AuthorTopic: 🎓 Subprime Student Loans  (Read 19644 times)

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🎓 How I learned to love my $95,000 student debt
« Reply #180 on: August 15, 2019, 09:48:06 AM »

How I learned to love my $95,000 student debt
Life and style

About 45 million Americans have student loan debt, and it can be crushing – but I don’t regret the program I paid thousands a semester for

J Oliver Conroy

Thu 15 Aug 2019 05.00 EDT
Last modified on Thu 15 Aug 2019 11.35 EDT

‘I probably would have paid off my undergraduate debt fairly easily – if I hadn’t gone on to a master’s degree.’ Photograph: Seth Wenig/AP

If you think about your student loans in the usual manner – “crushing”, “demoralizing”, a “financial tragedy of grotesque proportions” – you would be correct, but that line of thinking will kill you.

Instead, try picturing your debt as an amiable but hungry ghost, rooting around in your refrigerator at night, using up the milk and cereal, falling asleep on your couch with an empty pint of ice cream clutched in its incorporeal fingers. Since I began thinking of my debt as a chubby, spectral sidekick my mood has improved immeasurably. I can’t recommend it enough.
Q&A: what you need to know about America's student debt crisis
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About 45 million Americans have student debt – one in three adults under 30, according to Pew. The typical debt, according to data from the Federal Reserve, is between $20,000 and $25,000.

I have always strived to be above average, however, and it gives me considerable pride to report that I owe more than $95,000. (The exact number changes frequently – usually upward; as of publication it is $96,215.12.)

Less than a fifth of my debt is from my undergraduate degree, in part because I chose to attend a university in Canada. I had to pay international tuition fees, but school was still cheaper than at comparable US universities.

My parents paid most of my undergraduate tuition and living expenses, for which I’m grateful. I offset my expenses with various summer jobs and side gigs – night watchman, janitor, telemarketer, fry cook, bar-back, paid psychological test subject – and by the time-honored tradition of buying a textbook, speed-reading the important parts and returning it while the receipt was still warm.

    It became easier to worry about the money later and just treat my loans as a credit card with better rates

In my last year of school I took my first loan, less than $15,000, because my parents were starting to get tapped out. I probably would have paid off my undergraduate debt fairly easily – if I hadn’t gone on to get a master’s degree.

In 2016, exhausted after several years working in public relations and concerned that my aspiration to be the next Truman Capote kept getting deferred, I answered the siren call of graduate journalism school.

Journalism school is a strange institution – “the only master’s degree you do to make less money”, as someone once put it to me. The media industry has been in economic decline for much of living memory; journalism students are like Polish cavalry officers with horses and sabers, riding bravely into a hail of German machine gunfire. For this privilege they pay $10,000 to $20,000 a semester (or $30,000 at Columbia), not including living expenses.

I don’t regret it. The program was excellent and it undoubtedly made me a better writer and reporter. A scholarship covered a good chunk of the tuition, but I was living in New York, one of the most expensive places in the US, and attending NYU, one of the most expensive universities in America. Fees and bills accumulated at an alarming rate.

When I started grad school I set myself limits – “I will only take a certain amount in loans and force myself to make that number work” – that were, frankly, unrealistic. I soon exhausted my initial loans, so I took another one – a little one, just a stopgap – that quickly became another stopgap and another.

After a while, it became easier to worry about the money later and just treat my loans as a credit card with better rates.

After you finish a graduate degree, there’s a “grace period” before you have to start paying your debt, but interest is already compounding, which somewhat defeats the point. I wanted to get a running start, so I paid about $3,500 before the grace period ended. I felt good.

Within a few months the balance was the same as when I started. Soon I felt like Sisyphus, wheeling the rock uphill everyday for it to roll back down every night.

For a while I would lie in bed every night and see, emblazoned in the ceiling, the number $95,000. The anxiety made sleep impossible. Instead of counting sheep I would calculate $95,000 in, say, boxes of mac and cheese (76,000 of Kraft; 146,000 off-brand), or canned tuna, or Porsches. (This is an excellent exercise in Marxist class consciousness.)

Debt anxiety infected everything. I began to resent social invitations, which invariably involve spending money, and retreated into a self-imposed hermitage. In retrospect I don’t think this is a healthy attitude – if I were struck down tomorrow I wouldn’t necessarily want my last accomplishment to be “skipped his best friend’s birthday party to save on the subway fare” – but it is true that keeping up appearances puts a strain on the average millennial.

    Instead of counting sheep I would calculate $95,000 in, say, boxes of mac and cheese, or canned tuna, or Porsches

At one point I auditioned for Paid Off, a gameshow that pays contestants’ student debt if they answer quiz questions correctly. If I had gotten on the show I probably could have wiped out my entire debt in one go – the questions are easy and the host is openly rooting for the contestants to win. I wasn’t selected, though. Reality show auditions require bubbly personalities and I generally struggle to emote.

I have public, federal loans - a good thing, in the sense that federal loans charge lower interest than private ones and the feds are easier to work with if you’re having trouble. I’m currently on a repayment plan tied to income; I’m only required to pay $160 or so a month.

On months I’m doing well I pay more, though I sometimes wonder if there’s a point. Given a choice between adding $500 to my emergency savings or dropping it into a potentially bottomless pit, I choose the first. I have the rest of my time on Earth to pay my debt but only 30 days to pay rent.

A friend of mine is an economist who studies student debt. According to his research, people with more debt actually tend to do better paying it off. Someone with $80,000 in debt from a prestigious university has high earning potential; the real victim, he argues, is the person who got $15,000 into debt at a predatory for-profit college, didn’t finish and is now struggling to make their payments while working at McDonald’s. This is probably true, though not much comfort to a schlemiel with almost six figures.

And so I have learned to think of my debt fondly. I believe in tying oneself to a course of action, and having the GDP of a European microstate in student debt is a great way to do that. Now I have to succeed as a writer; failure isn’t an option.

I don’t live as frugally as I could, in part because I’m too busy. I’m a freelance journalist – a gun for hire – and at any given time I’m reporting or writing two to three stories and working on pitches for a dozen others. I view time and money as a tradeoff. I don’t want to be penny rich and pound foolish. I order takeout sometimes. I take taxis if the occasion calls. I get my shoes repaired within five days of a hole appearing.

These days I don’t think about my debt as much as you might expect – I simply don’t have time. Of course, more than once in my life I have wanted to grab some miserly editor by the lapels and scream: “I’ve got cats to feed, goddammit!” But that would be bad for the editorial relationship. I can’t afford a cat, anyway.
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🎓 What Should I Do With My Crazy Student Loans?
« Reply #181 on: August 19, 2019, 01:31:30 AM »

What Should I Do With My Crazy Student Loans?
Student loan debt is some of the toughest to deal with. Here's a path through it.
Chuck Saletta
Aug 18, 2019 at 4:15PM

Q. I've recently gotten engaged to the woman of my dreams, but I'm worried about starting off our life together in serious debt. It took me a while to figure out what to do for a career, and as a result of switching programs a few times, I have student loans that are far larger than both our salaries combined. Is there anything I can do about that?

Congratulations on your upcoming wedding. I hope you and your bride to be have a lifetime of happiness ahead of you. That said, be sure that both you and she enter your marriage with your eyes wide open about the state of both your finances. The more honest and forthright you both are with each other before your marriage about money, the better it will be for you both during your marriage.

Both you and your fiancee should share with each other what you're bringing into the marriage financially. The good, the bad, and -- from the sound of your student loan situation -- even the downright ugly. Do it now, before you're married. You'd much rather find out now before you're married whether money troubles could tear you apart than to find out later, when it's much more complicated and costly to split apart.
College graduation cap sitting on a bunch of cash

Image source: Getty Images.
Your biggest advantage as newlyweds

Once you share that news with each other, the two of you should start making a plan for how you will address your finances once you're hitched. You didn't mention kids, so I'll assume neither of you are bringing children into the marriage. If that's the case, once you're married, you'll be in the enviable position of being DINKs -- dual income, no kids. If so, you need to recognize that you may very well be nearing the highest point in your life when it comes to available income between the two of you.

After all, should you have children, chances are that either one or both of you will either cut back hours to care for your kids, or a significant part of your joint income will be redirected toward childcare costs. Either way, it means a high likelihood of less available cash if children enter the picture. That means right now may very well be the best time in your life to get aggressive when it comes to tackling your student loan debt.
Why you need to deal with your student loan debt
Man looking at wallet as money flies away

Image source: Getty Images.

In general, loans for us mere mortals come in one of two forms: "secured" or "high interest." If the loan is secured, the lender has the right to take back what you bought with the money should you not make your payments on time and in full. That allows the lender to charge lower interest to take on the risk of lending you the money. Loans that aren't secured, like credit cards, generally charge higher interest, because they can't claw back your assets should you not pay.

It's impossible to take back an education, but student loans are generally available at substantially lower interest rates than unsecured loans. The reason they're available so much more cheaply is that it's incredibly difficult to discharge student loans without paying them off -- even in most bankruptcies. Indeed, even your Social Security benefits can be garnished to pay back student loan debt, making it a debt you'll very likely either need to pay off or take with you to the grave.
How to handle your student loan (and other) debt

The most powerful way to get out of debt is a technique known as the snowball method. It gets its name because, like a snowball rolling down a snow-covered hill, its impact gets bigger the further along the path it gets.

To use the snowball method, line up all your debts in order from the highest interest rate one to the lowest. On all your debts but the highest-interest one, pay the minimum. On that highest-interest one, pay every penny above and beyond the minimum that you can. Once that loan is completely paid off, add every penny you'd been paying toward it to paying off what is now your new highest-interest loan. Keep up that snowball until all your debts are paid off.

