Childrens' Student Loans Delaying Retirement

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
flyingbison
Posts: 1363
Joined: Wed Mar 12, 2014 8:52 am

Re: Childrens' Student Loans Delaying Retirement

Post by flyingbison » Fri Dec 04, 2015 11:13 am

PVW wrote:
flyingbison wrote:
The "free market" price of tuition would be much, much higher than what public universities currently charge because the cost is already subsidized by state support, grants, and donations. The same service, un-subsidized, would cost 3 times as much as students are paying now. Maybe you are arguing that you want universities to provide some other cheaper service than what they do now, but that's a completely different line of discussion. And, such alternatives already exist in the form of trade schools, community colleges, for-profit colleges, etc.
I think we are arguing different points. I am not saying there should be any change in the way public universities are funded. I'm saying that there should be more free-market decisions from students and one way to do that is to limit the amount of student loans for financially worthless degrees. If students were making more free-market decisions, then expensive universities would either get cheaper or die.
I think you are right. Your original comment was specifically about public universities, and I would have a very hard time classifying any of them as expensive when compared to the cost of private colleges. I'd also disagree with the notion that there is any such thing as a "financially worthless" college degree. The main purpose of a college education is not vocational training, but even if you want to focus on employment and income, college grads from the lowest paying fields make more, on average, than those without a college degree.

I do agree that students should make good choices when it comes to taking on debt, but the vast majority do. About 70% of college grads finish with some student loan debt, and the average amount for that group is $35k, which is a very manageable amount. The ones who are racking up six figures to attend expensive private schools are the outliers, not the norm, and the vast majority of student loan defaults are from students enrolled in for-profit institutions (they also suck up a huge chunk of Pell grant money).

PVW
Posts: 590
Joined: Mon Dec 29, 2014 11:01 am

Re: Childrens' Student Loans Delaying Retirement

Post by PVW » Fri Dec 04, 2015 11:45 am

flyingbison wrote:
I'd also disagree with the notion that there is any such thing as a "financially worthless" college degree. The main purpose of a college education is not vocational training, but even if you want to focus on employment and income, college grads from the lowest paying fields make more, on average, than those without a college degree.
I agree with you. I was being overly general in referring to financially worthless degrees when what I meant were degrees that wouldn't pay for the loans used to fund them. With these degrees (and all degrees really), students should be weighing the cost with the reward, whether it be financial or otherwise. Sometimes students need help figuring out if the cost is worth it.

snowman
Posts: 934
Joined: Thu Jan 31, 2013 12:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by snowman » Fri Dec 04, 2015 12:10 pm

I see people like this everywhere around me, it’s an epidemic. I understand there is a tendency these days to assign blame for every problem in life - the lender, the government, bad economy, bad luck, whatever. But where is personal responsibility? This is just wrong on so many levels...

When I read this article, my first thought was about our HS with roughly 2000 students. Situated in a beautiful suburban landscape, it is accessible by many sidewalks, designated bike lanes, and roads, of course. Every morning, there is such congestion it takes one 15-20 minutes just to get out of the neighborhood. Almost nobody walks, bike racks are empty, everybody drives. Even kids within 5 minute walk time will rather drive for 20 minutes! Apparently, it’s what’s expected if you want to be “in”; walking or biking to school is not “cool”. Somewhat smaller congestion happens at lunch time – juniors and seniors getting into cars driving “out for lunch” to places several miles away.

I talked to my kids about it, not understanding health and financial aspects of such behavior. They said some kids work part time, most don’t. Their parents pay for it, they said, putting other kids under peer pressure to talk to their parents about the pain of being left out; parents eventually cave and follow the crowd. It becomes the norm.

These kids then apply to college of their “dreams” – what that means has usually more to do with landscaping, cafeterias and recreational facilities, than with academic reputation and job opportunities. Few will get substantial merit aid, even fewer will study well-paying STEM degrees. They cannot – math is “hard”, and college is supposed to be “the best 4 years of your life” anyway. Most parents, even the ones already financially drained, including recently downsized or laid off, will continue to subsidize this lifestyle. They endured it up to this point, they can handle the last 4 years. Their kids deserve it, after all, and cannot be left out at this critical point of their life. And since the cash flow is tight – big mortgage, car payment, CC debt payment, you name it – there goes HELOC, there goes parent loans. Hopefully, the kid will get a job and pay us back, although it’s so hard in today’s economy with high unemployment and stagnating wages...

These kids are now coming home to mam and dad, disillusioned about the tough world out there not appreciating their hard earned degree. Next door neighbor girl is back, having earned media communications degree from university in TX financed mostly by HELOC. Across the street, the boy is back, having earned journalism degree from university in NY; parents complain about loan payments and blame the administration for “stagnant” economy. And the house by the mail boxes – OMG – both twins are back, playing basketball again in the driveway just like in years past growing up. Parents had tough time with job losses in great recession, there was no HELOC available to them, both degrees (out of state) were financed by loans. One of them studied political science, the other one English. Very nice people, not blaming anyone; they just will not retire, they say, they can’t, very much like the couple in this story.

It’s a sad state of affairs. I fully understand there are underprivileged families out there who deserve every help they can get to get their kids through college. But there is a fairly large portion of outstanding student loan debt that’s caused by irrational parental behavior. I don’t blame the kids or “worthless degrees”; kids are not mature enough at that point, and college is not vocational school. But if you have to borrow money, there has to be risk-reward analysis done by parents. It all starts at home, and many adults are not doing their job, unfortunately.

Dandy
Posts: 5969
Joined: Sun Apr 25, 2010 7:42 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Dandy » Sat Dec 05, 2015 7:47 am

No doubt college is expensive. When I went to college I could almost pay the tuition with earnings from a summer job. My employer paid for my masters. There are probably lots of reasons for today's children getting into financial difficulty, or their parents when it comes to college. But one factor is parents trying to do the best for their children and going for colleges beyond their means. Lots of peer pressure on kids and parents to go to a brand name school. There are many institutions that will loan you or your child money to go to a university beyond your means. Some parents go into hoc sending their children to private high school.

