Author Topic: What is these people thinking when they get into too much college debt?  (Read 8065 times)

Eddy

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Many people assume that college is extremely expensive. Yes, it can become really expensive for some people if you go to fancy universities that cost 30k a year, but is that truly necessary? What is these people thinking when going to a fancy university and getting into 100k in debt? There are people that graduate in 4 years with 20k, even less. Is it because young people don't just about how they are going to pay that after graduate? What impresses me, is that people are already assume that college will cost at least 50k for any university.

I never got it, especially for those that will have careers that don't pay so much. Could someone explain this to me? Besides, who would ever consider to lend 100k to a recently young adult, almost a teenager? That's crazy!

CarDude

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Besides, who would ever consider to lend 100k to a recently young adult, almost a teenager? That's crazy!

If I were a bank, I'd totally do it. After all, the hard work of lobbyists I and fellow lending institutions bought led to the buying off of Congress, who decided that student loans would be indischargeable in bankruptcy, which means I always get my money back, and then some, regardless of how much I lend!. I'd be crazy not to lend as much money as possible.

Until the giant student loan default / amnesty comes (and oh yes, it's coming), expect education costs to race medical costs farther into crazyland.

ambimammular

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What are they thinking? Clearly not anything. I sure wasn't. Fortunately I went to the Jr college 2 years for my generals (cheaper than cheap) and then transferred.

You're thinking, this is what comes after high school. This is what my parents' expectations are. If I take classes and live in a dorm it will be way more fun than serving at Applebees. I get to stay in play world 4 more years before starting real life.

When I got out I didn't even know how much I owed. Mine wasn't too bad, though.  My little brother is the one I worry about, he's ten years younger of soaring college costs. Plus he sure as hell wasn't going to live with M & D and go to the local school.

frugally

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Having had many peers just get out of college with $60k+ in debt, I can confirm that parental pressure was the biggest driver for those who did not want to go to college.  For those that did want to go to college, most of them believe it's a necessary investment in yourself to get ahead in the future.  The kicker for me is that they're typically ecstatic for the $15/hour job a good portion of them are getting...

That being said, there were still plenty who were conscious of the money they were spending and did everything possible to minimize it.

Peony

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They're thinking it's like the old days (maybe how their parents remember it and have recounted it), when even private-college prices were not exorbitant, when college was a cost-effective educational/social/marriage-market experience that usually put the consumer well ahead of his peers in terms of job opportunities. My observation in talking to my 50-something friends with college-age kids is that many, many people have not adapted their thinking to the new economic landscape, in which college for most people (and certainly private college) can no longer be a safe coming-of-age experience, a sort of halfway-step toward independence for middle-class kids, which it was for decades. (By "not safe," I mean because of the huge opportunity cost of participation that is no longer certain to pay off.) I think this ostrichlike bahavior is perplexing to mustachians because the MMM community is all about being highly adaptable, quick to recognize and face up to financial and economic realities. But the MMM community is not the rest of the world. Most folks do not shift their thinking very quickly. Plus there is a tremendous amount of peer and societal pressure that teens, by their nature, have difficulty resisting. I am working hard to make sure my #2 son has "productive gap year" (or years) firmly planted as a totally viable, sensible, attractive option for his post-HS life. If he wants to go straight to college, OK, but don't do it just because that's "what everyone does." College has become another area where we need to guard against rip-offs. And I'm not necessarily even talking about for-profit schools.

mlipps

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I was the first in my family to go to college & had no idea what I wanted to do with the degree. As a result, I had a hard time imagining what I wanted to do with my degree and therefore a hard time figuring out what my likely first years wages were. I thought $30,000 was a reasonable estimate (and luckily I was pretty much right) but it's really hard to figure that out because all of the estimates of average wages for college graduates are skewed by engineers and the like. I understood how much my monthly payments would be & I understood how much my other expenses were likely to be, but I could not for the life of me get a good handle on how much I would earn.  That's a big piece of the puzzle.

StarryC

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1) Bad advice: I was told you could comfortably pay student loans equal to 2x your expected 1st year salary.  I took out less than that, but people told me I was making a mistake by choosing college based on price instead of "quality."  However, the new advice is 1x your first year salary.  And how do you know what that is?!  More bad advice!

2) Impossibility, or perceived impossibility of avoiding it.  If your parents have saved no money, and you have saved a total of say $3,000 from high school jobs, and there is no college in your town, what do you do?  You have to live someplace where you'll have to pay rent.  You feel/know/ believe that college is necessary for your desired life.  Expected cost of attendance for each year of in state tuition in my state is $24,000.  You can make maybe $10,000 through the year with your part time low paying job.  So, your very first year, you need to take out about $11,000 in loans.  Maybe you get some scholarships, but it would be hard, in that circumstance to get out with less than $30,000.   Of course, there are alternatives: Get more scholarships by being smart, take a year off to work and save, get help from parents (either with tuition or room and board by living with them), being frugal to reduce expenses, etc. 