Note that if you have a low-interest-rate loan, such as a sub-4% fixed-rate mortgage, on which you can easily afford the payment, you might be OK to keep that loan out of the snowball. Instead, just paying that loan as scheduled after finishing the rest of your snowball would let you start working on your other financial priorities that much more quickly.

If your bride-to-be is also bringing debt into the marriage, you and she should work separate snowballs on your own debts before you get married and then combine efforts once you're married. Here's why: Most spouses are able to give each other gifts of unlimited sizes without tax implications, but if you start paying off each other's debts before you're hitched, it could trigger gift taxes.

If she isn't bringing debt into the marriage, she may want to consider saving up a chunk of cash now that the two of you can use to help accelerate your snowball payment after you tie the knot.

As for consolidating your student loans -- only consider doing that if doing so will significantly lower your interest rate and there aren't big fees involved. Otherwise, all you're really doing by consolidating is pushing deck chairs around, rather than making real progress in eliminating the debt.
Figure out ways to get out of debt more quickly
Couple working on finances and debt repayment together

Image source: Getty Images.

With your student loan debt higher than both your salaries combined, it will probably take a few years to get out from under it, but it can be done. To speed things up, you have three tools at your disposal: earning more income, cutting back costs, or selling off things you no longer need. On a somewhat related note, while it may still be considered a bit tacky to ask for money as a wedding gift, chances are decent that you'll get some cash anyway. Any gift cash you receive can go toward your debt snowball.

Getting married gives you a great opportunity to assess what you already have -- and how much of it you really need. As you're combining households and lives, figure out if there are things you each have that you only need one of as a married couple. The extra one could be sold online or at a garage sale, to help free up some cash to put toward the debt repayment.

If you're moving in together for the first time with your marriage, keep an eye toward starting off frugally. Safety comes first, of course, but there's no need to load down your life with the costs of a fancier lifestyle just because your combined income is higher than either of you made individually. Can you make do in a one-bedroom apartment, for instance, instead of feeling obligated to buy a house just because it feels like the "married adult" thing to do?

From an income perspective, can either or both of you pick up some extra shifts at work, or do you have skills that you can leverage in a side hustle of some sort? Every dime you earn from your extra efforts can be put toward your debt snowball and getting yourself out of debt that much more quickly.
It'll be worth it in the end

While there's no magic wand when it comes to paying off your student loans, working your plan aggressively together will go a long way toward assuring your life together starts off on the right foot. With the shared goal and shared determination, you'll probably find the bond between yourselves growing that much closer.

Once those debt service costs are finally vanquished, you'll certainly find the relief that comes from the improved financial flexibility of no longer having them hanging over your head. Should your family be expanding with children, you will certainly value that flexibility as you juggle the higher costs and/or lower income that will bring. And should your family always remain the two of you, just think of how much more you can enjoy your time together with the extra cash you'll have available.

The $16,728 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Chuck Saletta

Chuck Saletta is a Motley Fool contributor. His investing style has been inspired by Benjamin Graham's Value Investing strategy.
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🎓 DeVos tightens rules for forgiving student loans
« Reply #182 on: August 31, 2019, 12:04:37 AM »

DeVos tightens rules for forgiving student loans


08/30/2019 08:24 PM EDT

Zach Gibson/Getty Images

Education Secretary Betsy DeVos on Friday finalized rules that make it more difficult for federal student loan borrowers to cancel their debt on the grounds that their college defrauded them, scaling back an Obama-era policy aimed at abuses by for-profit colleges.

The rules, which the Trump administration weighed for more than a year, set a more stringent standard for when the Education Department will wipe out the debt of borrowers who claim they were misled or deceived by their respective colleges.

The overhaul of the rules — called “borrower defense to repayment” — is a response to conservative criticism that the current federal standards, set by the Obama administration, are too lenient and expensive for taxpayers. The Obama-era rules were written following the collapse of for-profit college company Corinthian Colleges in 2015, when tens of thousands of former students flooded the Education Department with requests for loan forgiveness.

DeVos previously said those standards allowed students to raise their hands and receive “free money” from the government. For-profit colleges have also long criticized the rules as unfair.

In an announcement about the new rules, DeVos said on Friday that fraud in higher education “will not be tolerated” by the Trump administration. The rules, she said, include “carefully crafted reforms that hold colleges and universities accountable and treat students and taxpayers fairly.”

The tighter standards will reduce the amount of loan forgiveness provided to students by more than $500 million each year compared to the amount under the current Obama-era policies, the department estimated. The entire package of regulations — which also curtails loan discharges for students whose schools suddenly close — is projected to save taxpayers more than $11 billion over the next decade.
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The final policy, which takes effect July 1, 2020, sets a more stringent standard for loan forgiveness than exists under the Obama-era policy. But it’s not as restrictive as the one DeVos initially proposed last year.

The initial Trump administration plan would have required borrowers to prove that their college intentionally misled them in order for them to have their loans forgiven. It considered forcing student loan borrowers to wait until they had defaulted on their debt before allowing them to file a fraud claim, an obstacle that would have threatened borrowers’ credit history and could have jeopardized security clearances for military servicemembers.

“We made substantive changes to our proposed rule based” on public input, DeVos said.

But those changes did not go far enough for consumer advocates and Democrats, who said Friday that the Trump administration was gutting important protections for students defrauded by their college.

“This rule is another Trump-DeVos giveaway to their for-profit college cronies at the expense of defrauded student borrowers,” said Sen. Dick Durbin (D-Ill.), the No. 2 Democrat in the Senate.

Rep. Bobby Scott (D-Va.), chairman of the House education committee, said that "the Trump administration is sending an alarming message: Schools can cheat [their] student borrowers and still reap the rewards of federal student aid."

Harvard Law School’s Project on Predatory Student Lending — whose successful lawsuit last year forced DeVos to implement the Obama-era rules — vowed on Friday to bring a new legal challenge “in the coming days” to stop the latest regulations from taking effect.

“If Betsy DeVos won’t do her job and stand up for students, then we will fill that void,” the organization’s legal director, Eileen Connor, said in a statement. “That is why we will be filing a suit challenge these harmful new regulations that give a green light to for-profit colleges to continue scamming students.”

The new rules narrow the type of misconduct by colleges that could trigger loan forgiveness and also require that borrowers provide more extensive documentation about the financial harm they faced. Borrowers will also have to file their claims within three years of leaving school.

In addition, the final rule allows colleges to resume using mandatory arbitration agreements in their enrollment agreements with students, reversing an Obama-era ban on the practice, which was common at for-profit schools.

DeVos first proposed a rewrite of the "borrower defense" rules more than a year ago. Since then, she's been forced to implement the Obama administration's version of the rules after a federal court last fall struck down the Trump administration's efforts to delay them.

The Trump administration separately is facing criticism and a proposed class-action lawsuit over the backlog of existing "borrower defense" claims, which now exceeds 170,000 applications. The Education Department hasn't approved or denied any claims in more than a year.
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🎓 Student Debt Is Transforming the American Family
« Reply #183 on: September 05, 2019, 04:25:04 AM »

September 9, 2019 Issue
Student Debt Is Transforming the American Family
The cost of a degree—and the “open future” that supposedly comes with it—has become one of the defining forces of middle-class life.

By Hua Hsu
September 2, 2019

The challenge of paying for college binds parents and children together in a saga of ever-growing sacrifice.
Illustration by Till Lauer

In April, 2011, the anthropologist Caitlin Zaloom was sitting in her office at New York University when one of her most promising students appeared at her door, crying. Kimberly had dreamed of life in New York City since she was eight years old. Growing up in a middle-class family just outside Philadelphia, she was regaled with stories about her mother’s short, glamorous-sounding stint waitressing in Times Square. Kimberly’s version of the big-city fantasy was also shaped by reruns of “Felicity,” a late-nineties drama set at a lightly fictionalized version of N.Y.U. Her dream school did not disappoint. Kimberly was an intrepid, committed student, studying the effects of globalization on urban space; she worked with street venders and saw their struggles to make ends meet. College opened up a new world to her. But her family had sacrificed to help finance her education, and she had taken out considerable loans. She had looked forward to putting her degree to good use, while chipping away at the debt behind it. But the job she was offered involved outsourcing labor to foreign contractors—exacerbating the inequalities she hoped a future career might help rectify.

Zaloom felt that there was something representative about Kimberly’s story, as more students find themselves struggling with the consequences of college debt. She wanted to learn about the trajectory that had brought Kimberly to her office that day. She visited her at home and listened as her mother, June, talked about how she, too, had fantasized about a life in New York. But June’s family had needed her back home, in Pennsylvania, where she met Kimberly’s father. They eventually divorced, but they stayed in the same town, raising Kimberly together. June had wanted her daughter to have the experiences she had missed out on. When Kimberly was accepted at N.Y.U., her father urged her to attend a more affordable school in state. June implored him to change his mind, and he eventually agreed. The decision stretched their finances, but June told her daughter, “You’ve got to go.”

It’s easy to dismiss quandaries like Kimberly’s as the stuff of youth, when every question seems freighted with filmic significance. There’s a luxury to putting off practical concerns. But her story gave Zaloom insight into the evolving role of college debt in contemporary American life. Kimberly’s predicament was put in motion when she first set her sights on attending a college where, today, the annual tuition is more than fifty thousand dollars, in one of the most expensive cities in the world. That her parents risked their financial stability to nurture this dream seemed meaningful. Previous generations might have pushed a college-bound child to fend for herself; Kimberly’s parents prized notions of “potential” and “promise.” Shielding her from the consequences of debt was an expression of love, and of their own forward-looking class identity.