In some cases public high school or state colleges are not up to snuff. But, even when both are fine many parents choose to go the expensive and more prestigious route. It is not easy to look your child in the eye and say I'm glad you friend is going away to a brand name university but we can't afford to do that so your going to one of several very nice state schools or even worse a junior college. Oh and we can't afford to have you live on campus so you will have to commute from home. Love ya and your sister.

It sure isn't easy to deny your child the best when you could provide it if you or your child would just take out a loan. You might feel like a failure but you may also set a good example for your children on how to manage money and make tough financial decisions. I am fortunate that both my children have their masters and neither of us have any debt. Now we can have a comfortable retirement and are in a position to help them and our grandchildren financially instead of them having to help us.

ThatGuy
Posts: 940
Joined: Fri Feb 05, 2010 9:00 am

Re: Childrens' Student Loans Delaying Retirement

Post by ThatGuy » Sat Dec 05, 2015 8:26 am

Wagnerjb wrote:I respectfully disagree that people have a God-given right to subsidized college.
What about a state-given right?
Work is the curse of the drinking class - Oscar Wilde

cutterinnj
Posts: 306
Joined: Wed Jun 01, 2011 10:08 pm

Re: Childrens' Student Loans Delaying Retirement

Post by cutterinnj » Sat Dec 05, 2015 9:07 am

I'm a big proponent of community colleges. Nowadays, most support the first two years of STEM education. You can then transfer to a state school, sometimes with a scholarship, and finish up your undergraduate degree on the cheap.
If you plan on going for a graduate degree in a STEM field, do some decent research during your undergrad years, and ace the entrance exam, and you should be fine.

It makes virtually zero sense to go to an expensive private school (outside of Harvard/Yale/Princeton... and even those choices may be dubious depending on your chosen field)

User avatar
Tycoon
Posts: 1500
Joined: Wed Mar 28, 2012 7:06 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Tycoon » Sat Dec 05, 2015 9:21 am

snowman wrote:I see people like this everywhere around me, it’s an epidemic. I understand there is a tendency these days to assign blame for every problem in life - the lender, the government, bad economy, bad luck, whatever. But where is personal responsibility? This is just wrong on so many levels...

When I read this article, my first thought was about our HS with roughly 2000 students. Situated in a beautiful suburban landscape, it is accessible by many sidewalks, designated bike lanes, and roads, of course. Every morning, there is such congestion it takes one 15-20 minutes just to get out of the neighborhood. Almost nobody walks, bike racks are empty, everybody drives. Even kids within 5 minute walk time will rather drive for 20 minutes! Apparently, it’s what’s expected if you want to be “in”; walking or biking to school is not “cool”. Somewhat smaller congestion happens at lunch time – juniors and seniors getting into cars driving “out for lunch” to places several miles away.

I talked to my kids about it, not understanding health and financial aspects of such behavior. They said some kids work part time, most don’t. Their parents pay for it, they said, putting other kids under peer pressure to talk to their parents about the pain of being left out; parents eventually cave and follow the crowd. It becomes the norm.

These kids then apply to college of their “dreams” – what that means has usually more to do with landscaping, cafeterias and recreational facilities, than with academic reputation and job opportunities. Few will get substantial merit aid, even fewer will study well-paying STEM degrees. They cannot – math is “hard”, and college is supposed to be “the best 4 years of your life” anyway. Most parents, even the ones already financially drained, including recently downsized or laid off, will continue to subsidize this lifestyle. They endured it up to this point, they can handle the last 4 years. Their kids deserve it, after all, and cannot be left out at this critical point of their life. And since the cash flow is tight – big mortgage, car payment, CC debt payment, you name it – there goes HELOC, there goes parent loans. Hopefully, the kid will get a job and pay us back, although it’s so hard in today’s economy with high unemployment and stagnating wages...

These kids are now coming home to mam and dad, disillusioned about the tough world out there not appreciating their hard earned degree. Next door neighbor girl is back, having earned media communications degree from university in TX financed mostly by HELOC. Across the street, the boy is back, having earned journalism degree from university in NY; parents complain about loan payments and blame the administration for “stagnant” economy. And the house by the mail boxes – OMG – both twins are back, playing basketball again in the driveway just like in years past growing up. Parents had tough time with job losses in great recession, there was no HELOC available to them, both degrees (out of state) were financed by loans. One of them studied political science, the other one English. Very nice people, not blaming anyone; they just will not retire, they say, they can’t, very much like the couple in this story.

It’s a sad state of affairs. I fully understand there are underprivileged families out there who deserve every help they can get to get their kids through college. But there is a fairly large portion of outstanding student loan debt that’s caused by irrational parental behavior. I don’t blame the kids or “worthless degrees”; kids are not mature enough at that point, and college is not vocational school. But if you have to borrow money, there has to be risk-reward analysis done by parents. It all starts at home, and many adults are not doing their job, unfortunately.
Great observations snowman.
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Some are predisposed to consistently lose money. Don't be a sheep.

User avatar
Tycoon
Posts: 1500
Joined: Wed Mar 28, 2012 7:06 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Tycoon » Sat Dec 05, 2015 9:28 am

ThatGuy wrote:
Wagnerjb wrote:I respectfully disagree that people have a God-given right to subsidized college.
What about a state-given right?
Nope. Just because one can doesn't mean one should. Lot's of people are unprepared for university work. It would be, and is, wasteful for everyone to go to university just because they believe they have a God-given, or state-given, right.
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Some are predisposed to consistently lose money. Don't be a sheep.

cutterinnj
Posts: 306
Joined: Wed Jun 01, 2011 10:08 pm

Re: Childrens' Student Loans Delaying Retirement

Post by cutterinnj » Sat Dec 05, 2015 9:33 am

Tycoon wrote:
ThatGuy wrote:
Wagnerjb wrote:I respectfully disagree that people have a God-given right to subsidized college.
What about a state-given right?
Nope. Just because one can doesn't mean one should. Lot's of people are unprepared for university work. It would be, and is, wasteful for everyone to go to university just because they believe they have a God-given, or state-given, right.

Agreed that many should not be attending school full time.
However, technology has advanced to the point that much of higher education can be found on-line.

