It is much more luxurious than a dorm, a 5 minute walk from campus, and - shockingly - $300 per month cheaper than living in a shared dorm room, and it is a better study environment. I don't understand how people can afford/think it is reasonable to live ON campus.

I can agree with how ridiculous the amount of times people go out to eat is though. I really do not understand why they feel entitled to it. (Oh- and some people (and a roommate) keep calling me "rich" because I don't live paycheck to paycheck- mostly because I don't go out to eat and am intelligent about what I spend money on......)

newideas2013

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Re: This is why you have so much student debt...
« Reply #5 on: June 15, 2013, 02:45:57 PM »
If I were to go back to college age, I'd live in a room with others so my rent might be 350, max 450/month all utilities included in that.

A shelf, a used laptop, a single bed, a part-time job (20-30 hours a week) and a bicycle to get to class and work would cover most expenses and maybe even leave a few bucks for mild drinking 2-3x a month.

But its nuts now. People rack up 15k/year when tuition is 4k and books are 700.

grantmeaname

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Re: This is why you have so much student debt...
« Reply #6 on: June 15, 2013, 03:05:02 PM »
If I were to go back to college age, I'd live in a room with others so my rent might be 350, max 450/month all utilities included in that.

A shelf, a used laptop, a single bed, a part-time job (20-30 hours a week) and a bicycle to get to class and work would cover most expenses and maybe even leave a few bucks for mild drinking 2-3x a month.

But its nuts now. People rack up 15k/year when tuition is 4k and books are 700.
The first few lines are slightly more money than my current lifestyle, except that tuition even at in-state public schools is more than twice that before scholarships.

Some people choose to spend a lot, but I think that your caricatures don't describe the average as much as one particularly unsightly tail of the bell curve.

DebtDerp

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Re: This is why you have so much student debt...
« Reply #7 on: June 15, 2013, 09:43:03 PM »
Putting that on loans is stupid, but the sadder part is that many of those upscale housing options are cheaper than the dorms the students could otherwise live in. At my college I moved off campus to a townhouse shared by 3 others, we each have our own room, there is a huge kitchen, etc. It is much more luxurious than a dorm, a 5 minute walk from campus, and - shockingly - $300 per month cheaper than living in a shared dorm room, and it is a better study environment. I don't understand how people can afford/think it is reasonable to live ON campus.

I can agree with how ridiculous the amount of times people go out to eat is though. I really do not understand why they feel entitled to it. (Oh- and some people (and a roommate) keep calling me "rich" because I don't live paycheck to paycheck- mostly because I don't go out to eat and am intelligent about what I spend money on......)

This. My first two years of school I was required to live on campus. I bet $20k - $30k of my loans is in room and board costs for those two years. It definitely can be cheaper to live off campus, but if you are getting a place in one of these top end luxury apts like in the article, you are going to be racking up massive debts to pay for it. Unless, of course, mommy and daddy pay for it (the reality for a large contingent of the student population at my alma mater).

Reepekg

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Re: This is why you have so much student debt...
« Reply #8 on: June 15, 2013, 10:50:35 PM »
Putting that on loans is stupid, but the sadder part is that many of those upscale housing options are cheaper than the dorms the students could otherwise live in.

This. My first two years of school I was required to live on campus.

Definitely this. I was also required to live on campus the first 2 years and buy an outrageously priced meal plan from the university. I like how the school in this article is trying to be all high and mighty about how academic their residence halls are, when the reality is some schools (definitely mine) are worried that their scheme to rip off their students and use housing and meals as profit streams is threatened. This greedy side of education then makes resort private residences seem like a deal by comparison.
« Last Edit: June 15, 2013, 10:52:31 PM by Reepekg »

gooki

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Re: This is why you have so much student debt...
« Reply #9 on: June 16, 2013, 01:19:49 AM »
I was one of those dumb fucks who borrowed student loan money to cover my living expenses, hell I even financed a car with a student loan. Oh the mistakes we make in our youth.