Since 2012, Zaloom has spent a lot of time with families like Kimberly’s. They all fall into America’s middle class—an amorphous category, defined more by sensibility or aspirational identity than by a strict income threshold. (Households with an annual income of anywhere from forty thousand dollars to a quarter of a million dollars view themselves as middle class.) In “Indebted: How Families Make College Work at Any Cost” (Princeton), Zaloom considers how the challenge of paying for college has become one of the organizing forces of middle-class family life. She and her team conducted interviews with a hundred and sixty families across the country, all of whom make too much to qualify for Pell Grants (reserved for households that earn below fifty thousand dollars) but too little to pay for tuition outright. These families are committed to providing their children with an “open future,” in which passions can be pursued. They have done all the things you’re supposed to, like investing and saving, and not racking up too much debt. Some parents are almost neurotically responsible, passing down a sense of penny-pinching thrift as though it were an heirloom; others prize idealism, encouraging their children to follow their dreams. What actually unites them, from a military family in Florida to a dual-Ph.D. household in Michigan, is that the children are part of a generation where debt—the financial and psychological state of being indebted—will shadow them for much of their adult lives.

A great deal has changed since Kimberly’s parents attended college. From the late nineteen-eighties to the present, college tuition has increased at a rate four times that of inflation, and eight times that of household income. It has been estimated that forty-five million people in the United States hold educational debt totalling roughly $1.5 trillion—more than what Americans owe on their credit cards and auto loans combined. Some fear that the student-debt “bubble” will be the next to burst. Wide-scale student-debt forgiveness no longer seems radical. Meanwhile, skeptics question the very purpose of college and its degree system. Maybe what pundits dismiss as the impulsive rage of young college students is actually an expression of powerlessness, as they anticipate a future defined by indebtedness.

Middle-class families might not seem like the most sympathetic characters when we’re discussing the college-finance conundrum. Poor students, working-class students, and students of color face more pronounced disadvantages, from the difficulty of navigating financial-aid applications and loan packages to the lack of a safety net. But part of Zaloom’s fascination with middle-class families is the larger cultural assumption that they ought to be able to afford higher education. A study conducted in the late nineteen-eighties by Elizabeth Warren, Teresa Sullivan, and Jay Westbrook illuminated the precarity of middle-class life. They found that the Americans filing for bankruptcy rarely lacked education or spent recklessly. Rather, they were often college-educated couples who were unable to recover from random crises along the way, like emergency medical bills.

These days, paying for college poses another potential for crisis. The families in “Indebted” are thoughtful and restrained, like the generically respectable characters conjured during a Presidential debate. Zaloom follows them as they contemplate savings plans, apply for financial aid, and then strategize about how to cover the difference. Parents and children alike talk about how educational debt hangs over their futures, impinging on both daily choices and long-term ambitions. In the eighties, more than half of American twentysomethings were financially independent. In the past decade, nearly seventy per cent of young adults in their twenties have received money from their parents. The risk is collective, and the consequences are shared across generations. At times, “Indebted” reads like an ethnography of a dwindling way of life, an elegy for families who still abide by the fantasy that thrift and hard work will be enough to secure the American Dream.

If you are a so-called responsible parent, you might begin stashing away money for college as soon as your child is born. You may want to take advantage of a 529 education-savings plan, a government-administered investment tool that provides tax relief to people who set money aside for a child’s educational expenses. Some states even provide a 529 option to prepay college tuition at today’s rates. Zaloom writes of Patricia, a schoolteacher in Florida who managed to cover in-state fees for both of her children after five years of working and saving. Patricia resented the fact that preparing for her children’s future left her with so little time and energy to be with them in the present. Her daughter, Maya, was academically gifted and excelled in college. Then, when Patricia’s son, Zachary, was a high-school senior, her husband walked out on the family, leaving them four hundred thousand dollars in debt. Patricia spent her retirement savings to keep them afloat. Zachary had difficulty coping, and he had never shown a strong inclination toward college, but the money was already earmarked. Zaloom writes, “Her investment in his tuition was an expression of faith in him.” He struggled in college and never graduated. “If I’d had a crystal ball,” Patricia says, “I wouldn’t have gotten in the program for Zachary.” In Zaloom’s view, Patricia’s decisions all point to a core faith that college is fundamental to middle-class identity.

Throughout “Indebted,” parents and children lament the feeling of burdening one another. Parents fear that their financial decisions might limit their children’s potential, even when those children are still in diapers. It’s a fear, Zaloom argues, that loan companies often exploit. “You couldn’t not hear about it,” Patricia recalled of the commercials for Florida’s college-savings account.

The existence of 529 plans suggests that paying for college is just a matter of saving a bit of each monthly paycheck. And yet Patricia is an outlier. Only three per cent of Americans invest in a 529 account or the equivalent, and they have family assets that are, on average, twenty-five times those of the median household. Zaloom disputes the premise that “planning leads to financial stability.” Student debt didn’t become a problem because families refused to save. “In truth, it’s the other way around,” she writes. “Planning requires stability in a family’s fortunes, a stability in both family life and their finances that is uncommon for middle-class families today.”

As an anthropologist, Zaloom is particularly attuned to how institutions teach us to see ourselves. The Free Application for Student Aid (FAFSA) form, required of all students seeking assistance, consists of a hundred or so questions detailing the financial history of the applicant’s family. Zaloom hears about the difficulty of collecting this information, especially when parents are estranged, or unwilling to help. And the form presumes a lot about how the “family unit” works. One informational graphic poses the question “Who’s my parent when I fill out the FAFSA?”

Our failure to adhere to these official scripts becomes a sign of personal inadequacy. Zaloom argues that the financial-aid process encourages families to “maintain silence about the challenges they face in sending their children to college.” Sometimes, during her interviews, parents would ask Zaloom not to disclose the details of their finances to their children. (Elizabeth Warren has spoken about how she learned that her family was “poor” when she was filling out her financial-aid forms.) At times, the families sounded as though they were in denial. One mother wanted to shield her daughter from reckoning with the family’s tenuous financial health as they put her through college: “It’s not really part of a conversation that [my daughter] needs to be in.” That conversation can’t always be avoided, though. As Kimberly’s parents hashed out her prospects, there was, she recalled, “this weird moment of them feeling like my potential was going to be limited by their financial decisions and choices.”

A few generations ago, going to college didn’t involve so many forms, and seldom led to existential questions about the nature of familial ties. If you were a white male of means, it wasn’t all that difficult to attend the college of your choice. If you were not, then college probably wasn’t in your future. In the early years of the twentieth century, college graduates were rare: only about two to three per cent of adults earned a degree. Things changed with the G.I. Bill, which was designed to preëmpt the veterans’-rights marches that came after the First World War. The college population grew by nearly half a million, and campuses quickly expanded their facilities and faculties to keep pace. Still more Americans were able to go to college in the sixties, thanks to the National Defense Education Act of 1958, which offered financial assistance to students pursuing studies that could benefit the national interest, and the Higher Education Act of 1965, which provided federal support to poor and working-class students, regardless of what they wanted to study. Female enrollment levels soared, too.

But the specific ways in which the federal government helped make college affordable changed—from tuition subsidies and grants to an increasingly complicated network of federal and private loans. Starting in the sixties, Americans became more comfortable with the idea of taking on personal debt, owing in part to the rise of personal credit. Besides, for a long time, a college degree was a sound investment. Paying for it was just a transitional nuisance on the way to middle-class adulthood. In 1972, President Nixon created Sallie Mae, a partnership between the government and private lenders designed to help students. There was broad federal support to deliver more students to college.

When Ronald Reagan took office, in 1981, some people feared that his faith in free markets would mean the end of federal assistance programs and research support. But colleges continued to expand, partly as a result of growing applicant pools. New loan programs targeted middle-class families. The advent of the U.S. News & World Report college rankings, in 1983, and the rise of the test-prep industry helped create a new culture of competitive credentialism. Tuition had come to increase at nearly twice the rate of inflation.
“You know that if we’re late they’re going to blame me.”Cartoon by Elisabeth McNair

In 1979, the sociologist Randall Collins published “The Credential Society,” which was recently reissued by Columbia. College had, in Collins’s view, become little more than an expensive and inefficient system of accreditation. The problem was that those with power were the ones determining how much credentialling was sufficient, making young people feel that they needed a degree, no matter the cost. Collins’s insights are especially prescient, as the scholar Tressie McMillan Cottom notes in the new edition’s foreword, when considering how for-profit colleges have essentially preyed on the insecurities—and leeched off the loans and subsidies—of poor and working-class students. This “credential inflation” wasn’t driven by innovation or technical need. It was a product of social pressures. A college degree, once a guarantor of economic mobility, had become what a high-school degree symbolized to previous generations, “the prerequisite of mere respectability.”

For Zaloom’s families, the spectre of debt impedes the children’s transition toward self-sufficiency. One of her subjects is Clarice, an N.Y.U. undergraduate who grew up near Buffalo. Clarice’s mother, a social worker, and her stepfather, a retired military man, had to take on substantial debt to cover the thirty-six thousand dollars they owed for her first year, despite her large merit scholarship. For the remaining three years, Clarice took out loans in her own name totalling around sixty thousand dollars. Her mother recalled a conversation they had when deciding on colleges. “You’re making decisions today, Clarice, that are going to affect your whole life,” she told her daughter. “You might not be able to buy a home. You might not be able to own a car. You have to make choices.”