Starbucks' University of Arizona program seems like a fantastic idea that should spread like wildfire.

Work somewhere, get subsidized on-line education (which is extremely cheap to commoditize), and people can get an undergrad (and even a graduate) education on the cheap.

Similarly, if someone is just not sure college is for him, you can take quality classes online for a few semesters (maybe 1 or 2 at a time?) to test the waters.
Right now, for instance, many of MIT's best classes are presented completely on-line. (I'm looking at you, Walter Lewin!)
If you fail them, you go back to Barista-ing $200 poorer rather than $200,000 poorer.

User avatar
Tycoon
Posts: 1500
Joined: Wed Mar 28, 2012 7:06 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Tycoon » Sat Dec 05, 2015 9:50 am

cutterinnj wrote:
Tycoon wrote:
ThatGuy wrote:
Wagnerjb wrote:I respectfully disagree that people have a God-given right to subsidized college.
What about a state-given right?
Nope. Just because one can doesn't mean one should. Lot's of people are unprepared for university work. It would be, and is, wasteful for everyone to go to university just because they believe they have a God-given, or state-given, right.

Agreed that many should not be attending school full time.
However, technology has advanced to the point that much of higher education can be found on-line.

Starbucks' University of Arizona program seems like a fantastic idea that should spread like wildfire.

Work somewhere, get subsidized on-line education (which is extremely cheap to commoditize), and people can get an undergrad (and even a graduate) education on the cheap.

Similarly, if someone is just not sure college is for him, you can take quality classes online for a few semesters (maybe 1 or 2 at a time?) to test the waters.
Right now, for instance, many of MIT's best classes are presented completely on-line. (I'm looking at you, Walter Lewin!)
If you fail them, you go back to Barista-ing $200 poorer rather than $200,000 poorer.
I see your point, for those that are capable these are great options. However, the point I was trying to get across is that a large portion of the world's population, for whatever reason, will not be prepared to successfully graduate from college. I understand there are many reasons for this, and I don't wish to debate them. Heck, many kids with relatively successful high school careers often struggle with the rigor of college work. Given these facts does it make sense to grant everyone the "right" to attend college? Would it be wasteful to pay for someone to attend university when there is little hope of earning a degree?

Respectfully,

Tycoon
Last edited by Tycoon on Sat Dec 05, 2015 10:10 am, edited 1 time in total.
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Some are predisposed to consistently lose money. Don't be a sheep.

Wagnerjb
Posts: 7203
Joined: Mon Feb 19, 2007 8:44 pm
Location: Houston, Texas

Re: Childrens' Student Loans Delaying Retirement

Post by Wagnerjb » Sat Dec 05, 2015 9:58 am

Tycoon wrote:
ThatGuy wrote:
Wagnerjb wrote:I respectfully disagree that people have a God-given right to subsidized college.
What about a state-given right?
Nope. Just because one can doesn't mean one should. Lot's of people are unprepared for university work. It would be, and is, wasteful for everyone to go to university just because they believe they have a God-given, or state-given, right.
Well said. Thanks Tycoon.

We can debate whether one should have that right, but I will vote for representatives that allow me to spend my money where I choose....be that for an education for my child, or not. I am not interested in subsidizing everybody else's children. If the degree isn't worth the financial sacrifice for the parents (or the financial sacrifice for the children by working during school and/or paying off their loans), then maybe they shouldn't be going to college.
Andy

ParkersPaPa
Posts: 101
Joined: Sun Jun 14, 2015 9:16 am

Re: Childrens' Student Loans Delaying Retirement

Post by ParkersPaPa » Sat Dec 05, 2015 11:11 am

I greatly prefer the deal I made with my daughter: no loan support but upon graduation I will pay you $200/month until I die. No inflation adjustment. Two years into this she is starting to feel it is unseemly and threatens to refuse further payments. :D

A-Commoner
Posts: 218
Joined: Thu Apr 24, 2014 7:17 pm

Re: Childrens' Student Loans Delaying Retirement

Post by A-Commoner » Sat Dec 05, 2015 11:34 am

Money spent today instead of being saved for your retirement delays your retirement. The spending doesn't have to be on your kid's college education. It could be on anything.....vacations, cars, clothes, food, health care. Where does one draw the line between acceptable current spending on your child, and current spending that threatens the viability of your own retirement? You may just have to designate a reasonable spend limit....say, no more than 4% of assets or current income is allocated for your kid's schooling. It's not an all-or-none issue (that is to say, paying zero for college versus paying 100% for college is a false choice).

Pdxnative
Posts: 233
Joined: Sat Nov 07, 2015 2:17 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Pdxnative » Sat Dec 05, 2015 4:01 pm

flyingbison wrote: But the share/% of overall costs that the public is paying has declined. Because of that, a larger share of the cost has been shifted to tuition.
This is a key point, and I get the sense that some folks don't understand the magnitude of the shift that has occurred since the last recession. Between 2008 and 2015, there was a precipitous drop in state funding for higher ed in most states, resulting in funding levels 20, 30, and sometimes 40% lower than pre-recession. On a per student level, many public universities are receiving 2, 3, and sometimes 4K less than they did just 6-7 years ago. This has resulted in a steep rise in tuition at these schools. Now, that does not necessarily mean that folks should be taking out six digit loans. But many families who did things right in planning for college were also hit with rapidly rising tuition with little warning, in an economic environment that was less than ideal. It is not the same world that those of us who grew up in the 70s-90s encountered.

Here's one source of info. There are others that make the same point. Opinion pieces are not an ideal place to get facts.

http://www.cbpp.org/research/state-budg ... e-students

snowman
Posts: 934
Joined: Thu Jan 31, 2013 12:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by snowman » Sun Dec 06, 2015 11:03 am

Tycoon wrote:
Great observations snowman.
Thank you, Tycoon. What I see in my neighborhood really makes my head spin! Most of these kids don’t have part time jobs, they have no earnings. Yet, somehow, they were able to convince their parents that they DESERVE a car (parents’ or their own), smartphone, designer clothes. They not only convinced them to buy lunches at school that are less healthy and more expensive than home prepared meals, they convinced them to pay for their lunch out at Chipotle, Panda Express, or another place in town. Now think about it: not only is it expensive for parents, it creates unhealthy, expensive habit for their kids that will last a lifetime.

