How much student debt is reasonable?

Discussion in 'Politics, Religion, Social Issues' started by SLC Flyfishing, Jan 31, 2016.

  1. SLC Flyfishing Suspended

    SLC Flyfishing

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    #1
    It's come up a few times lately that higher education costs are out of control. That perhaps student loans are the next bubble threatening to burst all over the US economy. And that the federal government's guarantee of federal student loans for up to COA is a dangerous precedent which allows colleges to raise tuition unchecked.

    It makes me wonder, what do people here think is a reasonable amount to pay for an education.

    I could make a poll, but it would be complicated to set out the poll options in a way that is broad enough. So basically I'm wondering if there is some sort of consensus on here for how much debt is justifiable per amount of expected salary?

    In other words, if you got an engineering degree and expected $65k starting salary, with a possible $80-100k as you hit the sweet spot in your career; how much do you think is reasonable for something like that?

    What about as a Doctor, plan on $200k or more. How much debt is justifiable?

    Teacher? Between $40-$50k?

    How much debt would you be willing to take per unit salary before you felt the trade off was not acceptable?
     
  2. aaronvan Suspended

    aaronvan

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    #2
    That is the root of the problem. Get the federal government out of the student loan business and watch tuition rates stabilize. Also, what is the deal with university staff salaries? The Chancellor of the University of Washington--a public university--makes almost $1 million/year and she has dozens of subordinates making nearly as much.
     
  3. thermodynamic Suspended

    thermodynamic

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    #3
    Some. People saying there needs to be real reform and forgiveness for current borrowers that have paid is not about having a free ride, and those that say it should be free propose an interesting solution since a number of people having to go back to college already have some student loan debt...

    The following point is that colleges and their top admins are fleecing students and workers (educators) alike for profiteering as opposed to ethical profit.

    I, like most people, do not mind paying for college, but the costs really need to be reasonable, affordable, and pertinent to whatever whims the market wants. And hopefully the market won't change so fast that everyone gets left behind since retraining to get updated credentials for all the careers one is going to have -- all this stuff doesn't require a Masters degree to figure out and, again, it doesn't matter who holds the loan. The companies demand degrees, college degrees have no viable competition, and with "supply and demand" the degree becomes more valuable and thus costs more - even if inflated to excessive amounts, since degrees now cost 1120% more now than in 1978.

    If companies want a Bachelor's degree for low-end jobs, then what does that say about the quality of education lower than that?

    If companies say they cannot find skilled employees that have degrees, what does that say about the quality of colleges - which also ties into a lot of people saying full forgiveness should be allowed because all the companies are saying is that students are being ripped off royalty for what amounts to a useless degree, even in the fields the companies are looking for. That much should be obvious.



    A side question - how much profit enjoyed by admins at the expense of instructors, especially adjuncts, and students, is acceptable? When does it go from real capitalism to parasitism?

    $35k for an Associates degree is obscene and those going back since the great recession began know firsthand Associates degrees are becoming "remedial high school" in ways - more proof that students are being fleeced.

    $60k+ for a Bachelor's is hardly any better. Especially if all the jobs out there, especially entry level ones, require a Bachelor's degree but pay $15/hr. Nobody is saying that better pay comes with time, but if America is to compete and people get a chance at freedom, then existing costs and future ones must come down and - especially with the great recession being an obvious impetus - past collegegoers deserve a break as well.

    Some of that is accomplished already, which is certainly excellent. What have current candidates said on the issues and will they work together to help Americans? These issues aren't exactly total fiction...
    --- Post Merged, Jan 31, 2016 ---
    See my post above. It does not matter who holds the loans because the bigger problem is supply and demand. Companies demand people with 4-year degrees. College degrees have no competition that companies want. The supply (degrees) become more valuable. It's your own law of supply and demand, applied in a real life condition and accurately.

    It does not matter if government holds a loan or if Citibank does. The loan owner can profit from it, but that's all. That's a tangent to the core problem."
     
  4. Robisan macrumors 6502

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    #4
    [​IMG]
    (source)

    A Bachelor's Degree is worth approximately $550,000 NPV. Taxed at a marginal rate of 25% that returns $137,500 NPV to the US Government in additional tax revenue. So, if the government were to simply give (!) up to $100,000 (!) for college education it would still make a tidy $37,500 profit. Why, it's enough to make a GOPers head explode.