3) Lack of understanding of the numbers.  What is the difference between $30,000 and $100,000?  It all seems imaginary when your pay check has been $200-$800 a month!  But, again, someone will tell you the difference between $30k and $100k is that at the $100,000 school you'll "make connections" and get a better, higher paying job, and your life will be changed!  And people are telling you  that you shouldn't let money limit your life!

It's hard to counter these things if they are coming from your parents, teachers, counselors, and friends!  And you are 18, and the biggest life decision you've made is your senior project and your most expensive purchase has been prom!
« Last Edit: June 08, 2014, 12:09:44 PM by StarryC »

MrsPete

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Here are things I hear from my high school students -- many of them make no sense: 

- College is what's expected of everyone.  No one in high school ever says, "If you go to college" . . . it's always "When you go to college".  That may be appropriate in some families, but it's not appropriate for everyone, everywhere -- yet if schools DON'T push all students equally in that direction, people scream discrimination (sometimes racial, sometimes gender-biased, sometimes other things).  So our students who routinely skip high school, don't read well, don't like school . . . are mostly signed up for college classes right out of high school. 

In the worst situations, it's a pure profit-grab. The small, private colleges are the worst for this.  Here's an example:  I have a student who just finished my class.  She reads very poorly, is not motivated to do her school work, and doesn't know what she wants to do with her life.  She finished high school with a D average.  But she's going to college! No, her grades won't admit her into the big-name universities, but she's been admitted to a small private college with a 30K price tag.  She'll attend for a semester, maybe a year, and then she'll drop out because she won't be progressing towards graduation -- but that college will have made their money.   

- Students have grossly over-exaggerated ideas of what they'll earn after college.  Some of this is simply hubris, thinking that you personally are worth so much that employers will seek you out and pay you $$$$$ plus a yearly bonus and a company car because you are so wonderful.  Some of it is that salary information on the internet is over-exaggerated -- and even if it were correct, students fail to recognize that they're going to be on the starting end of that salary, not in the middle or the top. 

- Students don't have a real idea of what it costs to support themselves.  Oh, they know that a person who makes $50,000/year can live a better lifestyle than the person earning $25,000, but not so big a lifestyle as the person earning $100,000 -- but they don't have a real idea of whether the $50,000 person is going to live in an apartment and drive a used car, or whether he will be able to buy a mini-mansion two years out of college.  And they don't grasp "invisible costs" like insurance. 

- Because they don't really understand that an entry level salary barely =s a comfortable lifestyle, they foolishly think that a student loan will be easy to pay back.  It means skipping a couple meals out each month -- no big deal!  By the time they realize that student loans actually cut into your paycheck, you're already "in". 

- Often students don't grasp the most obvious facts:  You have to pay the money back.  I have a couple articles on student loans that I use in my classroom.  Typical questions that arise from these articles:  "You mean, you borrow money and if you don't graduate, you don't have the degree AND you still have to pay back the money?"  Or the opposite:  "You mean if you do everything right and you graduate, you have to pay the money back?" 

- They think everyone borrows, so it must be okay.  A college administrator said this to me at an Open House.  He said ALL the students at his very large university borrow.  When I pressed him on this and said that I found it hard to believe that a single family among 26,000 students couldn't manage to save the cost of attendance, he told me that's exactly what he meant.  That 100% of the students at that school borrow.  He didn't appreciate it when I told him he was full of crap. 

- The student loan industry PUSHES students to borrow.  I know -- I have a college student!  When she was a freshman, they sent her letters and emails, offering to lend her up to 150% of the cost of attendance!  And they're willing to give her credit cards on top of that!  I can understand why students who are on the fence about borrowing eventually give in -- when they're told time after time, "Look, free money!  I'm holding it out in your direction.  Just take it!" Many students will take it in a bad moment -- maybe when they're flat-broke and just tired of being the one who can't afford to go out with friends. 

- A decade ago students had a sense of, "College is good debt, and you owe it to yourself to attend THE UNIVERSITY -- not just some second-rate place your parents are pushing."  A decade ago students had a sense that THE COLLEGE EXPERIENCE is worth everything, that going somewhere far away is a good and necessary choice, and staying home is for losers or those with no ambition.  For example, I'm remembering a student of mine (wonderful student) who was dead-set on attending an uber-expensive school up north.  When I asked her why she was willing to borrow for that school rather than choosing something local and inexpensive, she said, "Oh, I've always had an image of myself in the cold, brisk weather walking to school in a heavy coat and scarf -- something about that image is just so appealing to me, and anyway, it's good debt."  I don't know where she is today, but I hope that journalism degree's paying off for her.  Anyway, that concept seems to have fallen by the wayside, and today more of my students are willing to look at local schools to which they can commute, etc.