I had to drive my daughter to Dr. appt. the other day, and mentioned to her that we might be late – we were being stuck trying to get out of the parking lot at lunch time together with hundreds of other cars going out for lunch. I said this is insane. My daughter tells me it’s not just lunch, some of her friends come to school with Starbucks coffee in their hands, and in some “circles” – not hers apparently – it’s to be expected if you want to be included. And I am like WTF? Really? Do they work? No. Who pays for that? Their parents. Why? Dad, you are so yesterday, not everyone is like you. I am the only one I know who had to buy their own phone; not that I complain, I am actually proud of myself for being able to buy my own phone with my own money, it’s kind of good feeling, you know what I mean, dad? Yep, I know it very well, good for you! But this is like $5 for coffee, $10 for lunch, 5 times a week... invested for 10 years it could be... Dad, she says, nobody thinks like you.

So I said they better find well paying careers in order to finance their already elevated “needs”; at some point they have to be on their own and not rely on their parents anymore. Naturally, I asked where and what her friends want to study after graduating from HS. The Starbucks coffee girl wants to major in music, her best friend in dance, another one in politics or philosophy, another one in history or journalism; but it could change, as everything changes, she says. I said you know, it’s going to be hard for them. What kind of job do you get with music or dance major? Is it easy to find one? How much does it pay? What’s the backup plan? Dad, she says, nobody thinks like that. If she likes dance, that’s what she is going to study because that will give her experience she will enjoy, she is not thinking about employment prospects after graduation. What about her parents, I ask. Don’t they think about her job prospects? Of course they don’t, she says. It’s just not how the world works, dad, get a clue already. They will pay for whatever she chooses to study because they love her and want her to be happy. That’s how most parents think, dad, you are very different. Let’s not talk about it anymore, OK?

And I get a knot in my stomach. It’s like watching a movie in slow motion, where you already know how it will end. Some of her friends will be coming back home to live with mom and dad after experiencing 4 years of happiness away from home. They will undoubtedly be better dancers, debaters, writers and flute players than before they left. They will also be unemployed, and their parents will be saddled with mountain of debt. Many will call for student loan debt forgiveness and free college education. And some, like myself, will be thinking - this was all so predictable! You knew it’s going to happen, it could not end up in any different way!

Pdxnative
Posts: 233
Joined: Sat Nov 07, 2015 2:17 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Pdxnative » Sun Dec 06, 2015 2:58 pm

Snowman, you're not suggesting that kids shouldn't pursue degrees in the humanities and social sciences, are you? I understand what you are saying about costs and benefits, but that sounds like a world I don't want to live in. Not to mention, I know quite a few stem folks. Most of them are being managed by liberal arts grads who went to b school.

User avatar
BigOil
Posts: 225
Joined: Wed May 23, 2012 2:45 pm

Re: Childrens' Student Loans Delaying Retirement

Post by BigOil » Sun Dec 06, 2015 7:09 pm

MnD wrote:I see this all the time. Parents make decent money but every paycheck is spent on fancy home with big mortgage, car payments, vacations, expensive toys etc. ...
Sound like many of our neighbors and a few friends over the years (as best we can tell...) :| :| :| :oops: :oops: :oops:

User avatar
BigOil
Posts: 225
Joined: Wed May 23, 2012 2:45 pm

Re: Childrens' Student Loans Delaying Retirement

Post by BigOil » Sun Dec 06, 2015 7:23 pm

snowman wrote:there is a fairly large portion of outstanding student loan debt that’s caused by irrational parental behavior. I don’t blame the kids or “worthless degrees”; kids are not mature enough at that point, and college is not vocational school. But if you have to borrow money, there has to be risk-reward analysis done by parents. It all starts at home, and many adults are not doing their job, unfortunately.
It sounds terribly cynical. I think it's true. Significant part of population in the reasonably affluent lower middle to upper middle-class...

You can't cure stupid. There's just no nice way to say somebody has to be the grownup. Furthermore politicians will always pandered to these issues and it's the media as well.

I suppose it makes sense, as most people apparently cannot properly shop for many things (financial services, car leases-buy, RE commissions & houses,multi level stuff...etc.)

But we overcome somehow. But it would be nice if the rules could somehow make it a little bit harder to screw things up. Stuff happens in life but self-inflicted worse.

Grt2bOutdoors
Posts: 21353
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Childrens' Student Loans Delaying Retirement

Post by Grt2bOutdoors » Sun Dec 06, 2015 7:26 pm

snowman wrote:I see people like this everywhere around me, it’s an epidemic. I understand there is a tendency these days to assign blame for every problem in life - the lender, the government, bad economy, bad luck, whatever. But where is personal responsibility? This is just wrong on so many levels...

It’s a sad state of affairs. I fully understand there are underprivileged families out there who deserve every help they can get to get their kids through college. But there is a fairly large portion of outstanding student loan debt that’s caused by irrational parental behavior. I don’t blame the kids or “worthless degrees”; kids are not mature enough at that point, and college is not vocational school. But if you have to borrow money, there has to be risk-reward analysis done by parents. It all starts at home, and many adults are not doing their job, unfortunately.
The kids are immature, so are the parents. Let's face it, if the requirement to be a parent required maturity and rational thinking, there would be a heck of a lot less young adults and kids walking on the face of the earth.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

cutterinnj
Posts: 306
Joined: Wed Jun 01, 2011 10:08 pm

Re: Childrens' Student Loans Delaying Retirement

Post by cutterinnj » Sun Dec 06, 2015 7:28 pm

Pdxnative wrote:Snowman, you're not suggesting that kids shouldn't pursue degrees in the humanities and social sciences, are you? I understand what you are saying about costs and benefits, but that sounds like a world I don't want to live in. Not to mention, I know quite a few stem folks. Most of them are being managed by liberal arts grads who went to b school.
But that may be the exception rather than the rule. In general, STEM folks do a lot better long term.
That being said, if you're a history major planning on going to med school, it's fine.
If you're a chemical engineer and double major in English, I think that also potentially gives you a leg up.