Clarice’s family was one of the few in the book to look at the college-finance process in such sober terms. Yet they embarked on it anyway. “Enmeshed autonomy” is what Zaloom calls a situation in which parents and children face a future of intertwined finances, even as they hope for future independence. Critics who describe the student-loan industry as predatory or exploitative are often told that the problem is one of individual irresponsibility. But Zaloom’s families illustrate how difficult it is to negotiate the snares set out by lenders and colleges. The system “monetizes the power of those bonds” between parents and children, she says, promoting the “morality of fiscal restraint to families even as it banks on their risk taking.” Zaloom offers a range of explanations for rising tuitions, from plush facilities and fancy meal plans to the expansion of administration and student services. Perhaps the reality is that college is expensive because it can be—especially when the destiny of one’s child seems to be at stake.

“Indebted” ends up being a story about modern families—about how we understand our responsibilities toward one another in a time of diminishing prospects. Sacrifice is nothing new, and guilt has mediated family relations for eons. But there’s a distinctly modern paradox in Zaloom’s version of middle-class life, with parents preparing their children for adulthood while also protecting them from it. One mother provides her son with spreadsheets every semester that show “how much tuition is per hour, how many credit hours he’s taken, how much his room and board is, how much every book costs.” It seems both infantilizing and like an attempt to accelerate a child’s acceptance of real-world responsibilities.

Other parents incur enormous credit-card debt or put off retirement in order to provide their children with luxuries and opportunities that they were never able to enjoy. The stories in “Indebted” end right around the time that the students are entering the complex world of loan repayment. Graduation is fresh in their minds; debt is just an abstraction, and the future can still feel open.

As graduates become employees, they start to feel the future closing in. In the late nineteen-nineties, Alan Collinge was beginning work as a research scientist, hopeful that he would be able to pay back about thirty-eight thousand dollars in loans he had taken on to study at the University of Southern California. But he fell behind, and a series of ill-timed career turns, most of which were undertaken to speed up his payments, left him deeper in debt. In “The Student Loan Scam,” published in 2009, Collinge writes with an anguished intensity about years spent with no days off—a “penance” for falling so far behind. He was constantly hassled by collection agencies, many of which he had never heard of. At the end of this hellish period, he realized that his tally had climbed to six figures. He didn’t understand whom he owed, and he could find no authority to which he could appeal; he felt trapped in a purgatory of call centers.

In 2004, Sallie Mae went private, meaning that the nation’s largest lender—and also one of its largest debt collectors—was no longer directly accountable to the government. Around the time that Collinge was struggling to make ends meet, Albert Lord, Sallie Mae’s C.E.O., received fifty million dollars in compensation over a five-year period. The company continued to thrive despite investigations into its seemingly predatory practices. Collinge’s response was to phone Lord at odd times to tell him how much he hated him.

In “The Student Loan Scam,” Collinge admits that he was “obsessed” with his debts. He launched a popular Web site and eventually became an activist. In 2011, Occupy Wall Street brought similar conversations around student debt into the public consciousness. Where debt caused the middle-class families in Zaloom’s study to feel shame and insecurity, young people nowadays talk about it freely, with righteous indignation. It’s become so commonplace that the Presidential candidate Pete Buttigieg—a gay veteran, a son of a Gramsci scholar, a Norwegian speaker—is relatable because of the six figures of student debt that he and his husband owe.

The idea of free college, once Bernie Sanders’s fringe dream, is now seriously debated in the political mainstream. As the economist David Deming recently argued, it’s not as though the money isn’t there. In 2016, the federal government spent ninety-one billion dollars subsidizing college attendance; for as little as seventy-nine billion dollars, tuition could be eliminated at all public colleges.

At the same time, there is mounting skepticism about the usefulness of the college experience. Earlier this year, Tim Cook, the C.E.O. of Apple, talked about the “mismatch” between the skills that people were acquiring in college and the ones demanded by modern businesses. He maintained that about half Apple’s new hires last year didn’t hold four-year degrees. The economist Bryan Caplan has provocatively argued that we would be better off if college were “less affordable.” In his 2018 book, “The Case Against Education,” he argues that a college education is largely useful as a means of “signalling,” of advertising one’s potential to a future employer: “It is precisely because education is so affordable”—thanks to loans and government subsidies—“that the labor market expects us to possess so much.” There are cheaper ways to do this, and, in Caplan’s cynically droll view, they don’t require us to spend years studying subjects we will never use.

Zaloom’s scholarship descends from a line of economic anthropologists who are particularly interested in the social bonds that result from exchange, not least ones that occur outside the market. (Zaloom’s previous book was “Out of the Pits,” an ethnography of traders and brokers in Chicago and London.) The French sociologist Marcel Mauss described one such configuration in his 1925 book, “The Gift.” We give gifts voluntarily, and though we expect reciprocity, we don’t know when that might happen. As a result, people feel in debt to one another in a way that, not being contractual, strengthens the bonds among them.

This was the spirit that first animated the Rolling Jubilee, an offshoot of Occupy Wall Street. The group raises money from donations and then buys student debt from banks for pennies on the dollar. Rather than holding on to the debt, the group forgives it, freeing debtors from their obligations. To date, it has spent about seven hundred thousand dollars to abolish nearly thirty-two million dollars of debt. Last summer, TruTV began airing “Paid Off with Michael Torpey,” a game show where contestants compete to get their student debt erased. Torpey claims that the show is satire. “I want you to be pissed off that the show has to exist and that we’re leaving students out in the cold,” he explained in an interview.

This May, the billionaire Robert F. Smith announced, in a commencement address at Morehouse College, a historically black institution, that he was going to take care of the entire graduating class’s student debts. Smith was hailed for his gesture, but it only dramatized the plight of today’s twentysomethings. (One’s heart goes out to the student who took an extra semester to graduate.) Economists imagined the research findings that this “natural experiment” would produce years from now. How would the gift—amounting to an estimated forty million dollars—change the students’ paths in life? A recent study by the Center for American Progress suggests that the disproportionate effect of student debt on black and Latinx graduates may explain the lack of teacher diversity in America. Without debt hanging over their heads, how many Morehouse grads will become teachers, or artists, or bankers?

Zaloom’s book takes much of what we have come to accept and renders it alien and a bit absurd. “For me, money is ineffable at the same time that it’s also very concrete,” one down-on-her-luck mother tells Zaloom. Other parents joke that their backup plan is to win the lottery. Scrutinizing the mazy FAFSA form, or a savings account you can open before your newborn has left the hospital, one is reminded of how strange it is that so much time and energy, across multiple generations, goes toward an experience that often feels like a four-year blur.

The rise of higher education in the twentieth century was an American success story. But access is not a birthright. One of the success stories of “Indebted” involves the Bakers, a black family with roots in the military whose daughter, Karen, desperately wants to attend Princeton. Her practical-minded parents nudge her toward cheaper, in-state alternatives, but she insists that Princeton will provide opportunities that Florida State and the University of Florida will not. Her parents get behind her, cutting back on cell-phone use and post-church brunches, forgoing air-conditioning despite the state’s sweltering summers. At Princeton, Karen experiences the weird dislocations of life on one of the Ivy League’s most élite campuses. She finds herself navigating wealthy classmates and social clubs, though she remains true to her frugal roots. “I mean I obviously wasn’t shopping at J. Crew,” she says. Karen flourishes; her professional successes will take her far away from where she grew up, and from the family that raised her. She’s entering into “rarefied” spaces that none of them will ever comprehend. She’s not leaving them behind, but she is “breaking free.” This, too, is the American Dream. ♦

This article appears in the print edition of the September 9, 2019, issue, with the headline “Unsettled.”
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🎓 How Student Loan Debt Is Kicking Retirement For Boomers, Gen X, Millennials &
« Reply #184 on: September 09, 2019, 12:35:45 PM »

Editor's Pick13,727 views Sep 8, 2019, 08:00am
How Student Loan Debt Is Kicking Retirement For Boomers, Gen X, Millennials & Gen Z To The Curb

Joseph Coughlin
Senior Contributor

I research & write on longevity, generational trends & innovation.

Is each generation trading a secure retirement for a college education? Getty

It’s that time of year again in Boston. September — when the streets are jammed with a seemingly endless parade of trucks and trailers. No, it’s not carnival season. It is college season. Parents from all over converge upon a city of 700,000 residents to send off nearly 150,000+ students to college with the hope that higher education will kickstart their children’s lives. But, for many, this singular act of loving investment in their child’s future may inadvertently jeopardize their own financial wellbeing.

Despite the increasingly surreal sticker price, college remains a worthwhile investment in the United States, unlocking opportunities and tiers of income that are otherwise difficult to come by. Some studies go so far as to suggest that college education correlates with greater life expectancy. The promise of a better life with a college education, in part, continues to propel enrollment rates in the U.S. suggesting that younger Americans have yet to be stymied away from college by fearful stories of student debt.

More pointedly, perhaps, the parents of young Americans have yet to steer their children away from investing in college. A 2017 study found that over half of parents contribute financially in some way to their childrens’ college education, with 20 percent of students saying that their parents paid for half or most of their college costs.

Today In: Money

The impact of student loan debt on the life course of younger Americans has been written about at great length: it has been written that the burden of student loans has pushed marriage, childbearing, and home ownership among Millennials to significantly later in life.

But another complication of runaway student debt in the U.S. has been relatively ignored: its effect on the retirement plans of older Americans. Student loans are not just a challenge for younger adults. An AARP report describes an alarming increase in student debt among borrowers ages 50 and older, of nearly $250 billion over the last fifteen years.

Much of this increase comes from parents and grandparents who borrow on behalf of their children. A MIT AgeLab mixed-methods study, sponsored by TIAA, explored the effects of student loan debt on retirement and relationships found that many moms, dads, and adoring grandparents that borrow for their kids and grandkids do not realize the full extent of the burden they are taking on. Taking on six figures of student loans at 18 is an intimidating proposition; taking it on at 50, when the conventional retirement age of 65 looms ahead like a jagged cliff, is even more daunting. And, for grandparents who are betting that their lifespan will not outlive their wealthspan, investing in their grandchildren’s future, may effectively be divesting from their own.