Worsted Skeins

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Re: This is why you have so much student debt...
« Reply #10 on: June 16, 2013, 05:22:35 AM »
One of the students in the article comments on the complex:  "It lessens the stress."

I fear that the stress of student loan repayment may be greater down the road for some.  Or perhaps the stress of stepping from relative luxury to a bare bones lifestyle on a minimal starting salary may become a needed face punch.

As a parent of a college student, I find college trends to be so strange. Everyone complains about the cost of college yet (almost) everyone seems to expect prime accommodations, food and spas on campus as well as an abundance of toys. 

kms

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Re: This is why you have so much student debt...
« Reply #11 on: June 16, 2013, 05:53:00 AM »
The bottom line is that it lessens the stress now, and you'll deal with it later. Admitting that the concepts of 'later' and 'accumulation of debt' are closely related is a whole different story.

MrsPete

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Re: This is why you have so much student debt...
« Reply #12 on: June 16, 2013, 09:56:49 PM »
"It lessens the stress".  My oldest child is a college student -- okay, technically she's not a child -- and she doesn't seem to be over-stressed, even during exams.  I think it'd be more truthful to say that borrowing heavily POSTPONES stress.  Living in a luxurious environment may "lessen stress" today, but it's going to hit those kids like a ton of bricks when they start paying back those loans. 

As for dorms vs. apartments, off-campus isn't always cheaper.  In fact, my daughter's searching for an off-campus place right now, and she hasn't found one yet that's cheaper than the dorms -- even with the meal plan included, even the sketchy places where we'd be afraid for her to live anyway.  At this point I'm thinking that when she starts nursing clinicals as a junior, it might be worthwhile:  She'll have a parking spot right outside her door, and she won't be paying for a meal plan while spending her days at off-campus hospitals . . . but now, while she's still taking basic classes on campus, the dorms are cheaper and more convenient for her. 

lisahi

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Re: This is why you have so much student debt...
« Reply #13 on: June 17, 2013, 11:29:10 AM »
When I applied for federal student loans, I was given an amount both for tuition and for living expenses. This was for law school. I was dumb about loans and didn't know any other way. The school I went to didn't want students to work. I think a few did--very few. I went to school in the Bay Area so it was quite expensive. You can imagine how much I was given.

One thing I didn't do, though, was take out a huge Bar Loan, which a lot of my classmates did. I had money leftover after I graduated that I could live off of while studying for the Bar. My friends, however, took out huge Bar Loans and, after the Bar Exam, traveled to Europe using those funds.

For regular college, I took out very few loans. I think those are all paid off now and all I have left are those stupid law school loans.

StarryC

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Re: This is why you have so much student debt...
« Reply #14 on: June 17, 2013, 11:49:17 AM »
But its nuts now. People rack up 15k/year when tuition is 4k and books are 700.

That doesn't seem nuts to me.  Tuition and books are about $5,000 by your estimate.  Living expenses account for the other $10,000 a year in loans, right?  Lets say you are a college student who works 20 hours a week 9 months a year and 40 hours a week 2 months a year.  The other month you are not working either because of Christmas, moving in/out, finals, etc. 

Your income from that job is the minimum wage of $7.25 an hour.   Your annual, pre-tax income is $7,540.  You are probably going to pay at least some tax on that income, so you take home $6,500 a year.  Plus the $10,000 above.  So that student is living on $16,500 a year.  That seems pretty mustachian to me.  If your rent is $400 a month, and your food bill is $200 a month, and your transportation costs are $100 a month (bus fare, no car), you are spending $8,400 of that money on reasonably priced necessitites.  Clothes, health care expenses (contacts, glasses, prescriptions, advil, condoms), activities, dining out, alcohol, any car expenses, travel to and from home for Christmas, supplies for any class, etc. are all about $10,000 a year.  I don't think that is incredibly excessive.  Sure, it isn't mustachian, but it isn't exactly buying NFL tickets and eating at 5 star restaurants either. 