However, compare your average electrical engineer vs your average anthropologist, and I think the comparison (career-wise) is very one sided.

Atilla
Posts: 1379
Joined: Tue Feb 09, 2010 7:44 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Atilla » Sun Dec 06, 2015 7:48 pm

I've lived in a Big10 city since I started high school. Went to same Big10 school starting in 1985. One semester's tuition doubled from $750 when I started to $1,500 by the time I graduated.

It was very do-able. I graduated with $3,500 in loans. I worked part time making a very good $7.50 an hour back then and my dad paid 1/2 of my tuition and sent me a check for $50 every week. I never lived on campus. I remember living with 5 other guys in a big crappy second floor flat and rent was $145 a month each utilities included. We didn't have a phone or air conditioning.

Now I see all the buildings that have gone up. The new high rise dorms...the labs, big school of business complex...all the new buildings. The luxury and amenities are unbelievable. Same number of students. In-state tuition is now over $10,000 per year. It's crazy.
Moderator Warning-Free Since 2017.

Pdxnative
Posts: 233
Joined: Sat Nov 07, 2015 2:17 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Pdxnative » Sun Dec 06, 2015 7:52 pm

cutterinnj wrote:
Pdxnative wrote:In general, STEM folks do a lot better long term.
Better how? I know quite a few very happy anthro majors who wouldn't trade their education for a higher salary, and actually are dong quite well professionally. Yes, most are in non-anthro fields. But the liberal arts background has given them the intellectual and professional skills to adapt. I think if you look at corporate mgt positions across the board (not just in Palo Alto) you'll find a pretty high % of liberal arts backgrounds.

Grt2bOutdoors
Posts: 21353
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Childrens' Student Loans Delaying Retirement

Post by Grt2bOutdoors » Sun Dec 06, 2015 7:55 pm

Atilla wrote:I've lived in a Big10 city since I started high school. Went to same Big10 school starting in 1985. One semester's tuition doubled from $750 when I started to $1,500 by the time I graduated.

It was very do-able. I graduated with $3,500 in loans. I worked part time making a very good $7.50 an hour back then and my dad paid 1/2 of my tuition and sent me a check for $50 every week. I never lived on campus. I remember living with 5 other guys in a big crappy second floor flat and rent was $145 a month each utilities included. We didn't have a phone or air conditioning.

Now I see all the buildings that have gone up. The new high rise dorms...the labs, big school of business complex...all the new buildings. The luxury and amenities are unbelievable. Same number of students. In-state tuition is now over $10,000 per year. It's crazy.
Cheap deal, HCOL good reputation state school - cost of attendance is $25K per year, without room and board it's $16K and that is before mandatory fees and books and what have you! Insanity at it's finest!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Alchemist
Posts: 341
Joined: Sat Aug 30, 2014 6:35 am
Location: Florida

Re: Childrens' Student Loans Delaying Retirement

Post by Alchemist » Sun Dec 06, 2015 8:42 pm

I was fortunate that my parents are very boglehead like. They eschewed debt and taught their kids to avoid debt, even for school. Instead of helping me find student loan paper work my parents helped me apply for scholarships. I paid for 100% of my tuition and books with scholarships. I lived in an off campus apartment, paid rent with a part time job and drove a car I paid cash for from paychecks earned working part time during high school. And I'm a millennial, graduated in 2009.

There is no reason to be deeply in debt when you graduate college. Go in state and/or start out in community college for get ed requirements, find any scholarship you can get your hands on, and for the love of simple arithmetic don't borrow money to pay living expenses. Get a job. I worked 35 hours a week the entire time I went to school, it didn't kill me. In fact it gave me distinct advantages over my student loan loving peers who didn't even know how to do a job interview when they graduated.

I don't mean to say never get a student loan. But only if you absolutely have to, and only for the amount needed for the cheapest in state school tuition. Thankfully given the $35k average student loan burden most students have graduating today, this seems to be what most people are doing.
Pdxnative wrote:
cutterinnj wrote:
Pdxnative wrote:In general, STEM folks do a lot better long term.
Better how? I know quite a few very happy anthro majors who wouldn't trade their education for a higher salary, and actually are dong quite well professionally. Yes, most are in non-anthro fields. But the liberal arts background has given them the intellectual and professional skills to adapt. I think if you look at corporate mgt positions across the board (not just in Palo Alto) you'll find a pretty high % of liberal arts backgrounds.

I also have to defend the Liberal Arts. Obviously STEM fields are extremely important, but so are many non-STEM fields. I myself got my undergrad in Political Science. I left school immediately making $50k. I'm now 28, been out of school for six years and am making right about $100k. I also have a recently completed Masters in a related field (employer paid for mind you) but that is more applicable to room for advancement. In other words I'd be making the same with the B.A. only but would be harder to advance.

Is this the case of the average Poli Sci major? Probably not. But I am in the Public Sector and it is very applicable to what I do, and I work with people of all different educational backgrounds.

You gain many useful skills no matter what you study in college. But you have to have a plan. I knew where I was going before I even started University. But the problem isn't so much as which degree someone has, but instead the lack of a plan of what to do with it. You can make decent money doing just about anything, but if you have no plan, take on huge amounts of debt blindly, and then hope someone else will make your dream come true than you deserve what you get.

Dandy
Posts: 5969
Joined: Sun Apr 25, 2010 7:42 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Dandy » Mon Dec 07, 2015 8:21 am

My youngest daughter recently married and it reminded me of two big expense decisions somewhat shared by parents and children what college to attend and the wedding expenses necessary to have a nice wedding. I have been very fortunate that both my daughters were reasonable. But, you could see the pressure from them and on them from society, peers and commercial interests. And pressures on parents from the same sources.

For college the kids think it is their decision because it is their life. Point taken but they aren't usually paying for it. And the peer pressure is great. We jointly decided that daughter #1 would be best suited at a smaller college, we discussed and mutually agreed on a few to visit etc. Everything was going great - she came home one day and said Donna's cousin goes to (Really Big School) and loves it. We said whoa - you wanted a smaller school and you don't even know Donna's cousin. We decided on a nice school out of state. She said no one else in my school is going there. etc etc. She finally went to a nice state school out of state and loved it - and we could afford. But we could have easily been pressured into something else. The great thing is that we reached a decision mutually but we retained the adult in the room control and guidance.

