Student debt and future? (Boston, Cambridge: fit in, 2013, apartment)
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Whenever I see articles about student debt and wider economic issues associated with it, I think about MA, and wondering if we could get slammed here in the MA going into next decade, when it gets more clear to which extent younger generations will become completely paralyzed by student debt and bad economy? Will younger folks ever be able to buy home and have kids, or all their money will be spent servicing their various debts? How many people and families are impacted by this? I know it is national issue, of course, but thinking how bad Ma is exposed considering brutal "start-up cost" of living/settling here.
I don't think it is a MA-centric problem, it impacts any population center.
The real issue to me is just the crazy cost of secondary education. The value proposition is just all off kilter.
I graduated undergrad in 1997 from a private institution and my senior year with full tuition and living in senior housing on campus we just cracked $20K/yr. I checked what the new cost would be a couple months ago and with the same frenshman package I paid $17K for in 1993/94 is now $54K/yr.....seriously? that is what medical school cost when I had friends going to med school.
How can you come out of an undergrad education with dick for experience and be saddled with $100-200K+ in debt? Most kids are looking at about $30-45K/yr to start in most cube farms and they basically have a mortgage without really even having a place to live or a way to get to work.
It is just crazy.
Back to MA, rentals, buying etc. can be very expensive in the areas with large numbers of jobs. Good luck.
If I had to do it all again, I would probably learn a trade like electrical or plumbing, get a 2 yr associates in Small Business Mgt. at the cheapest convenient place and look to ahve my own small service company by age 30.
I'm fine with my current position in life, but I didn't come out with that type of $200K headwind either....
I think it is a plus for apartment rentals, also condos and townhouses, and a minus for a house market. But, it can't grow exponentially, enrollment will drop, and tuition will have to come down. Also dems will try to intervene.
Whenever I see articles about student debt and wider economic issues associated with it, I think about MA, and wondering if we could get slammed here in the MA going into next decade, when it gets more clear to which extent younger generations will become completely paralyzed by student debt and bad economy? Will younger folks ever be able to buy home and have kids, or all their money will be spent servicing their various debts? How many people and families are impacted by this? I know it is national issue, of course, but thinking how bad Ma is exposed considering brutal "start-up cost" of living/settling here.
We have some of the best universities here in Boston and Cambridge. And their graduates will get the best jobs and be able to pay of their student loan debts.
Also, many college students are not Boston natives, so after graduation, they will just leave the area.
This is not MA issue but US issue, but I did wonder about impact on our economy in the long run.
I do agree that we have very desirable institutions of higher learning and many graduates will (or so I hope) find gainful employment. However, it is not by default that all graduates coming from MA universities are exempt from debt,or so much more smarter and employable. Some are, but many, just like they parents encouraged them too, feel in huge debt for prestige that might not translate well into real life well paying jobs and "prosperity guaranteed". I was curious on other people's take on that looming debt crisis, and will traditional colleges even survive into future? Many young students are pulling back from traditional path (for various reasons, including price) and doing more online courses and campus-remote based studies? It is real trend, very alive even at most prestigious schools. What will that leave MA with?
More debt creates less purchasing power in the future for today's college graduates. Add on wage stagnation and the issue gets worse. I would expect that many graduates will have to help support aging parents or grandparents (because their parents blew their savings on helping out with loans) with increasing life expectancies (personally or through an ever-burdened health system).
I don't think having an increased percentage of the population with a college education is a bad thing but increasing amounts of debt is an issue. I think universities have to take a hard look at what they are spending money on, focus on education and not have so many 'extras'. However, I think what will happen is that no one will want to cut the 'extras' (because a shiny new gym is more attractive than a sound history department) and permanent tenure lines will take the hit, saddling the already overworked adjuncts even more so (who, barely can make a living wage as it is). You could decrease time-to-degree or cut admin bloat but those rarely make the top of the list.
Even if you have a six figure loan, you can consolidate your federal loans into Direct Loans and enrolled in the Income Based Repayment program. The IBR calculates your monthly loan repayment to be 10 percent of your income. You qualify to be part of this IBR program if your Standard Loan payment (basically, total loan amount divided by 120 payments or 10 years) is above the IBR alternative of 10% of monthly income (and they also consider your family size). If you are in public service or a non-profit, after 10 years all outstanding loans will be forgiven. If you are not in public service or a non-profit, after 25 years, your loan will be forgiven (though there needs to be more tweaks to the program). There's also other programs like income contingent, but IBR is the best, especially if you are in public service.