Albert

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Re: This is why you have so much student debt...
« Reply #15 on: June 17, 2013, 12:56:07 PM »
About 17,000 $/year is how much I was paid for my TA/RA in grad school in Oregon 10 years ago. It was't a lot of money but still enough to eat decent food, have some entertainment plus visit a family in Eastern Europe once a year. All of that debt free of course.

Rural

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Re: This is why you have so much student debt...
« Reply #16 on: June 17, 2013, 07:33:45 PM »
About 17,000 $/year is how much I was paid for my TA/RA in grad school in Oregon 10 years ago. It was't a lot of money but still enough to eat decent food, have some entertainment plus visit a family in Eastern Europe once a year. All of that debt free of course.

Wow. Mine was $8,000. Lived on it plus some summer work, though it wasn't easy. That was closer to 20 years ago, so prices were lower, but not >50% lower.

Jamesqf

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Re: This is why you have so much student debt...
« Reply #17 on: June 17, 2013, 11:24:07 PM »
About 17,000 $/year is how much I was paid for my TA/RA in grad school in Oregon 10 years ago.

Currently a grad RA in CS at the local state university makes about $18/hr, plus I think 80% tuition waiver.

Albert

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Re: This is why you have so much student debt...
« Reply #18 on: June 18, 2013, 03:58:43 PM »
Wow. Mine was $8,000. Lived on it plus some summer work, though it wasn't easy. That was closer to 20 years ago, so prices were lower, but not >50% lower.

I was studying for PhD in chemistry. There could not have been any additional work to the one I was already doing in the lab (60-70 h/week) for the same money. Universities have to compete with each other for decent grad students so they can't pay just peanuts. I certainly would not have moved to US for just 8,000 $ per year.

Albert

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Re: This is why you have so much student debt...
« Reply #19 on: June 18, 2013, 04:01:37 PM »

Currently a grad RA in CS at the local state university makes about $18/hr, plus I think 80% tuition waiver.

That sounds a lot, but the question is how many hours are they allowed to work? If I remember correctly my full time salary was about 35,000 $/year but that was a fiction because as students we were not allowed to work (officially) more than 50%.

Jamesqf

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Re: This is why you have so much student debt...
« Reply #20 on: June 18, 2013, 05:13:39 PM »
I think half time (20 hrs per week) when school is in session is typical, often 40/wk over winter break, and sometimes summer.  So figure something like $15K/yr or better.  With little tuition to pay, and health insurance included, that isn't all that bad.  Quite possible to survive on it, hereabouts, or have minimal student loans to cover the balance.

MrsPete

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Re: This is why you have so much student debt...
« Reply #21 on: June 19, 2013, 07:09:40 AM »
Two comments:

Last year when my daughter was a college freshman, the private loan companies were tripping over themselves to offer her money.  Her total college cost (tuition and fees, dorm and meal plan) were X.  She was offered X + 50% by two different private companies!  It's an insane amount of money to throw to an inexperienced 18-year old.  If I hadn't talked to her so extensively about the dangers of loans, she could easily have said, "Hey, this is great!"

Someone mentioned being an RA.  That was the best thing -- financially -- that I did in college.  I got a private room in the dorms for free, 50% of my meal plan paid, 50% of my in-state tuition paid, and my in-room phone paid (this was before cell phones).  Plus I got a few other miscellaneous things a few meals out and a couple nice outings to cool places like Lazer Tag and white water rafting.  I never received a paycheck, which meant I wasn't taxed on any of these things.  I worked my butt off the first two weeks /last two weeks of school, but in between the work wasn't that strenuous.  The downside, of course:  These jobs are few in number and lots of people want them. 