As far as weddings it could be 10 times worse. Everything is pitched to the bride - it is her day etc. Thankfully, we didn't have a daughter that was a bridezilla. But, if you want to stimulate the economy forget about infrastructure - just get these single people married :) Again, lots of pressure on child and parents to overspend on the "special day".

Maverick3320
Posts: 527
Joined: Tue May 12, 2015 2:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Maverick3320 » Mon Dec 07, 2015 10:29 am

Pdxnative wrote:Snowman, you're not suggesting that kids shouldn't pursue degrees in the humanities and social sciences, are you? I understand what you are saying about costs and benefits, but that sounds like a world I don't want to live in. Not to mention, I know quite a few stem folks. Most of them are being managed by liberal arts grads who went to b school.
I think what snowman is trying to suggest is that everyone is free to make their own choices, but with that freedom comes responsibility. If one chooses to get a journalism degree - particularly with the common knowledge of the difficulty of getting a decent job with that type of degree - then one shouldn't be complaining or demanding others foot the bill when it turns out that, oddly enough, they don't find a job.

Maverick3320
Posts: 527
Joined: Tue May 12, 2015 2:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Maverick3320 » Mon Dec 07, 2015 10:32 am

Pdxnative wrote:
cutterinnj wrote:
Pdxnative wrote:In general, STEM folks do a lot better long term.
Better how? I know quite a few very happy anthro majors who wouldn't trade their education for a higher salary, and actually are dong quite well professionally. Yes, most are in non-anthro fields. But the liberal arts background has given them the intellectual and professional skills to adapt. I think if you look at corporate mgt positions across the board (not just in Palo Alto) you'll find a pretty high % of liberal arts backgrounds.
Better in terms of starting salary, total salary, ending salary, and ergo, better at being able to pay back their student loans.

Looking at corporate management positions today which are mostly filled by those that went to school 20 or 30 years ago is not necessarily a great way to determine what degrees are useful today.

snowman
Posts: 934
Joined: Thu Jan 31, 2013 12:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by snowman » Mon Dec 07, 2015 10:35 am

Pdxnative wrote:Snowman, you're not suggesting that kids shouldn't pursue degrees in the humanities and social sciences, are you? I understand what you are saying about costs and benefits, but that sounds like a world I don't want to live in. Not to mention, I know quite a few stem folks. Most of them are being managed by liberal arts grads who went to b school.
Oh no, not at all! In fact, I am one of those LA folks with MBA you mention, as is my wife. College education does not equal vocational school, and not everyone wants or can study STEM. However, college education shouldn’t be viewed, or even encouraged, as an extension of childhood, either. Just because your daughter likes to dance, for example, does not necessarily mean she should go to college and major in dance, with minor in media communications as a “backup”. There appears to be no conversation in many of these families loading up on student loans about career prospects after graduation – probability of getting a job, salary range for a given job, ability to pay off student loans with such salary.

My daughter is a dancer too, plus she plays an instrument. She is really good at it, and she absolutely loves it! That’s why most of her friends are from those two groups. When I asked her if she ever thought of pursuing artistic degree like her friends, she said not really, mostly because there are very few openings available (I don’t remember specifically what and where they are), and even if she worked hard and were lucky to land one, it’s an age limited career, plus there are always injuries that can end your career without any warning. Plus, she said, I love school, I love math and science, with a STEM degree I should be able to get a well paying job and have good career that I will enjoy. I can always dance and play music in my spare time if I feel like it.

Obviously, I am glad that our daughter is mature enough to make that kind of judgment, but it does not change the fact that student debt will continue to rise in this country at an alarming rate, when in too many cases it has no reason to exist. Again, if you are rich and are able to finance college “experience” for your kid, more power to you! For the rest of us, there needs to be a child-parent conversation about financial aspect of getting a college degree BEFORE any money is borrowed. Otherwise, there is a good chance parents will end up like the couple in this article. Like many parents all around me. It IS an epidemic.

snowman
Posts: 934
Joined: Thu Jan 31, 2013 12:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by snowman » Mon Dec 07, 2015 10:38 am

Maverick3320 wrote:
Pdxnative wrote:Snowman, you're not suggesting that kids shouldn't pursue degrees in the humanities and social sciences, are you? I understand what you are saying about costs and benefits, but that sounds like a world I don't want to live in. Not to mention, I know quite a few stem folks. Most of them are being managed by liberal arts grads who went to b school.
I think what snowman is trying to suggest is that everyone is free to make their own choices, but with that freedom comes responsibility. If one chooses to get a journalism degree - particularly with the common knowledge of the difficulty of getting a decent job with that type of degree - then one shouldn't be complaining or demanding others foot the bill when it turns out that, oddly enough, they don't find a job.
Well said, thank you. That's exactly what I tried to suggest.

User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 10:13 pm

Re: Childrens' Student Loans Delaying Retirement

Post by dbCooperAir » Mon Dec 07, 2015 10:41 am

A-Commoner wrote:It's not an all-or-none issue (that is to say, paying zero for college versus paying 100% for college is a false choice).
Agreed

In my peer group of the working common people. I see little saved for college, parents will cash flow what they can (with any luck your home may be paid off at this time), student works while going to school and with any luck come out with little to none college debt. If this means going to a community college/living at home etc. so be it. Many would be grateful (at least they should be) and I would even go out on a limb and say they will become young successful adults.

I think the above is much more common than a fully parent funded living on campus college experience.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

WageSlave
Posts: 97
Joined: Tue Jan 08, 2013 3:20 pm

Re: Childrens' Student Loans Delaying Retirement

Post by WageSlave » Mon Dec 07, 2015 10:44 am

snowman, thank you for sharing, that was great reading. Would you be willing to share where you live, just out of curiosity? Though I have a nagging suspicion your experience is probably typical of upper middle class suburbia in the USA.