- And I know some students (and parents) who have the idea that it's "safer" to attend a small, private Christian college.  I could name 4-5 in my general vicinity, and none of them are considered as strong academically as our average state school -- yet they command price tags of 30-40K.  I personally know students (and parents) who are fearful that big state schools are Satan's playground, and the temptations are just too strong -- better to stay in a small, Christian environment.  Parents of girls tend to worry about this more than parents of boys:  The idea is that they don't want to put their daughter into a situation where she might meet a wild boy.  And I know one family whose older daughter went away to a state school and got into drugs -- they were quick to blame her mistakes on the environment, and they wouldn't allow their younger daughter to investigate anything except the small, Christian schools.  Thing is, we all know that whatever you're looking for in a university (be it a prayer group or a keg party), you're going to find it. 


anisotropy

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Things are not too different in Canada. The public school tuitions are about 3-5k for a full load semester. Assuming 1.5k a month for living costs, that's about 25k a year.

If one lives at home it's entirely possible to "only" borrow 25k for 4 years of college.

I personally know quite a few people that have loads of student loans, they don't seem too worried cuz "everyone's got them".

 

randymarsh

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- Students have grossly over-exaggerated ideas of what they'll earn after college.  Some of this is simply hubris, thinking that you personally are worth so much that employers will seek you out and pay you $$$$$ plus a yearly bonus and a company car because you are so wonderful.  Some of it is that salary information on the internet is over-exaggerated -- and even if it were correct, students fail to recognize that they're going to be on the starting end of that salary, not in the middle or the top. 

- Students don't have a real idea of what it costs to support themselves.  Oh, they know that a person who makes $50,000/year can live a better lifestyle than the person earning $25,000, but not so big a lifestyle as the person earning $100,000 -- but they don't have a real idea of whether the $50,000 person is going to live in an apartment and drive a used car, or whether he will be able to buy a mini-mansion two years out of college.  And they don't grasp "invisible costs" like insurance. 

These two were the reasons why I borrowed too much. It's just easy to assume 4 year degree  = ~60K minimum starting pay. Until I started running paycheck calculators and created an expense spreadsheet, the idea of just how little money I may have after paying bills never really sunk in.

Luckily, I didn't screw up so bad that it can't be repaired. It'll take me more time than I'd like, but I'm glad it's fixable. I don't know what people who owe 200K making 30K are supposed to do though.

The idea is that they don't want to put their daughter into a situation where she might meet a wild boy.

Ha, "wild boy". More like any boy who wants to have sex with their precious snowflake!

GuitarStv

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Things are not too different in Canada. The public school tuitions are about 3-5k for a full load semester. Assuming 1.5k a month for living costs, that's about 25k a year.

If one lives at home it's entirely possible to "only" borrow 25k for 4 years of college.

I personally know quite a few people that have loads of student loans, they don't seem too worried cuz "everyone's got them".

That's one perspective.

I worked for four years every summer in high school.  I fast tracked my classes and took a half a year off after high school to work.  Then I worked every summer (and during the year) in university.  Somehow, it was possible to graduate from school with an engineering degree while living away from home without ever borrowing any money.

galliver

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First of all, I'm a big supporter of the "apply first, compare costs later" philosophy, particularly for advanced students (if you have 8 AP courses under your belt by senior year, community college will be of limited use, IMO). Private colleges sometimes have the endowment to offer generous scholarships that state schools cannot. There's nothing wrong with turning a school down if it turns out to be too expensive; but it makes sense to know what the real price is, first!

Second, I wonder how much of an effect rising college prices have. Maybe a student/family decides they can afford $x/year based on their first year costs and fin aid (grants) package. But if costs go up 7% per year (which my school did), the final costs are $4.43x (assuming the grants still covered the same percentage of the cost). And if one semester didn't go well, or there was a health issue that interfered after the withdrawal deadline, then that's another $1.31x on top of that.

Third, I think there might be some sunk-costs thinking...I'm already $30k in debt, and they took away my scholarship, but if I take out another $20k I'll have a degree but if I don't, how will I pay off my existing debt!?

That said, I do think the decision must be made with introspection and research. How good a student am I, really? Will I be able to complete my degree in time? What is the min/median/max pay for graduates in my field? What do I need to do in college to be competitive in that market?  What is my backup plan? Those sorts of things.