“Some parents and grandparents in the study said that it took years to discover that the debt was too much for them to handle, and that their retirement plans would be jeopardized,” said MIT AgeLab’s Lexi Belle, who contributed to the study. Another member of the AgeLab team, Samantha Brady, noted that while grandparents said they would take on the loan again, they had “no idea how much stress it would add to their lives.”

“It’s not just about the pure financial burden,” said Julie Miller, the lead author of the AgeLab study. “Student debt influences what borrowers believe falls within the bounds of the possible.” Many study participants said that they found the idea of both putting money aside for loans and for retirement as being too overwhelming to think about. For younger Americans, the weight of student debt can engender the belief that full-fledged adulthood remains out of reach. It appears that it can also make retirement feel like an impossibility, and so weaken the resolve of borrowers of all ages to save for retirement at all.

An overwhelming 84 percent of participants in the study said their loans limited the amount they were able to save for retirement. Three out of four of those respondents said they expected to begin or increase their contributions once their student loans were paid off. But if one’s loan obligations extend all the way into retirement age, then the time to begin saving may never arrive.

Adding insult to injury, the U.S. government garnishes the Social Security checks of claimants who still have unpaid federal loans in retirement. But there may be little that these downtrodden retirees can do to make up for their unpaid debt with their working life over.

The fact that student debt is impacting the whole life course—not just transitioning into adulthood, but older adulthood as well—is important knowledge for policymakers thinking about the cost of the U.S. education. And it’s important as well for our thinking about the contours of and barriers to retirement planning and savings in the United States — those trucks and trailers on the streets of college towns everywhere may not just be dropping off children, they may be leaving a secure retirement at the curb as well.

Joseph Coughlin

I lead the Massachusetts Institute of Technology AgeLab ( Researcher, teacher, speaker and advisor – my work explores how global demographics, technolog...
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🎓 Why College Became So Expensive
« Reply #185 on: September 10, 2019, 06:39:40 AM »

Why College Became So Expensive

And what that has meant for America’s middle-class families

Joe Pinsker
Sep 3, 2019

Brian Snyder / Reuters

The story of the rising cost of college in America is often told through numbers, with references to runaway tuition prices and the ever-growing pile of outstanding student debt.

The personal toll these trends have taken is hard to convey, but the anthropologist Caitlin Zaloom does so in her new book, Indebted: How Families Make College Work at Any Cost, which documents how the price of a college education has forced many middle-class families to rearrange their priorities, finances, and lives.

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In Indebted, Zaloom, a professor at New York University, draws on some 160 interviews she did with families who are taking on debt to pay for college, mixing in history of education policy and analysis of the financial morass students and their loved ones must navigate—including a close reading of the Free Application for Federal Student Aid, or FAFSA, form and the concept of family it promotes.

Read: Why dorms are so nice now

I recently spoke with Zaloom about what this system of paying for college is doing to families—as well as what might make higher education less financially fraught. The conversation that follows has been edited and condensed.

Joe Pinsker: In the past few decades, what’s changed in how families pay for college?
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    Why higher education in the U.S. is so expensive, and what students really pay for.
    The College-Affordability Crisis Is Uniting the 2020 Democratic Candidates
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    Why Many College Dropouts Are Returning to School in North Carolina
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    The Little College Where Tuition Is Free and Every Student Is Given a Job
    Adam Harris

Caitlin Zaloom: College used to be a lot cheaper for families, because there was more funding from the government. If you think about the biggest educational systems, like the University of California system or the City University of New York system, these universities were free or practically free for decades. That was in part because of a belief that higher education was essential for the national project of upward mobility, and for having an educated citizenry.

So middle-class families didn’t always have to pay for college with debt. The shift began in the 1980s, in terms of a changing political philosophy. President Ronald Reagan’s budget director, David Stockman, said in 1981, “If people want to go to college bad enough, then there is opportunity and responsibility on their part to finance their way through the best way they can.” When those who argued that college is a private benefit framed it like that, it became logical to say that education should be paid for by the people that it benefits. And so in the 1990s, the vast expansion of loans for higher education began.

Pinsker: Many of the parents and children you interviewed about their college-related debt feared that they were being financially burdensome to their family members. Given the shift you just described, do you think that this represents people internalizing system-level problems as personal ones?

Zaloom: The families that I spoke with really feared the possibility that they would be a weight on each other. And that is very much a fear of failing under the terms of the current college financing system—people understand themselves as failing, but we give them unreasonable terms.

The fear is a really visceral feeling for parents. What they want is for their children to be able to go off into the world and become adults without the weight of their history—that of the parents—bringing them down. Across all of my interviews, it was so important to parents to enable their kids to move into open futures, not limited by the parents’ economic background. The idea of limiting the horizon of their children is almost inconceivable to the parents that I spoke with.

Parents understand something profound about living in a powerfully unequal society. They recognize that having a kid who can take their shots—who can really make the most of themselves—is essential to the possibility of reaching this far-off tier where people are living lives of stability and wealth. And if young adults are unable to take that shot, they face the possibility that they will be in either that constrained, eroding middle class that their parents belong to—or, worse, that they will fall, and fall far.

Pinsker: The middle-class parents in your book generally didn’t talk with their kids about the financial strain of paying for college. You note that this isn’t confined just to the subject of paying for college, but is the case with other financial matters too. Why do you think parents so often avoid conversations about money with their kids?

Zaloom: I think that one reason middle-class parents stay silent about their finances is that they feel vulnerable, in terms of their social standing. When families face financial difficulties, that makes them feel like they may fall out of the middle class and like they won’t be able to do what people like them are supposed to do—for instance, to be able to send their kid to a college that’s a good fit or to be able to retire securely. So that silence about money is a kind of last resort for shoring up a faltering middle-class identity.

Pinsker: What is the single change that you think would be most effective in making paying for college less fraught for families?

Zaloom: I think that it is essential to make public universities tuition-free or low-cost. That would do wonders for helping families understand that education is for them, and for opening up the imaginations of young people who don’t otherwise see college as a possibility. That is important in and of itself, but it’s also important because free tuition would take the pressure off families to reorganize their lives around trying to achieve this unmanageable financial goal, which is what we ask them to do now. And then ultimately, it would also benefit young adults, because they would be graduating without the kind of debt that would inhibit them from trying to figure out what kind of contribution they want to make to the world and what kind of job they want to have.

Pinsker: What would you say to people who would read what you just said and argue in response that money can’t just be given out to everyone like that?

Zaloom: Most of the economic arguments against free tuition are based on the notion that education is a private good—that a college education is like a house, in that it’s something you are buying and then hold the responsibility to pay back. I don’t dispute the calculations of those who support that argument. And I do understand that funding free or low college tuition would also benefit a lot of wealthier families. But, for the reasons I mentioned earlier, I see higher education as being a fundamental public good that we have somehow defined as a private one.

Even considering that economic objection on its own terms, I would argue that higher education is now necessary for a stable life and a good job, in the way that K–12 education and a high-school degree was necessary 40 years ago. We now have a system that requires K–16 education for financial stability, so it’s important to fund that—we wouldn’t ask people to pay for 5th grade, so we shouldn't also ask people to be paying for sophomore year.

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Joe Pinsker is a staff writer at The Atlantic, where he covers families and education.
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🎓 The US doesn’t have a student debt problem. It has a college tuition crisis
« Reply #186 on: September 13, 2019, 07:48:54 AM »

The US doesn’t have a student debt problem. It has a college tuition crisis

By David KleinSeptember 12, 2019
CEO and co-founder, CommonBond

There’s a rousing call in the US to cancel student-loan debt, and to effectively blow up our current system in its entirety.

The issue was taken to Capitol Hill this week, where advocates for better borrower protection made their case before the House Financial Services Committee to debate what to do about this $1.6 trillion problem.

But there’s no such thing as a student loan crisis without its root cause: the college tuition crisis.

Comedian Hasan Minhaj, who was among the advocates attending the hearing, asked, “Why can’t we treat our student borrowers the way we treat our banks?”

That’s a fair question. In the last 30 years, tuition costs at public universities have increased by 213%. Among US News-ranked private institutions, more than 100 private colleges now charge at least $50,000 for tuition.

If the cost of tuition wasn’t constantly creeping up, our student loan balances wouldn’t increase. And thanks to the current student loan system, colleges and universities have little to no incentive to curb tuition costs.

When Minhaj had his live audience polled during a recent episode of his political comedy series that covered the crisis, he counted more-than $6 million in student-loan debt among his audience members. During the hearing this week, representative Alexandria Ocasio-Cortez revealed the amount of her own student debt. At around $20,000, it’s actually less than the national average. And when you weigh it against the $174,000 salary of a rank-and-file member of Congress, AOC’s return on investment probably doesn’t sound that bad to a lot of college graduates.

But that’s not the case for every American college graduate, many of whom are fighting to keep from drowning in interest payments.
We need a change

The government essentially serves as an ATM for colleges and universities by paying whatever the institution asks for tuition. Fees are transferred to the student in the form of interest-bearing debt, and in the case of defaulted loans, to the American taxpayer.

What compounds this issue is that universities are producing uneven outcomes for students once they graduate. Some students are able to land jobs after graduation with salaries that justify the monthly student loan payments, but others are not able to do so, rendering their student loans a particularly heavy burden.

This is exacerbated when you compare return on investment for the cost of degrees in computer science, for example, where average salaries are relatively high, to degrees in the arts where the majority of professionals earn less.

