Today's Wall Street Journal ran another bleak piece about student loans spiraling out of control. I've seen the same article for years, only the numbers change (they increase, obviously).
This morning's dispatch covered PLUS loans, which allow parents to borrow the entire cost of attendance at a given college, with very "light" underwriting, to say the least.
I won't lie, the stats are pretty depressing: 1.6 Bill in debt outstanding, and growing.
Defaults, credit issues and no relief in sight from Congress, apparently.
And, sadly. zero incentives for colleges to cut their own costs, because they're getting paid from loan proceeds that gush into their coffers from eager parents, early and often.
But the WSJ leaves out an angle that's important to discuss: borrowers' decisions to take on all this debt.
The piece mentioned one guy who graduated Georgetown Law, he owes $318,000 and works in a homeless shelter. I'm pretty sure he's not making millions.
Then there's a mom who owes $182,000 for sending her daughter to Howard University.
And a couple who racked up gargantuan $778,000, but currently earn less than $100,000. My question:
What were they thinking?
(Assuming they were actually thinking, which is highly questionable.)
Don't get me wrong, I understand the pressure to go to a "Dream College" and the ridiculous ease of borrowing, both professionally as a college advisor for more than 20 years...
....and personally, as a student who amassed more than 100K between college and law school, despite bartending and working to "put myself through college" (hah) all the way.
I wish I had gotten better advice from my parents about the cons of borrowing, and I was young and less worldly at the time, but I'm the one who made those choices. Ditto for the individuals profiled in today's paper.
And, seriously, $778,000?
Or in the case of the Howard University mom, a professional who earns six figures. who was quoted as saying that she "felt like there was no other option."
Let's deal with facts, not feelings. And use some common sense instead of getting caught up in the moment or blindly doing what you think you're supposed to do, without questioning it.
Nobody is FORCING you into a calamitous financial decision to attend a college with an unproven return on investment. There are PLENTY of other options.
The best defense against overpriced colleges is taking it upon yourself to get smart, and learn how to play the financial aid game, including which colleges are likely to "stiff' you for aid, as well as the schools that will be generous.
It matters where you apply -- most colleges just don't have the budget to dole out full rides, but then again, the average tuition discount at private colleges is a whopping 52.6%. Average!
Granted, this information isn't designed to be easy to find because colleges don't have an incentive to help you pay them less (duh).
However, there ARE a ton of resources out there, including the net price calculators on each college's website that, albeit flawed, give you SOME idea of what that college will actually cost you, net, out of pocket. They're a good start, and take approximately 6 seconds to search up on the Googs.
Or you can avoid thinking about this stuff, and wake up a few year later owing three quarters of a mill, and wonder what happened.
And who to blame.
There's plenty of blame to go round, but don't overlook the man/woman in the mirror.
-Andy "Hasn't Been Quoted in the WSJ for a While" Lockwood
P.S. We offer a cost-effective way to navigate he murky waters of financial aid and college admissions: it's a "DIY Plus" group coaching membership we call the Lockwood Inner Circle.
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