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Is a student loan that bad?

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Anonymous
Not applicable

Is a student loan that bad?

I'm in my second year of community college, compared to universities, tuition seems fairly cheap to me. It's 2500-3000 per term.

I have enough left in my college fund that my parents set up for 2 terms out of the 4 terms total that are left. 

My parents don't share much when it comes to financials, so I don't want to share on a public forum. However, my mother frequently complains about my dads spending and bill amounts. They should be pretty well off from what I could tell.

My father says after I use up my college fund I should leave college and work to save up the 5000(approx) for the last two terms. 

However, I am recently divorced single mother of 3 young children. Not possible to get a job within reasonable distance (as far as gas money goes) that can afford all me and my kids need and save up 5000 before my credits expire. 

 

Side note: I'm enrolled in a program that has 22% job growth outlook and easily within 2yrs in the field with good experience, could be making upwards of 65k which is much better than my usual 15k

 

I have a long history of struggle with college, working to get my financial aid back. My dad is extremely against any sort of loan. Reminds me each term "NO LOANS"

 

Big question: Is getting a student loan so bad? I have other resources maxed out, (other than grants/scholarships due to current, temporarily inability to get financial aid) and I can afford books and supplies. 

Message 1 of 15
14 REPLIES 14
rostrow416
Established Contributor

Re: Is a student loan that bad?

If the options are either take out a student loan and finish school or drop out and save to finish later, you should just take the loan and finish.  

 

As long as your costs are not going to get out of control (and from the cost of your tuition, it shouldn't), you should be able to come up with a repayment plan the same way you would come up with a plan to save the money to pay for school if you were to drop out now and go that route.

 

Make sure you get a Federal student loan, they are a lot more reasonable than a private one.

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Message 2 of 15
Slabenstein
Valued Contributor

Re: Is a student loan that bad?

I would say that, like many credit products, student loans are neither good nor bad in themselves and can be either depending on what debt one takes on and how one manages it.  Until about two years ago, my spouse's student loan payments were far in excess of what they could afford monthly, and that debt was a huge stone around their neck that defined a lot of their life in a really negative way.  They had to deal with collections harrassment, garnishment, denied rental applications, trashed credit reports, and a generally lower standard of living for about ten years, and even now we live two states away from our friends and family for a job that lets them pay them.  So student debt can be very bad debt to carry if it's in excess of what you can afford, since there's no real way to wipe it in a BK like other consumer debt, but it's also the case that if it's taken out in the right amount and in the right way student loan debt can be a pretty powerful financial tool.  My spouse left undergrad with debt about 4.5x their first-year pay, and about 2/3 of it in private loans, which has been a very steep hill to climb.  If you can finance your degree for no more than 1x your expected first-year pay, if you can do so with only or mostly federal loans, and if the degree you're pursing will give you access to higher lifetime earnings than the education level that you had before, then I think student loans will usually make sense for you because 1) the cost will be manageable in the near term and 2) hugely offset by the gains in the long term.  Your father may be looking at your pursuit of higher education through the lens of the costs a degree carried when he was college age which, depending on his age now, may have been at a time when working your way through college without debt was much more feasible.  Iirc my dad paid for his 2 years community and 2 years university w/ summer and part-time jobs and didn't take on any student debt until grad school.  College costs are much, much higher today and, while the easy availability of student loans in large amounts has probably been one of the drivers of that increase, they're still a necessity for most students now if they want access to the incomes that post-secondary education can provide.


Message 3 of 15
calyx
Super Contributor

Re: Is a student loan that bad?

It totally depends on the situation.   If you're in the middle of school, can take out loans to finish your degree and get a job, then great!

It's like car loans - are they bad?  no, they're neutral, how you use them and handle them is what is good or bad.

Just borrow what you need (and nothing else) and pay them off (while staying on top of any servicers, because it's the customer service that is usually bad).

Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 4 of 15
Anonymous
Not applicable

Re: Is a student loan that bad?

A lot of people say they are really bad because they get stuck with predatory lenders. 

