Discussion on Student Loans pt. 1
Posted 02-09-2015 at 10:42 PM by HappyinCali
I found this article very interesting and one that should be read by every millennial (Link). This is a WSJ article so if you just click on the link, you will not be able to read it. Instead, click on the link and Google the title and then click on it as it appears in the search results – you can read all WSJ articles for free that way.
Anyway, I think the above article is very important. As the article states, the average student loan debt is >$30k and now eclipses credit card debt and auto debt. This makes sense. Very few cards will allow you large enough limits to rack up $30k in credit card debt and most middle class cars now cost <$30k. In contrast, many private universities now charge >$35k PER YEAR just for tuition. On top of that, you have to add room & board, beer and fun (see the credit card articles below). If you add all that up, your costs of attending a 4 year private college in the US will add up to almost $200k over for years. This awesome chart shows you that $33k is actually the average for all colleges. Link Given that the median house in America costs $189k Link, college actually costs MORE than a house. Think about this and also think how we, as a society, think about these two things. College=everyone does it, so spending on it is really the only option, so you should do it. Oh, and also, when choosing college, follow your heart and choose whatever major you feel like. Buying a house=huge commitment, you have to be very responsible to be able to handle the payments, it is a major step in your life.
This does not make sense.
We are basically telling 18 year olds to just “follow their heart” and do what makes them happy for the next four years and go tens of thousands of dollars in debt, while many of us have no concept what a burden that debt level will be. Again, the web comes to the rescue “After graduation, students can choose from several options, with the most common re-payment schedule ending after 180 or 218 months, or 15 to just over 18 years. Some loan re-payment options can be spread to as much as 25 years, however.” Link
So, these “everyone does it, there is really no other option” loans that are described to us as a “no brainer” will make us debtors for 15-25 years. But getting a mortgage is soooo much more complicated. You have to be an adult. You have to understand the challenges. You have to understand the costs. You have to pick the right neighborhood. You have to know that you can be paying it off for 15-30 years. But student debt? Meh – everyone does it. Follow your heart.
I want to emphasize that I think that the *right* college and the *right* majors are easily the best investment any of us can make. Numerous studies have proven that college grads make materially more money over the course of their life than non-college graduates. However, I believe, it is increasingly obvious that just going to college is not enough. In the past, there were fewer grads, so *any* college degree made you stand out. Now things are different. The environment is competitive on both a national and global scale and the right credentials (i.e. major and college) are increasingly important.
In subsequent posts, I am going to share my opinion on student loans and how one should approach them and the college selection process. Those will obviously be just my opinion, but I think that college should be approached in a manner befitting one of the top 3 most important decisions you will make in your life. Not with platitudes and clichés, because platitudes and clichés have resulted in $1.3 trillion of student debt and >$30k indebtness for the average student.
Anyway, I think the above article is very important. As the article states, the average student loan debt is >$30k and now eclipses credit card debt and auto debt. This makes sense. Very few cards will allow you large enough limits to rack up $30k in credit card debt and most middle class cars now cost <$30k. In contrast, many private universities now charge >$35k PER YEAR just for tuition. On top of that, you have to add room & board, beer and fun (see the credit card articles below). If you add all that up, your costs of attending a 4 year private college in the US will add up to almost $200k over for years. This awesome chart shows you that $33k is actually the average for all colleges. Link Given that the median house in America costs $189k Link, college actually costs MORE than a house. Think about this and also think how we, as a society, think about these two things. College=everyone does it, so spending on it is really the only option, so you should do it. Oh, and also, when choosing college, follow your heart and choose whatever major you feel like. Buying a house=huge commitment, you have to be very responsible to be able to handle the payments, it is a major step in your life.
This does not make sense.
We are basically telling 18 year olds to just “follow their heart” and do what makes them happy for the next four years and go tens of thousands of dollars in debt, while many of us have no concept what a burden that debt level will be. Again, the web comes to the rescue “After graduation, students can choose from several options, with the most common re-payment schedule ending after 180 or 218 months, or 15 to just over 18 years. Some loan re-payment options can be spread to as much as 25 years, however.” Link
So, these “everyone does it, there is really no other option” loans that are described to us as a “no brainer” will make us debtors for 15-25 years. But getting a mortgage is soooo much more complicated. You have to be an adult. You have to understand the challenges. You have to understand the costs. You have to pick the right neighborhood. You have to know that you can be paying it off for 15-30 years. But student debt? Meh – everyone does it. Follow your heart.
I want to emphasize that I think that the *right* college and the *right* majors are easily the best investment any of us can make. Numerous studies have proven that college grads make materially more money over the course of their life than non-college graduates. However, I believe, it is increasingly obvious that just going to college is not enough. In the past, there were fewer grads, so *any* college degree made you stand out. Now things are different. The environment is competitive on both a national and global scale and the right credentials (i.e. major and college) are increasingly important.
In subsequent posts, I am going to share my opinion on student loans and how one should approach them and the college selection process. Those will obviously be just my opinion, but I think that college should be approached in a manner befitting one of the top 3 most important decisions you will make in your life. Not with platitudes and clichés, because platitudes and clichés have resulted in $1.3 trillion of student debt and >$30k indebtness for the average student.
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