My husband and I are in the top 10% of national US household income (or top 20% in Boston area). Yet we still qualified for the IBR. Paying 10% of our monthly income is manageable. We both came from humble backgrounds and are used to living relatively frugally though are lives our hardly full of deprivation. In less than 10 years and by the time we have elementary school age kids, we will be student loan free. We are steadily adding to our down payment and our looking for our first home. We wished we had paid the tuition rates of the Baby Boomer generation, but we went to very good schools, and think the education was definitely the worthy investment.
I'm not trying to gloss over the struggles of newly graduated students and the Recession was very painful for our age group, but this thread is about how it will affect the Boston area housing market, yes? I have friends who are annoyed by the loans payments and have delayed marriages, but many of them (late 20s) actually invested in houses and condos already because they were savvy enough to see it was a good market for buyers and already had their down payments squirreled away. The other strategy they went for was the low/moderate income programs available in Boston and Cambridge. So they have been building equity for the last few years while we are just catching up. I'm not saying massive loans are justifiable, but who says we all want to move to Lexington and Belmont? The younger home buyers I know are going to Malden, Quincy, Natick, or gasp, staying in Boston, and they are lawyers, software engineers, pharmacists, accountants, and investment bankers. Some are about to start families and plan to stay put. Others see it as only a first home and a good investment. The whole lot of them probably can afford to move to Newton (and some have), but they choose not to because they know better that school district numbers aren't everything (because, gasp, a lot of them graduated from Boston Public Schools).
Anyway, I feel bad for the kids who enrolled in for-profit University of Phoenix in landscape design and are struggling to repay their debts. For-profit institutions are where the defaults are happening most and the government should consider not subsidizing the ineffective programs. But I wouldn't worry so much for the people who went to Ivy Leagues or tier 1 schools, especially if they are married or in a stable relationship with combined incomes, which will usually bring them up to the top 25% of national incomes. I always tell people to aim for the best school they can get into NOT because I am a snob, but I know these schools with big endowments and strong alumni networks like MIT/Caltech, the Ivy Leagues (e.g. Harvard, Princeton), or wealthy, small liberal arts (Amherst, Wellesley, Pomona) have generous financial aid packages that will help the families with low to moderate income actually leave school with little to reasonably moderate debt. I really don't understand why some people in this forum are so quick to dismiss a "prestige" school. Not everyone goes to MIT or Harvard or Pomona to become Classics and Theater majors (or what did one of the articles say? "hospitality services"??). They go into cutting edge programs in computer science, environmental studies, engineering, and international politics. They are not a bunch of white male preppies sitting around congratulating themselves on their silverspoons...
Last edited by sharencare; 02-12-2013 at 02:25 AM..
I think a serious conversation needs to be had by parents to their children about the value of their degrees and what they will be making come graduation.
College for me had been discussed, dissected, and really beaten to death since Freshman year of high school. My parents fitted the bill, but they took an active role on discussing my options, expenses, projected earnings, etc. Was I surprised when I went to college and saw the situations others were coming from.
So many students picking the wrong major at the wrong school. No career plans, no parental guidance, loans, loans, and more loans. Just in college, screwing around because it was what they thought they were supposed to do. Those are the ones I see now who have debt issues and unemployed. I have plenty of friends, and my wife included who got 0 parental help but graduated with little to no debt because of grants, loans, being an RA, and picking the school that was the best value, not just the best name.
Now this might seem harsh, but i have little to no sympathy for those who are strapped with debt. There are so many options out there to get a degree without paying full tuition to a private school. But the people described above are the ones the politicians will ultimately use my tax money to help.
Even if you have a six figure loan, you can consolidate your federal loans into Direct Loans and enrolled in the Income Based Repayment program. The IBR calculates your monthly loan repayment to be 10 percent of your income. You qualify to be part of this IBR program if your Standard Loan payment (basically, total loan amount divided by 120 payments or 10 years) is above the IBR alternative of 10% of monthly income (and they also consider your family size). If you are in public service or a non-profit, after 10 years all outstanding loans will be forgiven. If you are not in public service or a non-profit, after 25 years, your loan will be forgiven (though there needs to be more tweaks to the program). There's also other programs like income contingent, but IBR is the best, especially if you are in public service.