    In the meantime, instead of doing this obvious, profitable thing we instead create new, exciting, sometimes Rube Goldbergesq ways of financing education and saddling young people with debt. It's so stupid...

    ...adding, this doesn't even take into account the ancillary societal and economic benefits of discovery, innovation etc. that the educated person might contribute.

    (crossposted from here)
     
  5. zioxide macrumors 603

    zioxide

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    #5
    Good post. America's "rugged individualism" culture is what's causing problems like this and turning our economy into hot trash.

    America needs to learn to invest in its best assets. Those assets are its young people. Imagine how much more economic impact young people could have on the economy if they weren't stuck with mortgage-sized payments for student loans.

    You would think in a country that emphasizes and worships business as much as America does that people would realize that saying "you have to spend money to make money" is absolutely true.
     
  6. aaronvan Suspended

    aaronvan

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    #6
    It does. Nearly anyone can get a government student loan and universities know they get the money whether the student defaults or not. That is a great incentive to keep tuition rates heading north. Citibank won't be so free with their money, and students with poor credit won't get the cheap & easy loans.
     
  7. vrDrew macrumors 65816

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    #7
    Its a somewhat complicated question, because there is not a clearly defined linear relationship between the cost of a higher education expense and the earnings realized by the student upon graduation. A host of other variables - such as the work ethic; ambition; personal charisma; networking abilities; personal and family connections, etc. all come into play. Job applicants who are taller, for petes sake, appear to get better paying jobs than otherwise equally qualified ones.

    Further complicating the question is the fact that different careers follow markedly different earnings curves. Physicians, for instance, spend the first eight to ten years of their post- Medical School career as lowly paid interns. Lawyers can spend a decade or so as associates before becoming either lavishly rewarded partners, or departing for other - decidedly less green - pastures. Compare that to finance grads, who can within a few years be making millions as Wall Street traders. Or languishing in the back offices of regional banks and insurance companies.

    There is little doubt that education represents an investment, not just of money but also of time, in one's future prosperity and happiness. I don't think that anyone can say - for certain - what the appropriate level of indebtedness, or even expenditure, ought to be. That, ultimately, has to be up to the individual.
     
  8. SLC Flyfishing thread starter Suspended

    SLC Flyfishing

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    #8
    I agree.

    But my question was simple, and I'm looking for individualized answers. I want to know how much you are comfortable borrowing per unit salary. If you are studying for a career that has an average salary ceiling of $70K, how much debt would you be OK taking on to get there?
     
  9. MacNut macrumors Core

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    #9
    The ratio should be no greater than 2:1. Your base salary should be able to pay off college in 2 years. If your degree is costing 3 times what you will make it's not worth it.
     
  10. rdowns macrumors Penryn

    rdowns

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    #10
    We need to be providing our high school students with a semester or two of personal finance courses.
     
  11. MacNut macrumors Core

    MacNut

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    #11
    We should also probably supply congress with the same courses.
     
  12. mrkramer macrumors 603

    mrkramer

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    I was lucky enough to have enough between money my parents had saved and scholarships to not take out loans. If I hadn't been in that position I probably would have joined the military to pay for it. After seeing how much of a pain it is for friends to have to make payments on their loans while trying to get started in life I don't think it is worth getting any loans.
     
  13. citizenzen macrumors 65816

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    when I went to college (~30 years ago) the California State College system was very low cost. In the years since, and especially in the last ten years, state support has decreased and more of the costs have been shouldered by the students.

    It's just another result of the American paradigm of individualism over socialism, where instead of everybody paying a little more to make higher education available to all who want it we make it incredibly expensive to those who dare to undertake it.
     
  14. MacNut macrumors Core

    MacNut

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    #14
    I don't think you should need to get a loan to get a quality education. College should not cost more than a high end luxury car. The problem is the higher education system has turned into a for profit business. It's collusion between corporations and colleges.
     
  15. citizenzen macrumors 65816

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    #15
    And a reduction in state support.
     
  16. MacNut macrumors Core

    MacNut

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    That's the thing though, state schools still get money from taxes.
     
  17. citizenzen macrumors 65816

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    The key word is "reduced." I didn't claim it was nonexistent.
     