I think it depends on what type of lender you go to. I have heard very little complaints about student loans from well established banks, but I've heard plenty about Sallie Mae, College Ave etc. (private lenders).

It also depends on what type of borrower you are. If you know that you can complete the monthly payments and you are extremely confident on the terms and conditions then they are not "bad" per say.

 

I think your fathers idea of you leaving for one year to work might be a good idea. Also, since you are a recently divorced mother of three and you're going to a communtity college, they should be able to grant you some type of grant.

Have you tried FASFA? or grants for displaced homemakers? 

Message 5 of 15
Anonymous
Not applicable

Re: Is a student loan that bad?


@Anonymous wrote:

I'm in my second year of community college, compared to universities, tuition seems fairly cheap to me. It's 2500-3000 per term.

I have enough left in my college fund that my parents set up for 2 terms out of the 4 terms total that are left. 

My parents don't share much when it comes to financials, so I don't want to share on a public forum. However, my mother frequently complains about my dads spending and bill amounts. They should be pretty well off from what I could tell.

My father says after I use up my college fund I should leave college and work to save up the 5000(approx) for the last two terms. 

However, I am recently divorced single mother of 3 young children. Not possible to get a job within reasonable distance (as far as gas money goes) that can afford all me and my kids need and save up 5000 before my credits expire. 

 

Side note: I'm enrolled in a program that has 22% job growth outlook and easily within 2yrs in the field with good experience, could be making upwards of 65k which is much better than my usual 15k

 

I have a long history of struggle with college, working to get my financial aid back. My dad is extremely against any sort of loan. Reminds me each term "NO LOANS"

 

Big question: Is getting a student loan so bad? I have other resources maxed out, (other than grants/scholarships due to current, temporarily inability to get financial aid) and I can afford books and supplies. 


It always amazes me that people will be against taking out a student loan but will march down to a car lot and finance a car that as soon as you turn out of the parking lot the car will go down in value.  But when approached about a student loan that could possibly (depending on your major and job demand) you can make more money than  you could without said degree.   If the job you're looking at getting into has a good job demand and this degree will allow you to get your foot in the door I'd say take the loan.  Business 101 says "in order to make money you must spend money".   A doctor will leave med school on average owing over 200K in loans.   Ask yourself this question.  Have you ever seen or met a broke doctor?   Have you ever heard of a doctor struggling with bills?   I haven't.  They drive nice cars.  Live in nice houses and are in a career that the 200K was an INVESTMENT in themselves that will be made back 3 times or more.  

Message 6 of 15
OmarR
Established Contributor

Re: Is a student loan that bad?


@Anonymous wrote:

Ask yourself this question.  Have you ever seen or met a broke doctor?   Have you ever heard of a doctor struggling with bills?   I haven't.  They drive nice cars.  Live in nice houses and are in a career that the 200K was an INVESTMENT in themselves that will be made back 3 times or more.  


My wife works in the medical field and my Fortune 500 company position had me working with doctors up until recently. 

 

Doctors can ABSOLUTELY be broke. No different than any other profession that thinks that they are smarter than the system.

 

My wife works with a doctor, who is married to another doctor. They EACH make about $250k/yr. The husband needed the wife to co-sign for his $100k Tesla. Nice car. Nice house. They own a stable with horses. And they live paycheck to paycheck. 

 

I worked with a doctor who admitted to me that her $300k student loans was "like their own 2nd mortgage" at $2k/month payments.  And with the interest 6%, she had no idea how she was going to pay it off. Her credit shot, too. She makes triple my salary and I wouldn't even think about lending her any money. 

 

If your income is X, and you constantly spend and/or borrow 2x, that's just simple math.  

 

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Message 7 of 15
jmw1
Frequent Contributor

Re: Is a student loan that bad?

The vast majority of college degree programs are garbage as far as improving future salaries. If you can get the education for free, sure. The school is not a good source of advice as far as whether a degree program will lead to a better job because they want you to pay and enroll.  Unless the degree in a patient facing health field, accounting, or computer science, I would be wary of spending money on a degree. Even business administration is not a great bet, but would be OK if tuition is really low.