I have two girls and the scenario you painted scares the heck out of me. As someone who has been reading Mr Money Mustache since he started, this scene is the exact antithesis of his philosophy. Fortunately, it sounds like your daughter is well-adjusted, in contrast to many of her peers. Any tips you can share? My kids are both under five, so I (hopefully) have time to plan and prepare...

As I said before, I can't help but wonder if this environment is fairly common, and maybe it can be offset by strategic relocation. A lot of upper middle class suburbia appeals to me: generally safe, clean, quiet neighborhoods, big yards, good schools... but it seems like in your case there is a hardcore "keeping up with the Joneses" (KUWTJ) mentality that is actively being instilled in the kids. I'd argue that KUWTJ is not only the antithesis of MMM, but of Bogleheads in general (or maybe commonsense personal finance in general).

Grt2bOutdoors
Posts: 21353
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Childrens' Student Loans Delaying Retirement

Post by Grt2bOutdoors » Mon Dec 07, 2015 10:49 am

WageSlave wrote:snowman, thank you for sharing, that was great reading. Would you be willing to share where you live, just out of curiosity? Though I have a nagging suspicion your experience is probably typical of upper middle class suburbia in the USA.

I have two girls and the scenario you painted scares the heck out of me. As someone who has been reading Mr Money Mustache since he started, this scene is the exact antithesis of his philosophy. Fortunately, it sounds like your daughter is well-adjusted, in contrast to many of her peers. Any tips you can share? My kids are both under five, so I (hopefully) have time to plan and prepare...

As I said before, I can't help but wonder if this environment is fairly common, and maybe it can be offset by strategic relocation. A lot of upper middle class suburbia appeals to me: generally safe, clean, quiet neighborhoods, big yards, good schools... but it seems like in your case there is a hardcore "keeping up with the Joneses" (KUWTJ) mentality that is actively being instilled in the kids. I'd argue that KUWTJ is not only the antithesis of MMM, but of Bogleheads in general (or maybe commonsense personal finance in general).
There is no Lake Wobegon - the Jones exist in every neighborhood, town, city, metropolis in the United States, they also live in other countries. This phenomena is not something homegrown, it is pervasive and ingrained in society at large.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

stoptothink
Posts: 6328
Joined: Fri Dec 31, 2010 9:53 am

Re: Childrens' Student Loans Delaying Retirement

Post by stoptothink » Mon Dec 07, 2015 10:53 am

Dandy wrote:My youngest daughter recently married and it reminded me of two big expense decisions somewhat shared by parents and children what college to attend and the wedding expenses necessary to have a nice wedding.
We all want better for our children than we had ourselves, but my wife and I (34 and 29) paid for the entirety of our college educations and wedding ourselves, and we made it through pretty OK. We have agreed to provide that same opportunity to our kids when the time comes. It's not my decision where they go to school or what kind of party to throw when they get married, but IMO I'm not responsible for paying for their decisions. I feel a lot better helping out once they've made those decisions themselves; ie. helping pay off those school loans or providing a home downpayment.

Dandy
Posts: 5969
Joined: Sun Apr 25, 2010 7:42 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Dandy » Mon Dec 07, 2015 11:41 am

We all want better for our children than we had ourselves, but my wife and I (34 and 29) paid for the entirety of our college educations and wedding ourselves, and we made it through pretty OK. We have agreed to provide that same opportunity to our kids when the time comes. It's not my decision where they go to school or what kind of party to throw when they get married, but IMO I'm not responsible for paying for their decisions. I feel a lot better helping out once they've made those decisions themselves; ie. helping pay off those school loans or providing a home down payment.

I don't think most "kids" that are graduating from high school should be in charge of making the decision as to what college they should attend. Most are not mature enough and/or have enough financial savvy to make a good decision. If they are and choose wisely you are blessed. Parental guidance and if all else fails veto power is warranted in most cases. I don't think I would allow my child to choose a college that would burden them with excessive debt. Just because they got all A's in high school doesn't mean much when making these type of decisions at this age with this much peer pressure. Even supposedly mature, savvy adults are making some really bad decisions.

As far as a weddings - people are getting married later and are hopefully more mature and financially savvy so they should be able to choose wisely. Whether parents or children pay for the wedding depends a lot on family/regional custom. My daughter and son-in-law were in their 30's and were easy to work with. But, they were shocked at how easy a few seemingly innocent decisions could drastically drive up the price. Believe me the wedding related merchants are very good at their business of getting people to pay extra for that "special" day. Working together turned out well -- no one has school or wedding related debt.

stoptothink
Posts: 6328
Joined: Fri Dec 31, 2010 9:53 am

Re: Childrens' Student Loans Delaying Retirement

Post by stoptothink » Mon Dec 07, 2015 12:01 pm

Dandy wrote:We all want better for our children than we had ourselves, but my wife and I (34 and 29) paid for the entirety of our college educations and wedding ourselves, and we made it through pretty OK. We have agreed to provide that same opportunity to our kids when the time comes. It's not my decision where they go to school or what kind of party to throw when they get married, but IMO I'm not responsible for paying for their decisions. I feel a lot better helping out once they've made those decisions themselves; ie. helping pay off those school loans or providing a home down payment.

I don't think most "kids" that are graduating from high school should be in charge of making the decision as to what college they should attend. Most are not mature enough and/or have enough financial savvy to make a good decision. If they are and choose wisely you are blessed. Parental guidance and if all else fails veto power is warranted in most cases. I don't think I would allow my child to choose a college that would burden them with excessive debt. Just because they got all A's in high school doesn't mean much when making these type of decisions at this age with this much peer pressure. Even supposedly mature, savvy adults are making some really bad decisions.