Psychstache

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- College is what's expected of everyone.  No one in high school ever says, "If you go to college" . . . it's always "When you go to college".  That may be appropriate in some families, but it's not appropriate for everyone, everywhere -- yet if schools DON'T push all students equally in that direction, people scream discrimination (sometimes racial, sometimes gender-biased, sometimes other things).  So our students who routinely skip high school, don't read well, don't like school . . . are mostly signed up for college classes right out of high school. 


Also, in many states part of a high school's accountability rating is calculated based on the number of students accepted to college, so it is in the interest of the administration to push ALL students towards college regardless of ability, desire, or appropriateness. Clearly some perverse incentives at work.


- And I know some students (and parents) who have the idea that it's "safer" to attend a small, private Christian college.  I could name 4-5 in my general vicinity, and none of them are considered as strong academically as our average state school -- yet they command price tags of 30-40K.  I personally know students (and parents) who are fearful that big state schools are Satan's playground, and the temptations are just too strong -- better to stay in a small, Christian environment.  Parents of girls tend to worry about this more than parents of boys:  The idea is that they don't want to put their daughter into a situation where she might meet a wild boy.  And I know one family whose older daughter went away to a state school and got into drugs -- they were quick to blame her mistakes on the environment, and they wouldn't allow their younger daughter to investigate anything except the small, Christian schools.  Thing is, we all know that whatever you're looking for in a university (be it a prayer group or a keg party), you're going to find it.

I remember overhearing a conversation of a couple of parents where one was going on about how she was concerned that her son was looking at LSU for college since it is a "rowdy party school". When the other mom asked her where she wanted him to go, I nearly spit my drink out when the mom said the name of a local school that is widely known for being a HUGE party school in recent years, but I guess she just remembers her experience there before it gained this reputation. Bonus story: I went to a small, well regarded, christian private school for grad school. Their greek system was crazy and frequently had parties broken up by police, underage drinking, and all of the typical debauchery that you associate with that life.

anisotropy

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Things are not too different in Canada. The public school tuitions are about 3-5k for a full load semester. Assuming 1.5k a month for living costs, that's about 25k a year.

If one lives at home it's entirely possible to "only" borrow 25k for 4 years of college.

I personally know quite a few people that have loads of student loans, they don't seem too worried cuz "everyone's got them".

That's one perspective.

I worked for four years every summer in high school.  I fast tracked my classes and took a half a year off after high school to work.  Then I worked every summer (and during the year) in university.  Somehow, it was possible to graduate from school with an engineering degree while living away from home without ever borrowing any money.

yes it is certainly possible to do so. I also know some people that didn't get much debt but they were lucky enough to secure summer internships that paid well.

Prairie Stash

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I bought a house that was 4X my salary, is that bad too?
I only spent 1X salary for my education. I was fully aware of the debt, I was also aware of the alternatives. I received letters annually telling me how screwed I'd be if I didn't finish.

Why is education bad but real estate good?  They both have substantially increased my Net Worth. Plus education is immune to housing crashes, stock market corrections, political conflicts, taxes and inflation. The rest of my net worth could evaporate and I can rebuild, thanks to my education.

studentdoc2

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I went to one of the most expensive undergraduate institutions in the country, and I don't think I ever really considered the cost. (1) College was always expected (in my high school/family/social circle). (2) I was a top student, so "of course" I should go to a prestigious/expensive school. (3) The concept of paying back loans was so far in the future that it was hard, at 18 yo, to conceive. (4) Once you start talking about tens of thousands of dollars in loans, the differences don't seem that important (i.e., another drop in the bucket. (5) We were told that you go to the school that "fits" and that feels "right" -- not the school that suits your budget. (more like a marriage than a business deal). (6) We were told that your college sets you up for graduate school (if applicable) and dictates your social circle for the next 4 years (and possibly future) -- don't you want it to be your "dream school"? (7) I was offered a decent financial aid package my first year, include a $15,000/yr grant... that was promptly dropped after my first year because my parents increased their income (working more/longer hours) to be able to afford to send me to the school.

Fortunately, it worked out well for me -- although I left with ~$55,000 in loans, I was in a great academic/social environment, the school allowed me to qualify for free grad/med school once I graduated undergrad, and I happened to pick a well-paying career (not the career I had originally planned, however). Would I pick my stupidly expensive undergrad school again if I had to do it over? Yeah, probably. Would I encourage my child to pick their undergrad school without thinking through the economics? Hell no.

nawhite

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I don't know what people who owe 200K making 30K are supposed to do though.

Anecdotal evidence from my classmates in this situation who graduated in 2009/2010, you have 4 options.