 

Now onto the student loans. The big, big, huge minus is that they are not dischargable in bankruptcy. If folks were allowed to discharge student loans, there would be a line around the block to bankruptcy lawyers. Almost everything else can disappear in bankruptcy. Do not let the talk about student loan forgiveness make you think things are going to get better. It's been six over months and almost nothing has happened regarding campaign promises to deal with student loans. Assume you will die with student loans no matter how bad your situation gets or you will pay every last penny to get rid of it.

 

Between the two paragraphs above, I would be wary about going to school and getting into student loan debt.  A car loan on a depreciating asset is still better than a student loan because you need transportation to make money at work. The education will probably not help you make any extra money unless it's one of the few majors I listed above. 

 

Message 8 of 15
unsungivy
Established Contributor

Re: Is a student loan that bad?


@jmw1 wrote:

The vast majority of college degree programs are garbage as far as improving future salaries. If you can get the education for free, sure. The school is not a good source of advice as far as whether a degree program will lead to a better job because they want you to pay and enroll.  Unless the degree in a patient facing health field, accounting, or computer science, I would be wary of spending money on a degree. Even business administration is not a great bet, but would be OK if tuition is really low.

 

Now onto the student loans. The big, big, huge minus is that they are not dischargable in bankruptcy. If folks were allowed to discharge student loans, there would be a line around the block to bankruptcy lawyers. Almost everything else can disappear in bankruptcy. Do not let the talk about student loan forgiveness make you think things are going to get better. It's been six over months and almost nothing has happened regarding campaign promises to deal with student loans. Assume you will die with student loans no matter how bad your situation gets or you will pay every last penny to get rid of it.

 

Between the two paragraphs above, I would be wary about going to school and getting into student loan debt.  A car loan on a depreciating asset is still better than a student loan because you need transportation to make money at work. The education will probably not help you make any extra money unless it's one of the few majors I listed above. 

 


From the other side of the fence... many many MANY jobs will not let you get a foot in the door without the "basic" box checked of a bachelor's degree. They don't care what type, what major, or where it came from. Just that you can check that box. Did you know you can't work at a rental car company, and rent people cars without a bachelor's degree (at least this was the case when I was job hunting in the mid 00's)? Found that out when I was burnt out from my first attempt at college, and it took me 10 years to go back and finish. And yeah, I took out loans. After I finished paying off loans from the FIRST time. It is what it is.

 

My parents were in the "put yourself through college waiting tables" generation. But they also commited to helping their kids with college (parents plus loans, in addition to us all getting scholarships and loans in our own names), and now I feel bad for them that they have the weight of student loans in their 70s that weren't even for themselves. But at least it allows them to empathize with the current situation as it stands, while being able to contrast it with how easily they were able to fund their own college educations.

 

The OP is not seeking a crazy useless degree, they are paying for the "basic" box you have to check in a large number of employment fields in the world today.


Biz - Sock -
Message 9 of 15
jmw1
Frequent Contributor

Re: Is a student loan that bad?

Checkbox BA degrees in garbage majors like liberal studies, general studies, etc. are OK if they're almost free (less than $10k).  Example is WGU (Western Governor's University) with a very motivated and fast online learner who can finish it in a year after community college.  Interestingly, all of WGU's majors are aimed at future careers with no checkbox majors.  Otherwise I think it costs too much.

 

Don't fall for the 1980s propaganda saying that a person will completely change careers seven times in their lifetimes so choosing a liberal arts major doesn't hurt them.  With automation and AI around the corner, it's very important to specialize in something that makes money. That's why I'm pretty hostile to checkbox BA degrees.  Even if it's cheap or free, you're better off picking a more useful and often a much more difficult major rather than a checkbox major.

 

Student loans are total evil. Don't even go near them. Find a cheaper school where you can complete your BA fast.

Message 10 of 15
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