My husband and I are in the top 10% of national US household income (or top 20% in Boston area). Yet we still qualified for the IBR. Paying 10% of our monthly income is manageable. We both came from humble backgrounds and are used to living relatively frugally though are lives our hardly full of deprivation. In less than 10 years and by the time we have elementary school age kids, we will be student loan free. We are steadily adding to our down payment and our looking for our first home. We wished we had paid the tuition rates of the Baby Boomer generation, but we went to very good schools, and think the education was definitely the worthy investment.
I'm not trying to gloss over the struggles of newly graduated students and the Recession was very painful for our age group, but this thread is about how it will affect the Boston area housing market, yes? I have friends who are annoyed by the loans payments and have delayed marriages, but many of them (late 20s) actually invested in houses and condos already because they were savvy enough to see it was a good market for buyers and already had their down payments squirreled away. The other strategy they went for was the low/moderate income programs available in Boston and Cambridge. So they have been building equity for the last few years while we are just catching up. I'm not saying massive loans are justifiable, but who says we all want to move to Lexington and Belmont? The younger home buyers I know are going to Malden, Quincy, Natick, or gasp, staying in Boston, and they are lawyers, software engineers, pharmacists, accountants, and investment bankers. Some are about to start families and plan to stay put. Others see it as only a first home and a good investment. The whole lot of them probably can afford to move to Newton (and some have), but they choose not to because they know better that school district numbers aren't everything (because, gasp, a lot of them graduated from Boston Public Schools).
Anyway, I feel bad for the kids who enrolled in for-profit University of Phoenix in landscape design and are struggling to repay their debts. For-profit institutions are where the defaults are happening most and the government should consider not subsidizing the ineffective programs. But I wouldn't worry so much for the people who went to Ivy Leagues or tier 1 schools, especially if they are married or in a stable relationship with combined incomes, which will usually bring them up to the top 25% of national incomes. I always tell people to aim for the best school they can get into NOT because I am a snob, but I know these schools with big endowments and strong alumni networks like MIT/Caltech, the Ivy Leagues (e.g. Harvard, Princeton), or wealthy, small liberal arts (Amherst, Wellesley, Pomona) have generous financial aid packages that will help the families with low to moderate income actually leave school with little to reasonably moderate debt. I really don't understand why some people in this forum are so quick to dismiss a "prestige" school. Not everyone goes to MIT or Harvard or Pomona to become Classics and Theater majors (or what did one of the articles say? "hospitality services"??). They go into cutting edge programs in computer science, environmental studies, engineering, and international politics. They are not a bunch of white male preppies sitting around congratulating themselves on their silverspoons...
Mainly because of selectivity and a much lower probability of acceptance, then expected by each parent from a top school district.
I think a serious conversation needs to be had by parents to their children about the value of their degrees and what they will be making come graduation.
College for me had been discussed, dissected, and really beaten to death since Freshman year of high school. My parents fitted the bill, but they took an active role on discussing my options, expenses, projected earnings, etc. Was I surprised when I went to college and saw the situations others were coming from.
So many students picking the wrong major at the wrong school. No career plans, no parental guidance, loans, loans, and more loans. Just in college, screwing around because it was what they thought they were supposed to do. Those are the ones I see now who have debt issues and unemployed. I have plenty of friends, and my wife included who got 0 parental help but graduated with little to no debt because of grants, loans, being an RA, and picking the school that was the best value, not just the best name.
Now this might seem harsh, but i have little to no sympathy for those who are strapped with debt. There are so many options out there to get a degree without paying full tuition to a private school. But the people described above are the ones the politicians will ultimately use my tax money to help.
I agree with the bulk of this post.
I've actually had some goofy late night discussions while sitting around a fire with libations around this subject. We threw out the idea of education pricing based on expected earnings. Granted it is almost impossible to implement but it goes to the point of "Value" of that degree.
It seems silly to me that an English major who is most likely heading for a career in academics of some flavor would pay the same for that degree as an engineering student. When you think about the value of those two degrees and their earning potential 2-5 years from graduation, which one is worht more to most people?
I think the discussion about elite schools vs. everyone else is an interesting one. The schools that fall into the top 15-20% of a given line of study can potentially provide good return while costing a fortune for the reasons mentioned previously, strong alumni and hiring history etc. After those schools, it get murky.
I work for one of the largest companies in the country and for my team I hire mid level folks with 3-10 years of experience. After 3 years or post school, I really don't care where they went to school, at all frankly. It is all about what they have done since then. Now, at 37 years old, no one cares what school I went to, or my secondary education, it is all about my 17 years of a work experience and what I have done.
Sadly, if I had the loans these kids have today, I would still be paying them off.
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