1) Marry someone who is an engineer/computer something and makes bank. Then expect them to pay for your loans.
2) Go on the "Pay as you Earn" repayment plan (10% of your income) and ignore the fact that 20 years from now you're going to be hit with a tax bill you can't afford when the loan is "forgiven."
3) Be a lazy/willfully-ignorant schmuck and default on your loans, ruin your credit, and still keep the loans for the rest of your life because even bankruptcy won't kill them.
4) Live at home with your parents and ask them very nicely to cover your loans while you're there.

Options 1 and 3 seems to be the more popular ones. At least the people who take option 2 are taking responsibility for their choices.

Exflyboy

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I read today an article of a dental student that ran up $520k of debt... Holy Cow!

Frank

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Personally, I worked part-time in HS but I had no concept of how much rent cost, how bills were paid out of a salary etc.  So when I was 17 looking at payment options for school, the concept of oh this will cost me $300 a month when I graduate literally had no meaning to me.  I assumed that if I was able to take a loan for college then it must calculated by the college or loan program (Sallie Mae sounded like a quasi-governmental program i.e. they wouldn't screw me over) to be within reason with my expected salary.  I didn't know how hard it is to find and keep a job (although I've done well).  I didn't know anything about money or bills at all.  So that is how you get into multi-thousand dollar college debt.  The other option was to buy a (beater) car and attend classes per credit at the local community college while living at home, which is what someone with 1500 SAT score really wasn't counseled to do.  On top of that, the closest community college was 45 minutes each way which is a lot in gas.

And my mom didn't know a thing about money either so there was no help there.  Schools don't teach personal finance. I didn't have a concept of fancy vs. non-fancy.  I shared ONE room with 2 other people with bunk beds.  The food plan included Texas Toast and myster meat so I promptly left the plan and ate the local pizza (no kitchen in our dorms). There really was nothing too fancy about it not that I would have known the difference.

I graduated with around $70k in debt after 4 years (which included housing, utilities, and tuition).  I didn't buy books because I didn't have enough money.  I made $250 a month in a work study job because my school was in a dead zone where there was not even a cafe that hired students.  I know all of this could have been mediated with more planning but I didn't know a thing at 17.  I once walked 80 blocks because I didn't have $1.25 for a metro card and didn't have any nice clothes.  I didn't study abroad or go on spring break.  I made $3000 in the summer which I lived on almost all year plus the $2000 from work study.  I didn't get any money from my family for expenses. 

Unless you learn it from your parents, you don't know at that age.
« Last Edit: June 10, 2014, 06:00:46 PM by Meadow »

gimp

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We tell kids all their lives that they have to go to college, then get shocked when they take easily-accessible money to do so. We tell kids all their lives to follow their dreams, then get shocked when they use the money to study something not very valued, economically speaking. We tell kids that hard work will lead to financial success, then get shocked when they spend $100k to work sixty hours a week at a $30k/year job.

18-year-olds living at home don't know shit about careers or money. We don't teach them that in school, either. Of course they should know better, but why are we surprised they don't? 18-year-olds might be legal adults, but try reading a news story about a "19-year-old man who did blah blah" without rolling your eyes. We've done an excellent job of separating people from the realities of life and expenses until they've moved out entirely on their own, and that seems to happen later every year on average.

frugal_engineer

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I don't think having big student debt being a bad thing is nearly as cut and dry as everyone makes it out to be here.  $100k+ of debt is totally worth it for a house that will only maintain pace with inflation, what is $100k of debt compared to a degree that will earn you $1M+ over not having one over a lifetime.

The key, I think, is to balance your debt load with your expected starting salary.  Most school publish graduate salaries broken down by major.  If philosophy is averaging $30k/yr upon graduating, that probably doesn't justify a huge student loan (but maybe it does if it leads to a JD).  If your engineering degree is going to start at $70k out of the gate, maybe $100k is reasonable?  Sure it'll still sting at the beginning, but talk about an investment with big returns - double your initial investment in 2-3 yrs? And then again every year or 2 after that forever? Thats a winner.

On a personal note, I highly recommend any schools with required co-op programs.  I lucked out a big myself, but most people in my class had income over the 5 years of school equal or greater to the cost of tuition from co-ops / internships (engineering), depending on their individual debt load.  Obviously we weren't mustachian and didn't use enough of that income to actually pay for school, but MMM wasn't around to inform us that was a good plan.

For the right education, the current cost of college is a steal at twice the price.  The worry is that it'll keep increasing until the cost is equal to the benefit, then we'll all be screwed.

Travis

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I bought a house that was 4X my salary, is that bad too?
I only spent 1X salary for my education. I was fully aware of the debt, I was also aware of the alternatives. I received letters annually telling me how screwed I'd be if I didn't finish.

