As Default Rates on Borrowing for Higher Education Rise,Some Borrowers See No Way Out

[flyinbroke]

I honestly don't think people explore all options. In Dillon's case, she did not bother filing her paperwork in any of the years so she would not be eligible for financial aid. Laziness/pisspoor planning is not the majority though.

In many cases, the banks happily approve private "student loans" because the government sided with them making them no longer dischargeable. They are far easier to get for above and beyond the amount needed for tuition. Gov't loans look at the whole person, say "you can pay this much and here is the rest..." and send it to the university. So the privates are easy money, no real questions asked.

There are several new initiatives to make paying back federals easier, but with many that go the private loan route, there is no option. The initiatives do not cover them. And people get screwed as a result.

MSbklawyer, depends on the engineering. I interviewed with an airline and a nuke plant. Neither will be hiring from outside our borders. However, you are correct about a lot of them...nurses are being imported in so hospitals don't have to pay as much. "Engineers" are phone based and can't speak English (try getting tech support on a computer for proof.) Scary world we are in...

[jdcat]

I'm 37 years old and have been toying with the idea of going back to school for a couple of years now. I have no formal training in any field, unless customer service counts, so my options are very limited as far as work goes. I would have to borrow to pay for school.

This forum and this thread have been very eye opening for me. Common sense is telling me that working for minimum wage and working my way up in whatever company I end up working for is the smartest thing to do.

Working for minimum wage isn't sounding to bad. As a matter of fact it's sounding pretty damn good.

[MSbklawyer]

I'm 37 years old and have been toying with the idea of going back to school for a couple of years now. I have no formal training in any field, unless customer service counts, so my options are very limited as far as work goes. I would have to borrow to pay for school.

This forum and this thread have been very eye opening for me. Common sense is telling me that working for minimum wage and working my way up in whatever company I end up working for is the smartest thing to do.

Working for minimum wage isn't sounding to bad. As a matter of fact it's sounding pretty damn good.

You're 37 years old. What have you done up to this point? Maybe you could build on that instead of starting over completely.

[flyinbroke]

I would never dissuade someone fron getting a degree and if you are at a company it may be necessary to have to move up through the ranks. I would definitely try for as many freebies as possible; qualify for grants like Pell that don't need to be paid back, see what your employer offers for education. Free money is good money. Use loans to make up the difference...just don't live on them. And stay away from private loans. You want to file for financial aid and use gov't loans. In a pinch, these can be deferred (and interest rates are not as bad).

With loans, less is more.

[Penny Less]

My sister is in the same boat (but on track with her debt - no defaults). She focused so hard on her goals in school - and met them - that the loans were just considered part of the package.

She succeeded in every way possible but that one - despite planning, grants, living well below her means (my family grew up poor so this was easier for us), etc, it must feel like a failure to have such high payments due at the end of the month.

The large loans worked for her - her quality of life is much higher then a minimum wage job - and her long term outlook is still good.

So don't knock student debt entirely...I agree that it is horrific when it does not work out and the terms can be awful but at least it's available!

[Pizza]

Chipping in my 2 cents:

Purchasing higher education (loan or not) is placing bets on a brighter future. So is taking out credit card loans, home loans, business loans, stocks, etc. See any major difference? I don't. Not anymore. "Get a degree and you'll go places" is so outdated it's unbelievable.

In the past, the uneducated would just toss out "you better go to school," but not much emphasis was placed on why or which degree plan to pursue. Even as recently as the 90s with the IT boom, students were misguided as far as college was concerned.

Education wasn't intended to be called a magical piece of paper that lands you a job, but it was given these attributes by our parents witnessing others with an education outdoing them in life. Those of you who say that the government guarantee is the only reason the loans are financed are absolutely right - without such a guarantee many degree plans would be scrapped because financial institutions would not allow enough students loans to keep classes filled.

We have to accept that education was meant to EDUCATE, not provide, if we want to utilize college to our advantage. There are many concepts, even at the inexpensive 2-year degree level, which can help a high school graduate decide their career paths. A 4-year degree must be specialized in a domestic, face-to-face career in order to land a high-paying job, and the poor economy has underlined this fact.

But the past is the past. Now that most students are understanding how college works in the real world, perhaps there should be some forgiveness for those who followed the crowd before and got burned. Instead of labeling student debt as "party money" (because it's SO much different than putting a bar tab on a credit card, right?) we should, collectively, find solutions rather than placing blame.

[OhioFiler]

Chipping in my 2 cents:

Purchasing higher education (loan or not) is placing bets on a brighter future. So is taking out credit card loans, home loans, business loans, stocks, etc. See any major difference? I don't. Not anymore. "Get a degree and you'll go places" is so outdated it's unbelievable.

In the past, the uneducated would just toss out "you better go to school," but not much emphasis was placed on why or which degree plan to pursue. Even as recently as the 90s with the IT boom, students were misguided as far as college was concerned.

Education wasn't intended to be called a magical piece of paper that lands you a job, but it was given these attributes by our parents witnessing others with an education outdoing them in life. Those of you who say that the government guarantee is the only reason the loans are financed are absolutely right - without such a guarantee many degree plans would be scrapped because financial institutions would not allow enough students loans to keep classes filled.

We have to accept that education was meant to EDUCATE, not provide, if we want to utilize college to our advantage. There are many concepts, even at the inexpensive 2-year degree level, which can help a high school graduate decide their career paths. A 4-year degree must be specialized in a domestic, face-to-face career in order to land a high-paying job, and the poor economy has underlined this fact.

But the past is the past. Now that most students are understanding how college works in the real world, perhaps there should be some forgiveness for those who followed the crowd before and got burned. Instead of labeling student debt as "party money" (because it's SO much different than putting a bar tab on a credit card, right?) we should, collectively, find solutions rather than placing blame.

The government intervention in the education industry is also the reason prices for education has skyrocketed well beyond the inflation rate. Once again the problems associated with socialist economics is highlighted. If schools were forced to compete in the free market for tuition dollars a lot more people could afford to attend as prices would be 1/2 what they are today.

[Pizza]

The government intervention in the education industry is also the reason prices for education has skyrocketed well beyond the inflation rate.

Which intervention are you referring to exactly? Government-funded community colleges are still very cheap in comparison to private universities.

[backtoschool]

The government intervention in the education industry is also the reason prices for education has skyrocketed well beyond the inflation rate. Once again the problems associated with socialist economics is highlighted. If schools were forced to compete in the free market for tuition dollars a lot more people could afford to attend as prices would be 1/2 what they are today.

Actually it is not government intervention that has caused the price of higher education to skyrocket. Inflation, skyrocketing insurance costs, increased technology costs, private scholarship and grant costs, and most of all, exponentially higher demand, are the reasons that higher education prices have skyrocketed.

Also, the government is contributing less to higher education, not more, and schools are making up the prices by raising tuition.

[OhioFiler]

Actually it is not government intervention that has caused the price of higher education to skyrocket. Inflation, skyrocketing insurance costs, increased technology costs, private scholarship and grant costs, and most of all, exponentially higher demand, are the reasons that higher education prices have skyrocketed.

Also, the government is contributing less to higher education, not more, and schools are making up the prices by raising tuition.

By making government backed student loans available to virtually anyone the government intervened in the education market. This created a falsely high demand or as you refer to it "exponentially higher demand".

I speak with confidence that had the government not made it so easy to get into school via these loans the market alone would have held the cost of schooling in check.

I'll give you the other items you list as causes but insignificant in comparison.