After averaging the college tuition costs paid by the 60 members of the committee and adjusting for inflation Minhaj surmised that the members had only paid $11,690 a year in tuition costs, some 30 years ago.

“Today, the average tuition at all of your same schools is almost $25,000. That’s a 110% increase over a period of time when wages have gone up only 16%,” he said.

We encouraged millions of students to go to college, and then we sent them into the workforce, without ever giving them the information they needed to make the right decision. For some, the American Dream has buckled under the weight of this increasingly historic burden.

“You see what’s happened? We’ve put up a paywall to the middle class,” said Minhaj.

If we want to solve the debt problem, we need to be honest and address its source: the rising cost of tuition.

So, how do we better align incentives in a way that creates a system capable of preparing college graduates—en masse—for the workforce, without being overly indebted upon entering it?

One really easy place to start is for institutions to be more transparent with students and families, so they can make better decisions about where to go to school.

In other words: Give consumers more power.
Ask the questions

There are three very specific—and simple—pieces of information that would lead students and their families to make significantly better decisions about where to go to school. But they need to be made readily available. In turn, access to this information would hold colleges and universities more accountable for their costs upon entry, as well as outcomes for students post-graduation.

As ranking Republican Rep. Patrick McHenry stated at the hearing, “This is a crisis, but it is a crisis that the government created.” The government needs to help fix it by requiring easy access to the answers to these questions:

    How much does it cost to go to this school?

This sounds like an obvious one, but admissions personnel rarely address this question fully. When a college extends an acceptance offer to a student, there are discrepancies in how various terms of cost are used.

A study by the New America think tank found that over a third of colleges and universities did not include any information about the total cost of attendance on their award letters.

In addition, 70% of colleges surveyed grouped all aid together, making it seem like there were no fundamental differences between scholarships on the one hand (free money) and student loans on the other (financing with an interest rate).

Uniform presentation of this information across all colleges would make for a more streamlined consumer experience, helping students and parents make better informed decisions on how much needs to be taken out in loans and what their financing options are.

    If I need a loan, how much will I pay per month after I graduate?

It needs to be made very clear to students what they will be paying in student loans every month upon graduation—before even taking out that loan to begin with.

Astoundingly, the vast majority of Americans have no idea what their monthly student loan payment is, or how long it will take them to pay back their loans. Stories abound of graduates who never knew or didn’t realize how much they’d have to pay every month after graduating.

Schools are in a unique position to deliver this information to students and families, right at the time when they make the decision to sign on the dotted line. School financial aid offices have up-to-date information on students’ federal student loans. And private lenders have pre-established pipes into college financial aid offices, through which this information can be easily shared.

    What do other graduates from my school—and my major—make every month once they graduate?

College and university acceptance letters should include the average monthly starting salary for graduates of that school within the student’s intended major. This information, in combination with total cost and monthly student loan payments upon graduation, will provide students and families with clarity about their true indebtedness upon graduation—and whether they can actually afford to take out that loan or go to that school.

The fact remains that not every four-year degree from every higher education institution actually helps students make a higher salary than they would with just a high school diploma, a GED or an associate degree.

A recent study polled 1,000 undergraduates across all majors and found that average expected annual salary was $57,964 in their first jobs after college, when in fact the average salary for a college graduate is $47,000. That means our college students overall are expecting to be paid 23% more than they will get when they first join the workforce.

Many colleges already have data on expected outcomes through alumni surveys conducted by their development offices. Revealingly, it tends to be business schools that share this information most consistently, where accountability to career outcomes is inherently high, creating a natural incentive for schools to publish the information. The better the numbers, the higher the applicant demand, the more revenue an institution will be able to earn.

There’s no reason the government can’t collect this data in a relatively robust way. We all know that the Treasury Department collects our incomes every year, and the Education Department knows where most of us went to school through the federal student loan program, so why not combine these two data sources in an anonymized fashion, by institution, so that the right information can get to prospective students before they make a significant financial and life decision?

If universities clearly and consistently offer these three pieces of information, students and their families will be able to better understand their debt, relative to their income, upon graduation.

This knowledge would allow students and families today to determine which colleges—and the career outcomes they actually lead to—make the most sense for their tomorrow.

The universities that charge more than is justified by students’ post-graduate outcomes would be forced to decrease tuition, or drive stronger job placement and salaries for their graduates. Or both.

Some universities propped up by our broken system might even have to close down entirely.

That’s wouldn’t be a bad thing. Markets only truly work to drive the outcomes we want if there is transparency around the right information. In this instance, transparency would lead to fairer tuition rates or better career placement—either or both of which would lead to a significant reduction in over-indebted college grads in the US.
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🎓 Some older Americans say millennials' student debt is their own fault
« Reply #187 on: September 14, 2019, 07:18:39 AM »

Some older Americans say millennials' student debt is their own fault
Andrew Keshner
15 hrs ago

Alf Seccombe, a San Francisco area-based director with $223,000 in student loans, says those who blame students for the problem are “a little out of touch.” “People don’t realize that everybody is living paycheck to paycheck and they are not doing that by choice,” said Seccombe, 36.

He makes six figures in retail fashion marketing, but is still sliding into credit-card debt to pay his loans. Seccombe thinks of his in-laws, who both worked as teachers and bought a house with an ocean view. His house is on a highway and has plumbing work that needs to be put off.

“We’re in a different boat,” he said. “It’s a different time period. It feels like things are stacked up against me.” Seccombe already works at least 50 hours a week and has wondered about a weekend job. “It’s basically the choice between, ‘Am I going to raise my kids or not?’"

One year at any four-year institution cost $26,593 during the 2016 to 2017 school year, according to the National Center for Education Statistics. Adjusting for inflation, the center said the 1985-1986 cost to pay for that same year of schooling was $12,274.

Don’t miss: The No. 1 university in America now comes with a total sticker price of over $293,000

But not everyone empathizes with debt-holders. One-third of adults aged 45 and up say graduates are most at fault for their student debt, according to a new survey. In fact, 25% say young people should look for lower interest rates and 19% say graduates should work harder to pay it off.

The 18- to 44-year-olds participating in the survey — those most likely paying off loans right now — see things differently. Only 21% say students are at fault, while 40% say the responsibility rests primarily with the government.

Related video: Student loan debt balloons to $1.6 trillion nationwide (provided by Fox News)

And just 10% of younger participants in the survey said graduates need to work harder. Their No. 1 solution (according to 27% of this age group) was free public college; only 18% of older Americans said they felt the same way.

Borrowers between the age of 18 and 39 owe $840 billion of the nation’s approximate $1.5 trillion dollar student debt as of this year’s second quarter, according to Federal Reserve Bank of New York data, while those aged 18 to 49 owe $1.16 trillion. Americans with student-loan debt had an average $32,700 balance as of the end of last year, the Fed noted.

Don’t miss:This budget shows how a $350,000 salary barely qualifies as middle class

Advocates say minority students face steeper costs and consequences because they are more likely to borrow money for school. One recent study found that white men paid down 44% of their debts 12 years after school, but the balance for black women increased 13% over that time.

At a congressional hearing earlier this week, comedian Hasan Minhaj called student debt “a paywall to the middle class.” “People are putting off marriage, kids, home ownership and retirement,―especially my generation,” said the 33-year-old host of Netflix’s “Patriot Act.”

Rep. Barry Loudermilk (R-Ga.), 55, said debt levels were a crisis, but pressed witnesses on whether student loans were absolutely necessary for schooling.

“Two of my three children graduated from four-year college institutions with zero debt and no scholarship,” Loudermilk said. “They actually worked and paid for their tuition. Even from some colleges you would recognize.”

On Friday, Loudermilk told MarketWatch that students’ “work and ability to generate income is an important part of this puzzle. But the root of the problem is that the federal government took over student lending in 2010, which caused student loan funds to basically become an entitlement available to anyone, which resulted in colleges and universities significantly increasing the cost of attendance.”

He said there’s “also no evaluation as to whether the borrower can repay a federal student loan. I believe that’s why the default rate on federal student loans is 22%, and the default rate on private student loans is 2%. The federal government is now the largest consumer lender in the country. This is the fundamental problem.”
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Re: 🎓 Some older Americans say millennials' student debt is their own fault
« Reply #188 on: September 14, 2019, 11:15:16 AM »

Some older Americans say millennials' student debt is their own fault

Alf Seccombe, a San Francisco area-based director with $223,000 in student loans, says those who blame students for the problem are “a little out of touch.” “People don’t realize that everybody is living paycheck to paycheck and they are not doing that by choice,” said Seccombe, 36.

// But the root of the problem is that the federal government took over student lending in 2010, which caused student loan funds to basically become an entitlement available to anyone, which resulted in colleges and universities significantly increasing the cost of attendance.”

He said there’s “also no evaluation as to whether the borrower can repay a federal student loan. I believe that’s why the default rate on federal student loans is 22%, and the default rate on private student loans is 2%. The federal government is now the largest consumer lender in the country. This is the fundamental problem.”

Yeah, and the so-called "older generation" went to college when tuition was $700 a semester. These are the same scabrous motherfuckers who vote for Trump. Fuck them.

The real problem is the change in social policy over several decades to price middle class students out of the higher ed credential market absent taking out ruinous loans, the better to create a generation of servile drones who won't make waves (See Greenspan, A.: "precariat").

The only reason Uncle Sugar is in the college loan business is that banks don't want it. If they did, every red-state semen-slurper would be howling about creeping socialism, and unfair government competition with the "free market" (sic), and "Freedumb."