Why is education bad but real estate good?  They both have substantially increased my Net Worth. Plus education is immune to housing crashes, stock market corrections, political conflicts, taxes and inflation. The rest of my net worth could evaporate and I can rebuild, thanks to my education.

I would say the difference between real estate debt and education debt is the day after you start your mortgage you're living in a house that is a tangible object and provides you real value you can use.  When you get a student loan you still have to put a lot of effort into putting it to good use and it's not guaranteed that it will pay off.  You can buy a house based off your salary which is a known variable.  As a couple folks have mentioned here you have no idea if you can even get a job after college let alone how much you'll make at it.  If the mortgage debt isn't working out you have the option to sell the house and recoup the debt (or possibly make a profit).  If you drop out of college all you have are bills and a loan that has to still be repaid.  Generally speaking you're better off in the long run getting a college education, but there's still risk and hope involved whereas a mortgage is a known quantity with some options.

MoneyCat

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In my case, I grew up poor so I didn't know how to handle money.  All I knew was that college was pretty much the only shot I had to ever escape from poverty, so I borrowed whatever I had to so I could go.  I also saw college as a way to have a roof over my head and food in my stomach for four years, because as far as my family was concerned I was no longer their concern for even essentials once I reached the age of 18 (although they were quick to take advantage of the HOPE education credit on their taxes even though they had nothing to do with my payment for college).  Can you tell that I'm still bitter?

MrsPete

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These two were the reasons why I borrowed too much. It's just easy to assume 4 year degree  = ~60K minimum starting pay. Until I started running paycheck calculators and created an expense spreadsheet, the idea of just how little money I may have after paying bills never really sunk in.
Just yesterday I was in my classroom with a small group of high school seniors -- these are all general-level kids, not particularly wonderful students but all very capable.  They were sorting out some books and things for me, and they were talking excitedly about their plans.  One asked, "Where do you all expect to be in 20 years?"  100% of them claimed they expect to be college graduates, working in high-paying, exclusive jobs (lawyers, one surgeon, two who expect to own their own businesses -- one expects to be driving for NASCAR).  Several expect to be living in ocean-front mansions, driving nice cars. 

Sure, some of this comes from the excitement of being steps away from graduation and "talking it up" among friends, but they were all rather unrealistic. 
First of all, I'm a big supporter of the "apply first, compare costs later" philosophy, particularly for advanced students (if you have 8 AP courses under your belt by senior year, community college will be of limited use, IMO). Private colleges sometimes have the endowment to offer generous scholarships that state schools cannot. There's nothing wrong with turning a school down if it turns out to be too expensive; but it makes sense to know what the real price is, first!
Disagree.  Having taught high school seniors for so many years, I can assure you that about 99% of the time the more expensive school turns out to be . . . the more expensive school.  The oft-mentioned urban myth of "this school is cheaper than the state school once they kick in their scholarships" turns out to be true so, so, so rarely that it's barely worth mentioning.  It used to happen for 1-2 students in each graduating class, but now I haven't seen it in years. 

The danger of "oh, just apply and we'll see what it costs" is that you risk the student falling in love with that overpriced school . . . and then it's tough for him to be happy with another school.  No, I say only apply to schools that you can actually afford to attend.  My oldest daughter was temporarily enchanted with a big-name, out-of-state school well known for sports and parties, a school that I felt was grossly unsuitable for her (lots of Greek life, seemed a little snooty to me).  I told her she could apply, but she had to do so with the understanding that it was wildly more expensive than our in-state schools, and we could only swing it if massive scholarships appeared out of nowhere.  She filled out the application, but in the end two things happened simultaneously:  1) She realized it really wasn't a good fit for her.  2) She realized that it was just too expensive.  She never filed the application and forgot about the place.