  18. thermodynamic, Jan 31, 2016
    Last edited: Jan 31, 2016

    thermodynamic Suspended

    thermodynamic

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    #18
    Also keep in mind, the outdated courses colleges provide - for-profits not spending the money to keep up, regardless of reason, even the new #CSForall initiative has an email going around that says "Plus, stereotypes perpetuated by media portrayals, unconscious bias, the unsung history of CS heroes like Grace Hopper, and outdated classroom courses - they often 'opt-out' of CS even when it is offered." That email states point blank that colleges are NOT putting out the materials companies rightly want. So many students screwed over and it's now admitted on all levels of citizenry. So, yes, there could really be a case for penalty-free forgiveness or partial refunds, since companies have had to do training where the schools were unable or unwilling to and it has affected society in all aspects too.

    Source:
    http://www.ladailypost.com/content/computer-science-all
     
  19. SLC Flyfishing thread starter Suspended

    SLC Flyfishing

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    #19
    This is what I'm interested in hearing people's varying opinions on. Thanks for the response.
     
  20. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #20
    I think a certain amount of liberal education for everyone is priceless. But, what I think you are asking is about highly specialized vocational training. I think you should make sure that you are getting a reasonable ROI. There are career calculators out there and articles that discuss these things. A Harvard Law degree is likely a good investment. A PhD in Art History from Lubbock U. is probably not. There is no one number for everyone, because, some degrees when completed will pay off big in ten years, while others will never pay off -- you would be better off working for Starbucks.
     
  21. SLC Flyfishing thread starter Suspended

    SLC Flyfishing

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    #21
    Right, this is common knowledge.

    What I'm saying is what do you think a reasonable amount to be OK with would be for someone going into teaching? Or Any other field you wish to highlight?
     
  22. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #22
    I don't think there is that simple a rule of thumb. The more difficult and costly professions typically follow more complicated learning curves. Particularly law and medicine. For a somewhat simpler career goal, like an accounting degree, you probably could develop a "safe" rule of thumb, based on the idea that almost anyone with a certain degree should be able to make, say, $10,000/year more than minimum wage at any stage. (This would not account for an outstanding accountant who ends up being CFO at Google.) But, it really depends on the particular degree from the particular school how much it is worth in the marketplace.

    I would discourage people who want to make money from going into teaching. If you really love to teach, teach. But, as it happens, I know quite a few teachers, and, for ROI, almost any other career pays better.
     
  23. samiwas macrumors 65816

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    #23
    I think you might have mentioned it before, but the finger should also be pointed at companies who want degrees or years of experience for jobs which simply do not require either. Then they complain that they can't find "qualified" candidates. If you require the T-shirt folder at Old Navy to have a masters degree in retail services and 4 years experience managing retail stock supply chains, well then you will never find a qualified candidate. My wife ran into this in her job search a few years back. She was just trying to find something to make an income, and was just looking for simple part-time jobs to fill up some time. Even things as simple as customer service phone/email jobs required degrees and years of experience. She never got a degree, but is more intelligent than most people with one. But, no employer would ever give her the time of day, because she's "not qualified".

    Business needs a big finger pointed at themselves as well.

    I went to a large state university from 1993-1997. According to some online sources, the yearly in-state tuition (which I qualified for my second year) was $1,950-$2,335 per year. It's now listed at over $8,500, an increase of over four times.

    Absolutely. I have heard many a person say they would rather pay more just to know that they are paying for only themselves, rather than pay less and know that they are paying for other "freeloaders".
     
  24. citizenzen macrumors 65816

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    #24
    Their wish came true. Lucky them.
     
  25. VulchR macrumors 68020

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    #25
    FWIW the UK is now charging students after a tradition of providing undergraduate education paid for by taxes and postgraduate education through studentships. Now the students have to taken 'loans' because no politician in the UK is willing to call it a graduate tax. The Tories had promised to put the money they earned from selling the rights to the 4G mobile phone frequencies into a sovereign fund for supporting university education, but of course they reneged.

    My take on things is that the government should pay (up to a limit) and then the graduates should pay back into the system according to their ability to pay.

    I also like the idea of peer-to-peer loans - in effect, individuals investing in students for a small proportion of their future earnings. This might help support the older generations who need the younger generations to support them anyway, and it would attract money to the students who take their work seriously (presumably such students would have to pay lower rates as potential funders bid for them).....
     

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