George Carlin is still right.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

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Re: 🎓 Some older Americans say millennials' student debt is their own fault
« Reply #189 on: September 14, 2019, 11:29:28 AM »

Some older Americans say millennials' student debt is their own fault

Alf Seccombe, a San Francisco area-based director with $223,000 in student loans, says those who blame students for the problem are “a little out of touch.” “People don’t realize that everybody is living paycheck to paycheck and they are not doing that by choice,” said Seccombe, 36.

// But the root of the problem is that the federal government took over student lending in 2010, which caused student loan funds to basically become an entitlement available to anyone, which resulted in colleges and universities significantly increasing the cost of attendance.”

He said there’s “also no evaluation as to whether the borrower can repay a federal student loan. I believe that’s why the default rate on federal student loans is 22%, and the default rate on private student loans is 2%. The federal government is now the largest consumer lender in the country. This is the fundamental problem.”

Yeah, and the so-called "older generation" went to college when tuition was $700 a semester. These are the same scabrous motherfuckers who vote for Trump. Fuck them.

The real problem is the change in social policy over several decades to price middle class students out of the higher ed credential market absent taking out ruinous loans, the better to create a generation of servile drones who won't make waves (See Greenspan, A.: "precariat").

The only reason Uncle Sugar is in the college loan business is that banks don't want it. If they did, every red-state semen-slurper would be howling about creeping socialism, and unfair government competition with the "free market" (sic), and "Freedumb."

George Carlin is still right.

Well, the deal is that private banks still do make the loans, but only with the Federal Guarantee they will be repaid.  So it is Risk-Free for them.  The Fed Goobermint tried to guarantee THEY would be paid back by making these loans non-dischargeable in bankruptcy.  Sadly for them, even if you garnish wages until the student debtor croaks, he's not making enough money to pay the loan back.

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Millennials have an average of $28,000 in debt—and the biggest source isn't student loans
Published Wed, Sep 18 2019 11:13 AM EDT
Megan Leonhardt  @Megan_Leonhardt


It may seem like student loans and millennials are inextricably linked. But a new survey shows that education bills are not the leading source of debt among this generation.

Millennials (defined here as ages 23 to 38) have racked up an average of $27,900 in personal debt, excluding mortgages, according to Northwestern Mutual's 2019 Planning & Progress Study. The findings are based on a survey conducted by The Harris Poll of over 2,000 U.S. adults.

The biggest source of debt? Credit card bills. And that's a "troubling" trend, Chantel Bonneau, a financial advisor with Northwestern Mutual, tells CNBC Make It.

"One issue that a lot of millennials have is that they have not wanted to sacrifice their lifestyle, even though they have student loans or lower incomes," Bonneau says. "That has left us in this spot where they've accumulated a significant amount of credit card debt."

That's especially concerning because it's important to save for future financial goals, such as buying a home or building a retirement fund, when you're young and have time to let compound interest grow your money.

But because millennials are balancing both student loans and credit card debt, "the likelihood that millennials are prioritizing retirement in any meaningful way as an overall generation seems unlikely," Bonneau says.

Yet for many millennials, the slide into debt goes beyond just lifestyle creep. Wages are not keeping up as day-to-day costs continue to soar, according to Alissa Quart, executive director of the Economic Hardship Reporting Project and author of "Squeezed: Why Our Families Can't Afford America."

The average paycheck only has the same purchasing power it did 40 years ago, a Pew Research report found. Almost two-thirds of millennials say they're living paycheck to paycheck and only 38% feel financially stable, according to Schwab's 2019 Modern Wealth report.

Student loans are also a factor. The number of households with student loan debt doubled from 1998 to 2016, Pew Research Center found. The median amount of loan debt millennials carried was $19,000, significantly higher than Gen Xers' balance of $12,800 at the same age.

While it may be easy to criticize millennials for simply spending too much, it's important to remember that there are other issues at play, Terri Kallsen, Schwab's executive vice president of investor services, tells CNBC Make It. "Spending is not the enemy that we might think that it is," she says.
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Millennials have an average of $28,000 in debt—and the biggest source isn't student loans
Published Wed, Sep 18 2019 11:13 AM EDT
The biggest source of debt? Credit card bills. And that's a "troubling" trend, Chantel Bonneau, a financial advisor with Northwestern Mutual, tells CNBC Make It.

"One issue that a lot of millennials have is that they have not wanted to sacrifice their lifestyle, even though they have student loans or lower incomes," Bonneau says. "That has left us in this spot where they've accumulated a significant amount of credit card debt."

That new Xbox isn't going to buy itself.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

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🎓 When and How to File Bankruptcy for Student Loans
« Reply #192 on: September 26, 2019, 01:06:59 AM »

When and How to File Bankruptcy for Student Loans
[U.S.News & World Report]
Arianne Hutchins
U.S.News & World ReportSeptember 25, 2019

Many student loan borrowers struggle to make their monthly payments, which may prompt some to wonder whether they can file for bankruptcy for student loans.

A recent study by LendEDU, an online marketplace for student loans, indicated that 32% of people filing for Chapter 7 bankruptcy had student loan debt, and that almost half of their total debt came from student loans. It's commonly believed that student loans can't be discharged in bankruptcy, but that's a myth. It can be done, so why aren't more borrowers pursuing it? Here's what to know.

Should I File for Bankruptcy?

Filing for bankruptcy is a very serious matter and shouldn't be taken lightly. You should only consider bankruptcy when you've exhausted all of your other options.

If keeping current on your student loans means you can't afford basic necessities, you should consult with an experienced attorney, one who knows that a student loan discharge is possible after declaring bankruptcy.

What Are Some Alternatives to Bankruptcy Filing?

Before filing for bankruptcy, you should explore income-driven repayment plans. They could significantly reduce your monthly payment based on your income and family size, sometimes even to $0.

If your payments are still too high and you don't meet the requirements for discharging student loans in bankruptcy as outlined below, don't hesitate to file for deferment or forbearance. These options allow you to temporarily stop making your federal student loan payments or reduce the amount you pay.

[Read: 4 Questions to Ask Before Requesting a Student Loan Deferment, Forbearance.]

Filing for deferment and forbearance is free and typically only requires you to fill out a form and provide proof of income. While each of these comes with its own pros and cons, they are your primary options for providing financial relief from your student loans.

Can My Student Loans Be Discharged in Bankruptcy?

To successfully have your student loans discharged in bankruptcy, you will need to prove that repaying them would cause an undue hardship. Unfortunately, "undue hardship" is not a specified term, although the Department of Education has recently made an effort to establish a concrete definition.

[Read: What to Know About Possible Bankruptcy Rule Changes for Student Debt.]

Until then, each situation is up to each court's discretion. That's where the Brunner test, used by most bankruptcy courts, comes in. The Brunner test could be used to determine if a borrower's student loans are too much to afford, making them able to be discharged in bankruptcy. To pass the Brunner test, you must prove you meet the following three criteria:

1. Your income and expenses do not currently allow you to continue a basic or minimal standard of living for you and your dependents if you're forced to repay your student loans.

2. This financial situation will, most likely, continue for a majority of your student loan repayment period.

3. You have made good faith efforts to try to repay your student loans before filing for bankruptcy.

Filing for bankruptcy is no walk in the park and not all of your debt could be wiped out. There are two common options for consumer bankruptcy, Chapter 7 and Chapter 13, and both of them can have a serious impact on your credit score. It's also worth noting that, according to a CareerBuilder survey cited by Experian, one of the three major credit bureaus, 29% of employers run a credit check on new job applicants. Your bankruptcy filing could cost you potential employment.

[Read: These States Could Revoke Your Professional License Over Student Loan Debt.]

Chapter 7 is the liquidation type of bankruptcy and is more common. It can stay on your credit report for up to 10 years, so think carefully before filing. Another setback from this type of bankruptcy is that you will likely need to sell off a large portion of your property to satisfy part of what you owe to your debtors. In this case, property doesn't just mean land; it means your house, car and even some of your retirement fund could be up for grabs to pay back what you owe, depending on what exemptions are permitted.

Chapter 13 is the reorganization type of bankruptcy. It will remain on your credit report for up to seven years, but it's seen as a bit less serious because you're agreeing to pay back at least a portion of your debt while you're on a court-structured payment plan. One of the benefits of this payment plan is that you might not need to sell off any of your property to pay your debts.

How Do I Start the Bankruptcy Filing Process and Get My Student Loans Discharged?

If, after reading this and doing your research, you've decided that filing for bankruptcy is your only viable option, here's what you can do to start the process.

As mentioned earlier, you could contact a bankruptcy attorney. Attorneys are helpful to have on your side and many will offer you a free consultation to discuss your situation. There are even some attorneys who will take on your student loan bankruptcy case pro bono.

Start the process by filing for Chapter 7 or Chapter 13 bankruptcy after you've determined what best suits your situation. Next, you or your attorney will file a written complaint, which will begin the additional lawsuit needed to erase your student loans. This is called an adversary proceeding.

Then, it's off to the judge to weigh your situation. If the bankruptcy court grants your request, your student loans could be fully discharged, partially discharged or they could be recalculated with a lower interest rate.

It's a lot of hard work and it has serious repercussions, but discharging your student loans through bankruptcy is possible. As always, do your research and make sure you've considered all of the pros and cons before deciding whether declaring bankruptcy is right for you as a student loan borrower.
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🎓 A Look At Millennial Student Debt
« Reply #193 on: October 05, 2019, 04:23:46 AM »

38,037 viewsOct 3, 2019, 01:21pm
A Look At Millennial Student Debt

Wesley Whistle
I write about education, including policy, student debt, and more.