Having worked with many, many students over the years -- students of all academic levels -- I'll add this:  Scholarship money exists, but the vast majority of it is not school-specific.  That is, you earn the scholarship, and it can be applied either to the expensive private school or the moderately-priced state school. 
I went to one of the most expensive undergraduate institutions in the country, and I don't think I ever really considered the cost. (1) College was always expected (in my high school/family/social circle). (2) I was a top student, so "of course" I should go to a prestigious/expensive school. (3) The concept of paying back loans was so far in the future that it was hard, at 18 yo, to conceive. (4) Once you start talking about tens of thousands of dollars in loans, the differences don't seem that important (i.e., another drop in the bucket. (5) We were told that you go to the school that "fits" and that feels "right" -- not the school that suits your budget. (more like a marriage than a business deal). (6) We were told that your college sets you up for graduate school (if applicable) and dictates your social circle for the next 4 years (and possibly future) -- don't you want it to be your "dream school"? (7) I was offered a decent financial aid package my first year, include a $15,000/yr grant... that was promptly dropped after my first year because my parents increased their income (working more/longer hours) to be able to afford to send me to the school.
Sounds like you were "sold" the attitude that was prevalent a decade or so ago: You deserve the whole college experience.  You'd be cheating yourself not to attend the dream school.  I like your comment that it's more like a marriage than a business transaction. 
Personally, I worked part-time in HS but I had no concept of how much rent cost, how bills were paid out of a salary etc.  So when I was 17 looking at payment options for school, the concept of oh this will cost me $300 a month when I graduate literally had no meaning to me.  I assumed that if I was able to take a loan for college then it must calculated by the college or loan program (Sallie Mae sounded like a quasi-governmental program i.e. they wouldn't screw me over) to be within reason with my expected salary.  I didn't know how hard it is to find and keep a job (although I've done well).  I didn't know anything about money or bills at all.  So that is how you get into multi-thousand dollar college debt.  The other option was to buy a (beater) car and attend classes per credit at the local community college while living at home, which is what someone with 1500 SAT score really wasn't counseled to do.  On top of that, the closest community college was 45 minutes each way which is a lot in gas.

And my mom didn't know a thing about money either so there was no help there.  Schools don't teach personal finance. I didn't have a concept of fancy vs. non-fancy.  I shared ONE room with 2 other people with bunk beds.  The food plan included Texas Toast and myster meat so I promptly left the plan and ate the local pizza (no kitchen in our dorms). There really was nothing too fancy about it not that I would have known the difference.

I graduated with around $70k in debt after 4 years (which included housing, utilities, and tuition).  I didn't buy books because I didn't have enough money.  I made $250 a month in a work study job because my school was in a dead zone where there was not even a cafe that hired students.  I know all of this could have been mediated with more planning but I didn't know a thing at 17.  I once walked 80 blocks because I didn't have $1.25 for a metro card and didn't have any nice clothes.  I didn't study abroad or go on spring break.  I made $3000 in the summer which I lived on almost all year plus the $2000 from work study.  I didn't get any money from my family for expenses. 

Unless you learn it from your parents, you don't know at that age.
My experience was very much like yours:  I worked in high school, I saved, but I had no real concept of how much it cost to live, etc.  I worked myself to death in college and didn't borrow, but looking back I can now see options that were available to me -- options that weren't obvious to me at that point.  While I didn't do too badly, I could have made some better choices that would've made my life easier.  For example, I always assumed I would work during college -- and for me that meant riding the city bus /adhering to their schedule.  In contrast, my daughter attends a college that's physically smaller, and she has the choice to walk to many job options.  Likewise, books were always an issue for me; whereas my daughter's college tuition includes book rental.  I should have considered things like that when making my college choice. 

I disagree with one part:  You said high school doesn't teach personal finance.  I specifically remember my Algebra teacher (might've been Algebra 1 or 2 -- I had the same teacher for both classes) making us repeat over and over, "I want a simple interest loan with no prepayment penalty".  And I remember other financial lessons in other classes.  Today I have seen my daughters bring home financial lessons from school -- specifically I remember my youngest asking for my help with some lessons on credit cards and interest in Economics & Civics, and I remember my oldest being confused about a lesson dealing with health insurance.  Thing is, students don't remember them because they aren't connected to things that are "real" in their lives at that moment! 

Furthermore, during my senior year -- probably prompted by college decisions -- I became very aware that my parents weren't doing well financially partly because of bad choices.  So I sought out information:  I read all kinds of books about finances.  Things about frugal living, things about investing.  Today this information can be found on the internet, so it's easier than it was in the 80s. 
For the right education, the current cost of college is a steal at twice the price.  The worry is that it'll keep increasing until the cost is equal to the benefit, then we'll all be screwed.
Oh, you're completely right.  My job isn't particularly high-paying, but I have "had back" every penny I paid for my education and more -- many, many times over.  Ditto for my husband. 

However, one of the other mistakes "we" are making today is suggesting to kids that ALL college degrees are equally valuable.  In fact, during a college fair my husband was thrilled to speak to one of his old professors at the engineering table . . . and they commented to one another that the students were lined up at the adjacent theater table, while the engineering staff was just kind of standing around. 

Travis

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Quote
However, one of the other mistakes "we" are making today is suggesting to kids that ALL college degrees are equally valuable.  In fact, during a college fair my husband was thrilled to speak to one of his old professors at the engineering table . . . and they commented to one another that the students were lined up at the adjacent theater table, while the engineering staff was just kind of standing around. 