Jamesqf

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Re: This is why you have so much student debt...
« Reply #22 on: June 19, 2013, 12:11:45 PM »
Someone mentioned being an RA.  That was the best thing -- financially -- that I did in college.  I got a private room in the dorms for free...

Oops, I think we have a little acronym confusion going on here.  Your RA is a Resident Advisor (or something like that), a person who lives in the dorms and is supposed to keep order &c.  The RA I was talking about is a Research Assistant, someone who works in a lab (usually on the sci/tech side), and may be doing anything from scut work to an independent research project.

dboyer

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Re: This is why you have so much student debt...
« Reply #23 on: June 21, 2013, 12:56:58 PM »
We always used GRA or GTA depending on if you were doing research or teaching.  The residential employees ('ResLife' and 'Campus Housing' at the two uni's I went to) were either RD (residential directory, usually some sad perma-grad student), RA, and DA (desk attendant, signed guests in and out and other stupid tasks you get from being bottom of the food chain).   

I've seen the living on loans thing.  It's not so much a problem with taking loans out for living expenses, it's do so and then living like you can afford to have an upper middle class lifestyle.  Some people look at the "starting salary" for their major and figure "Hey, no problem!  I can pay it off!"  Some can, some can't, but I didn't go that route and am much better off for it.

Future you doesn't appreciate it :(
« Last Edit: June 21, 2013, 12:59:30 PM by dboyer »

MrsPete

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Re: This is why you have so much student debt...
« Reply #24 on: June 22, 2013, 11:34:51 AM »
Someone mentioned being an RA.  That was the best thing -- financially -- that I did in college.  I got a private room in the dorms for free...

Oops, I think we have a little acronym confusion going on here.  Your RA is a Resident Advisor (or something like that), a person who lives in the dorms and is supposed to keep order &c.  The RA I was talking about is a Research Assistant, someone who works in a lab (usually on the sci/tech side), and may be doing anything from scut work to an independent research project.
Yes, indeed, I was talking about being a Resident Adviser.  I have no knowledge about being a Research Assistant.

Rich M

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Re: This is why you have so much student debt...
« Reply #25 on: June 22, 2013, 11:27:48 PM »
Yes.  I teach at a university and cringe when I hear students that I know are living on loans talk about which restaurant to drive to for lunch.  Not to mention that almost every one has an iPhone.
I'd actually say something to them. After all, they are there to learn.  I learned a lot in college from professors who stated their opinions on politics, money, etc that wasn't related to the actual class.  I a respected them sharing their wisdom about it.

« Last Edit: June 22, 2013, 11:34:10 PM by Rich M »

Rich M

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Re: This is why you have so much student debt...
« Reply #26 on: June 22, 2013, 11:33:28 PM »
I was one of those dumb fucks who borrowed student loan money to cover my living expenses, hell I even financed a car with a student loan. Oh the mistakes we make in our youth.

"Youth is wasted on the young!"  -George Bernard Shaw

And the best and hardest thing you can do in life is try to imprint wisdom to your children or young people

The flaw of the human species is that we have to be educated and learn from experience so the same mistakes are always repeated in a general sense.
« Last Edit: June 22, 2013, 11:35:01 PM by Rich M »

Gerard

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Re: This is why you have so much student debt...
« Reply #27 on: June 24, 2013, 07:43:57 AM »
I walk to school. My students drive. Some of them live closer to the school than I do. They're all taking longer than the minimum time to finish their degrees because they have to work, because (and I quote) "I'm poor!"

mgreczyn

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Re: This is why you have so much student debt...
« Reply #28 on: June 25, 2013, 01:40:53 PM »
When I went to business school I rode the bus and / or rode my bike (a beater bike that I paid $20 for).  My classmates all drove, some of them in BMWs, to parking garage spaces they paid $1000/term for.  It was amazing.  We were all there to learn business, and nobody had any concept of living within their means.  I mean, we were all racking up debt, but still there's no need to spray gas on the fire.  I knew one person who made a mildly frugal decision on transportation, using a scooter instead of a car.  That same person was on a dual-degree path taking 3 years and had a weekly restaurant expenditure of $100 or more.  Pretty sure his loans wound up 2x mine.