Comedian Hasan Minhaj calls on Congress to address the student loan debt crisis as he and others testify before the House Financial Services Committee at a hearing on protecting student loan borrowers, on Capitol Hill in Washington, Tuesday, Sept.ASSOCIATED PRESS

The “student debt crisis” has become a common phrase used by many, so much so that celebrities have engaged in the conversation. Comedian Hasan Minhaj even included an episode on student loans in his Netflix series and recently testified at a congressional hearing on the subject. His interest in this issue—and that of other celebrities—shouldn’t be that surprising given his audience of Millennials, many with student debt.

Millennials came of age during a time of transition in both the economy and in the landscape of higher education. During their lifetimes, college costs have risen significantly, with the net price of tuition, fees, and room and board at a public, four-year college increasing 68% since the 1999-2000 academic year. The sheer amount borrowed annually for higher education has doubled since then too. Despite growing evidence that a college degree leads to higher incomes and career success, students’ perceptions of debt are deeply negative. In a recent poll, 57% of Millennials thought student debt was the largest source of consumer debt, even though student debt pales in comparison to mortgages.

The Pew Research Center defines Millennials as those born between the years 1981 and 1996. That means the oldest Millennials graduated high school around 1999, while the youngest graduated high school around 2014. The economy plays a big role in student debt—especially for this generation—but with such a large time span the economy can differ over that time period. It certainly did from 1999 to 2014. The Great Recession plays an important role in Millennial student debt and, though its impact varied across different ages within the generation.

Unemployment for 18- to 35-year-olds hit 13% at the height of the recession in 2010, a time when many Millennials were in high school. Due to such poor economic conditions, college enrollment spiked as many enrolled in college though they might not have otherwise. Others already working lost their jobs and enrolled in an effort to reskill and increase their chances of better employment once the economy recovered. And while public institutions—who were forced to charge higher tuition to make up for the difference in state funding—absorbed most of the increase, the for-profit sector more than doubled its undergraduate enrollment within six years. The for-profit sector is already more expensive on average and for-profit institutions have been plagued with dismal graduation rates, poor job placement success, and even fraud, leaving students saddled with debt they often can’t afford. Even as the economy has recovered, the problems of the for-profit sector have persisted.
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Distinguishing Among Millennial Student Debt

Student debt data is somewhat limited, inhibiting experts’ ability to diagnose the different problems around student debt. The federal student loan portfolio offers a snapshot of the existing cumulative debt for Millennials. As of Q2 of the 2019 fiscal year, for borrowers ages 25 to 34—a significant share of the Millennial population—there was $497.6 billion in outstanding student loan debt for about 15.1 million borrowers. This translates to an average student debt of around $33,000 dollars for each borrower. For those ages 24 and younger, there was a cumulative loan balance of $124.6 billion for 8.1 million borrowers—an average of about $15,000 per borrower, though many of those borrowers may still be in school.

These numbers mask several important distinctions. Many of these loans are already in repayment and have been for some time—particularly for the older borrowers. This means they have left school already and begun to repay their loans. Some are reducing their debt, and those who are paying something but not enough to cover their full obligations may actually be seeing their debts grow. The cumulative balance also includes those from graduate school, likely increasing the average debt load per borrower, given that undergraduates are tightly limited in how much they can borrow. And the data does not reflect if a student has graduated, dropped out, or is still enrolled.

Millennial Undergraduate Debt by Degree

Survey data from the U.S. Department of Education allows us to see how Millennials borrowed for their undergraduate degree at different times. The table below depicts the borrowing of Millennials for their undergraduate education across four separate snapshots of academic years in which they received their degrees. It shows the percentage of graduates who borrowed and the median debt at graduation of those who did borrow. Depending on the year in which a student graduated, they borrowed at different rates and borrowed differing amounts.
Millennial borrowing rates and median debt of undergraduate degree holders.

Source: “National Postsecondary Student Aid Survey.” National Center for Education Statistics, U.S. Department of Education, 2019“National Postsecondary Student Aid Survey.” National Center for Education Statistics, U.S. Department of Education, 2019

It is not surprising that over time, as college costs increased, more students borrowed and those students also borrowed more. While borrowing rates increased for both bachelor’s and associate degree recipients, the percent increase for associate degree graduates was much higher at 46%, compared with a 13% increase for bachelor’s degree graduates. Dollar amounts—adjusted for inflation—also increased over time. Not surprisingly, the largest increase in total borrowed was from the 2007-2008 graduates to the 2011-2012 graduates, during the height of the Great Recession.


Of course, this data is based on those who completed a degree. That doesn’t capture the full experience of students who start college and don’t finish, but are still saddled with student debt. Quality varies greatly across institutions of higher education. Many colleges and universities would be labeled dropout factories if they were a K-12 school given their abysmal graduation rates. Non-completers are nearly three times as likely to default as those with a college degree, even though they have less debt. The majority of defaulters (65%) have relatively low loan balances, under $10,000. On average, a college degree pays off for most borrowers—even accounting for cost—as long as they graduate. If they don’t graduate, they typically can’t reap the earnings premium a college degree affords them, leaving them with difficulty repaying their obligations. Even if their outstanding balances are below average—sometimes just a few thousand dollars—non-completers are often in greater financial crisis. 


While experts often disagree about the “student debt crisis,” concerns regarding college costs and debt are legitimate. This is especially true for a generation where many entered the workforce at a time when the economy was weak after paying more for college than previous generations. However, the details matter and there is nuance in what the debt looks like and how it impacts borrowers. In future posts, I will further examine Millennial student debt and how it looks across demographics, for graduate students, and more.
Wesley Whistle
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My aunt cosigned my student loans, but 12 years later I'm determined never to do the same
Kelly Burch
Oct 4, 2019, 6:38 AM

The author is not pictured. Inna Reznik /

    My financial aid couldn't cover the cost of my college tuition, and my parents couldn't cosign a private student loan to make up the rest.
    My aunt stepped in and cosigned an $18,000 loan, for which I'll always be extremely grateful.
    However, I'll never again ask for a cosigner or cosign someone else's loan. I've seen firsthand how complicated and tricky it can be, and I won't put myself or someone else in that position again.
    Read more personal-finance coverage.

During my freshman year of college, there was a five-figure gap between what my financial aid covered and what tuition cost. In hindsight, I should have seen that bill and run to my nearest community college, since the four-year university I was planning to attend was clearly unaffordable.

Instead, I turned to private student loans to cover the cost. As a broke 18-year-old with no official work history, I couldn't get approved for a private student loan on my own. My parents couldn't either because of their credit histories. I was panicked, until an aunt offered to cosign an $18,000 loan.

I was incredibly grateful at the time, and still am today. That loan allowed me to get started in a journalism program that kickstarted my career. However, in the 12 years since that loan was dispensed, I've learned a lot about cosigning.

I recently refinanced the loan in my own name, and I'll never ask for a cosigner again. And though I am incredibly grateful for the gift my aunt gave me, I'll never be a cosigner myself. Here's why.
Cosigning affects you, even if everything goes well

Many people think a cosigner is merely a backup payee. If the primary borrower doesn't pay, the lender can go to the cosigner, who is also responsible for the loan. If you think about cosigning this way, there's little risk, as long as you believe the primary borrower will hold up their end of the deal.

However, that's not the full picture. When you cosign a loan, it shows up on your credit report. Lenders consider cosigned debt just the same as they would consider debt where you're the primary borrower. It affects your all-important debt-to-income ratio, which can limit your ability to get additional credit in the future. That means that even if the person you cosigned for is doing everything right, their loan can still change your financial situation.

This came up for us when my aunt's kids were heading to college themselves. She wanted to take out additional loans for their education but couldn't in part because of the monthly payment on my loan. As you might imagine, that put us in an awkward situation.
Cosigning can change your relationships

At that point, my aunt asked me to refinance the loan in my own name. However, I was only a few years into launching my business, and I couldn't get approved for a private, unsecured loan on my own.

That was frustrating for everyone: I was irritated that my aunt couldn't understand that I would refinance just as soon as I was able, and she couldn't understand why I hadn't considered this sooner.

There were a few tense phone calls involved. The tension even seeped into family events, where I wondered if she was seeing the loan every time she looked at me. When I bought a house, I worried that she was angry I was spending money on that, rather than paying down the loan.

We were lucky that we had an underlying respect and solid relationship that wasn't ruined by intertwining our finances. My aunt knew I had always meticulously made payments on time. She understood that, as I bluntly put it, I wanted her off the loan just as badly as she wanted to be off. I knew that my choices were affecting her finances.

Despite that, there was still a lot of strife, and I saw clearly how a cosigning relationship can quickly go sour.
There's a lot of fine print

If you do opt to cosign a loan, read the fine print carefully.

When my aunt first requested to get off the loan, I called my lender. Since I had never made a late payment in 10 years, I figured it would be no problem to remove the cosigner. However, years before, I had deferred payments temporarily after my husband lost his job while I was pregnant. That disqualified me from ever having my cosigner removed — something the lender didn't tell me (or my aunt) at the time.

In hindsight, I should have spoken with my aunt about making the decision to defer payments for a few months. Unfortunately, I had no idea that deferment would have a long-term impact. If I were ever to consider cosigning for some reason in the future, I would ensure that the primary borrower and I have an open dialogue about every decision with the loan, no matter how small it may seem.
Cosigning ignores the financial reality

This point is hard to make, because I've been in the embarrassing and frustrating position of needing credit and not being able to get it. However, if the bank is saying no to a borrower, there's a reason. That person doesn't make enough money or have a long enough credit history for the bank to have faith that they can afford the loan payment. If the professionals at the bank won't take a risk, why would you?

I would have been devastated at 18 if I couldn't secure a loan for college. However, at 31, I truly believe I may have been better off in the long term without that loan. My student loan has been affecting my financial decisions and family relationships for more than a decade. I wouldn't wish that on anyone else, and I certainly won't be part of making that happen.
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