Someone pointed this out in some US economic analysis paper years ago that our college education system is a weak link in our economy not because of costs, but rather that it is no way tied to the free market.  Regardless of what is in demand you can get a fully funded education in whatever the hell you want.  I don't think there's another country in the world that has the per capita college availability that the US does.  In most countries competition for access to those few university slots is fierce and you're expected to be productive with it.

Jomar

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Things are not too different in Canada. The public school tuitions are about 3-5k for a full load semester. Assuming 1.5k a month for living costs, that's about 25k a year.

If one lives at home it's entirely possible to "only" borrow 25k for 4 years of college.

I personally know quite a few people that have loads of student loans, they don't seem too worried cuz "everyone's got them".

That's one perspective.

I worked for four years every summer in high school.  I fast tracked my classes and took a half a year off after high school to work.  Then I worked every summer (and during the year) in university.  Somehow, it was possible to graduate from school with an engineering degree while living away from home without ever borrowing any money.

Yup, I agree entirely. I mostly lived away from home during university, plus spent 9 months doing volunteer work and two full semesters (plus 7 months at the end of my degree) traveling, paid my own tuition (I only got $1700 worth of scholarships for my entire degree and $1300 from an RESP in my first year from my parents), and even owned a little pickup truck for a year and a half, and still I had no debt at the end. Working part-time and finding decent summer work (in my case, forest fire fighting for a couple of years, jobs in national parks, camp counselor) is key. And that job experience ends up being as valuable or more than your degree.

galliver

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First of all, I'm a big supporter of the "apply first, compare costs later" philosophy, particularly for advanced students (if you have 8 AP courses under your belt by senior year, community college will be of limited use, IMO). Private colleges sometimes have the endowment to offer generous scholarships that state schools cannot. There's nothing wrong with turning a school down if it turns out to be too expensive; but it makes sense to know what the real price is, first!
Disagree.  Having taught high school seniors for so many years, I can assure you that about 99% of the time the more expensive school turns out to be . . . the more expensive school.  The oft-mentioned urban myth of "this school is cheaper than the state school once they kick in their scholarships" turns out to be true so, so, so rarely that it's barely worth mentioning.  It used to happen for 1-2 students in each graduating class, but now I haven't seen it in years. 

The danger of "oh, just apply and we'll see what it costs" is that you risk the student falling in love with that overpriced school . . . and then it's tough for him to be happy with another school.  No, I say only apply to schools that you can actually afford to attend.  My oldest daughter was temporarily enchanted with a big-name, out-of-state school well known for sports and parties, a school that I felt was grossly unsuitable for her (lots of Greek life, seemed a little snooty to me).  I told her she could apply, but she had to do so with the understanding that it was wildly more expensive than our in-state schools, and we could only swing it if massive scholarships appeared out of nowhere.  She filled out the application, but in the end two things happened simultaneously:  1) She realized it really wasn't a good fit for her.  2) She realized that it was just too expensive.  She never filed the application and forgot about the place.

Having worked with many, many students over the years -- students of all academic levels -- I'll add this:  Scholarship money exists, but the vast majority of it is not school-specific.  That is, you earn the scholarship, and it can be applied either to the expensive private school or the moderately-priced state school. 

MrsPete, I'm okay with disagreeing, and I know I only have my friends' and our siblings' experiences to go off of which is a much more limited pool than yours. But I have observed the actual price of private schools going way down after fin aid is considered; perhaps it's not always/usually actually lower than the state school like it was for me, but it's at least comparable. The private school my sister wanted to attend was about $6k more in tuition; a lot (which is one reason she and my parents ultimately chose the state school), but not the $40k you would expect based on sticker price. It brought it into consideration. I don't know why our experiences are so different; it doesn't sound like you're working in an extremely well-off area, and you say you've worked with students of all levels of achievement. So, I really don't know why your experience is 99% negative and mine is...at least 50% positive?

I feel like choosing a college education on price alone makes about as much sense as buying the cheapest car or computer without considering the features and reliability. Or choosing a job based solely on salary and not work environment. I wonder what would have happened if the school your daughter was considering was highly regarded for *academics* rather than sports and parties. What if it had been a good fit, personality-wise? What if it was an hour from home instead of out-of-state (not that the two are mutually exclusive, or that residency matters for private schools)? It just sounds like there were way more problems with that situation than just the price; which you don't actually know, because she never applied.

Finally, my experience with external scholarships is different from yours as well. I personally wasn't eligible for most of them (citizenship status), but I also don't really know anyone who has been successful funding their education that way.

So, I stick by my point of view. Dream and apply to the dream school and hope (but also apply to the state school of course!). Then, learn to deal with disappointment and make intelligent decisions and do the best with what you have. That's life.