Once on a bus, wearing a suit since I had an interview, an undergrad looked at me and said "businessmen don't ride busses!"  I replied "broke, unemployed ones do."

That $20 bike has saved me untold thousands, clearly the highest yielding investment I have ever made.  Hedge fund managers should be so lucky.

Monkey stache

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Re: This is why you have so much student debt...
« Reply #29 on: June 30, 2013, 09:13:11 AM »
I remember finding out that people were tacking on their living expenses on their loans my senior year of college and I was so surprised! I guess I thought everyone's parents were supporting them. I worked a sales job full time through college which paid $12/hr plus commission on everything I sold (I think I averaged $20/hr). It was inbound sales so it wasn't too bad but I did hate the job. I was able to get through it because I knew I could leave when I was done with school. Looking back it was worth it though because I have no student debt.

Something I see a lot of my friends doing is going back to school because they can't find jobs! I know some fields require more than a Bachelors and that makes sense to me. But I have a hard time believing that employers would prefer more years of formal education instead of experience for fields like marketing, business, ect. I think that just racks up more debt and makes it harder to find a job. I could be wrong. I just remember looking at "entry level" jobs that want 3-5 years of experience!

lisahi

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Re: This is why you have so much student debt...
« Reply #30 on: July 01, 2013, 10:20:28 AM »
Something I see a lot of my friends doing is going back to school because they can't find jobs! I know some fields require more than a Bachelors and that makes sense to me. But I have a hard time believing that employers would prefer more years of formal education instead of experience for fields like marketing, business, ect. I think that just racks up more debt and makes it harder to find a job. I could be wrong. I just remember looking at "entry level" jobs that want 3-5 years of experience!

I think going back to school is really a method of "waiting out" higher-than-average unemployment, especially in the field in which you are already educated. I don't think it's worth it if you're simply getting a higher degree in the same field with higher-than-average unemployment. You might as well just find a job in a different field until you can find one in your preferred field, because sometimes a higher degree will make you look less attractive since you'll now be, technically, more "expensive" to hire. You're taking on debt in the hopes that somebody will find you more attractive in a field you couldn't get work in before, assuming the market has rebounded by the time you graduated. There's a lot of wishin' and hopin' and prayin' going on.

If you're planning on changing careers, however, because there is more opportunity elsewhere, then it might be worth it.

TrulyStashin

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Re: This is why you have so much student debt...
« Reply #31 on: July 01, 2013, 12:09:09 PM »
Granted this is a small minority of cases but one significant reason why my law school student loan debt is so high is that I went to school at age 40 with a middle-schooler and high-schooler at home.  I had to keep their ground level (or risk a custody suit from my ex-husband who was circling and eager to challenge me) which meant maintaining the suburban house in their school district.

That said, in hindsight there were expenses I could have cut more ruthlessly.  But it would have been impossible for me to live "like a grad student" without unfairly impacting them.

Overall, however, I agree that students are taking out debt and do not remotely understand the consequences to their future.

Jamesqf

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Re: This is why you have so much student debt...
« Reply #32 on: July 01, 2013, 05:40:44 PM »
I think going back to school is really a method of "waiting out" higher-than-average unemployment...

Another reason is possible avoidance of age/overqualification discrimination.  Get an advanced degree, and suddenly you are one of a crop of new graduates...

Xtal

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Re: This is why you have so much student debt...
« Reply #33 on: July 07, 2013, 04:12:29 PM »
Here in Minneapolis these luxury student apartment buildings are popping up like mushrooms.  A lot of historic buildings are being knocked down, and it's harming the character of the neighborhood.  A bookstore that has been in business for decades -- the last independent used bookstore for miles -- is being forced to move due to this type of development.  It all seems very short-sighted.