As far as a weddings - people are getting married later and are hopefully more mature and financially savvy so they should be able to choose wisely. Whether parents or children pay for the wedding depends a lot on family/regional custom. My daughter and son-in-law were in their 30's and were easy to work with. But, they were shocked at how easy a few seemingly innocent decisions could drastically drive up the price. Believe me the wedding related merchants are very good at their business of getting people to pay extra for that "special" day. Working together turned out well -- no one has school or wedding related debt.
Nowhere in my post did I say that my input (as a parent) would not be included into their decision where to attend college, but I ultimately can not (and would not want to) force them to go where they do not want to.

flyingbison
Posts: 1363
Joined: Wed Mar 12, 2014 8:52 am

Re: Childrens' Student Loans Delaying Retirement

Post by flyingbison » Mon Dec 07, 2015 12:08 pm

Dandy wrote:
I don't think most "kids" that are graduating from high school should be in charge of making the decision as to what college they should attend. Most are not mature enough and/or have enough financial savvy to make a good decision. If they are and choose wisely you are blessed. Parental guidance and if all else fails veto power is warranted in most cases. I don't think I would allow my child to choose a college that would burden them with excessive debt.
Most students are legally adults when they begin college. You can offer all the guidance you want, and you can certainly decline to pay for it, but you can't force them to do what you want or "veto" their choices.

User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 10:13 pm

Re: Childrens' Student Loans Delaying Retirement

Post by dbCooperAir » Mon Dec 07, 2015 12:46 pm

Dandy wrote:I don't think most "kids" that are graduating from high school should be in charge of making the decision as to what college they should attend. Most are not mature enough and/or have enough financial savvy to make a good decision. If they are and choose wisely you are blessed. Parental guidance and if all else fails veto power is warranted in most cases. I don't think I would allow my child to choose a college that would burden them with excessive debt. Just because they got all A's in high school doesn't mean much when making these type of decisions at this age with this much peer pressure. Even supposedly mature, savvy adults are making some really bad decisions.
I think I know what you are saying, all you can really do is give them as much guidance as they are willing to take.

We started to drive home the point in High School that they can go to any college their check book chooses, they get it in the big over all picture. Will they get everything right and take the best possible approach, I don't think so, I feel they will stay mostly on the tracks however. Some things are best learned by the mistakes we make, as tough as it is for a parent watch/see, lets just hope they are not earth shattering bad.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

Dandy
Posts: 5969
Joined: Sun Apr 25, 2010 7:42 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Dandy » Mon Dec 07, 2015 1:05 pm

While the legal age for an adult might be 17 or 18 that has less meaning in family relationships. My goal was to have my children graduate from college, unless other viable options existed for them. It was understood that I would pay for college. My previous posts discussed guiding and reaching mutual agreement as the goal and as what happened relatively easily. I did reserve the right to veto unwise choices and pay for them - that never arose and was never even mentioned. I wouldn't force a child to go to the college of my choice. The deal was come to a mutually agreeable solution. The deal breaker would be if they insisted going to a college I couldn't afford. I would have given them my best advice about not taking out a student loan to go to a very expensive college but wouldn't prevent them from doing it. Really, how could I?

Parents at that stage of life often have great influence to guide young adults unless they are excessively rebellious. We built a lot of trust and confidence working with them to mutually agree on what type of colleges were right for them. One wanted no part of going local the other wanted to go local etc. Both wanted small colleges and understood that the most expensive schools were not the rational choice for them or us. Compromise and working things out mutually is a way of married life and family life most times.
It also set an example for them on how to make complex decisions in life -- as often this is their first one.

Anyhow each family is different - this approach worked great for us financially and for family relationships. Best of luck with the approach that fits your family dynamics and finances.

Miriam2
Posts: 2662
Joined: Fri Nov 14, 2014 11:51 am

Re: Childrens' Student Loans Delaying Retirement

Post by Miriam2 » Mon Dec 07, 2015 1:39 pm

Dandy wrote:But, if you want to stimulate the economy forget about infrastructure - just get these single people married :)
This thought occurs to me every time we go to some extravagant wedding! I keep thinking to myself these weddings keep the economy going! Without this gorgeous affair, all these workers would be unemployed, at least for this time, all the vendors would not sell their wares, the hotel would not be as occupied, the band would be moping at home, and so on - the service economy.

Pdxnative
Posts: 233
Joined: Sat Nov 07, 2015 2:17 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Pdxnative » Mon Dec 07, 2015 2:02 pm

snowman wrote:
Pdxnative wrote:Snowman, you're not suggesting that kids shouldn't pursue degrees in the humanities and social sciences, are you? I understand what you are saying about costs and benefits, but that sounds like a world I don't want to live in. Not to mention, I know quite a few stem folks. Most of them are being managed by liberal arts grads who went to b school.
Oh no, not at all! In fact, I am one of those LA folks with MBA you mention, as is my wife. College education does not equal vocational school, and not everyone wants or can study STEM. However, college education shouldn’t be viewed, or even encouraged, as an extension of childhood, either. Just because your daughter likes to dance, for example, does not necessarily mean she should go to college and major in dance, with minor in media communications as a “backup”. There appears to be no conversation in many of these families loading up on student loans about career prospects after graduation – probability of getting a job, salary range for a given job, ability to pay off student loans with such salary.

My daughter is a dancer too, plus she plays an instrument. She is really good at it, and she absolutely loves it! That’s why most of her friends are from those two groups. When I asked her if she ever thought of pursuing artistic degree like her friends, she said not really, mostly because there are very few openings available (I don’t remember specifically what and where they are), and even if she worked hard and were lucky to land one, it’s an age limited career, plus there are always injuries that can end your career without any warning. Plus, she said, I love school, I love math and science, with a STEM degree I should be able to get a well paying job and have good career that I will enjoy. I can always dance and play music in my spare time if I feel like it.

Obviously, I am glad that our daughter is mature enough to make that kind of judgment, but it does not change the fact that student debt will continue to rise in this country at an alarming rate, when in too many cases it has no reason to exist. Again, if you are rich and are able to finance college “experience” for your kid, more power to you! For the rest of us, there needs to be a child-parent conversation about financial aspect of getting a college degree BEFORE any money is borrowed. Otherwise, there is a good chance parents will end up like the couple in this article. Like many parents all around me. It IS an epidemic.
Okay, I think we're in agreement that college is not vocational training, and that parents/ students need to be realistic about potential future earnings when considering loans. But I don't think the latter means that STEM>History, English, Econ, Anthro for all students (and it sounds like you don't either). Most studies show LA grads do well (although many choose social services or education fields, which are less lucrative). Performing and fine arts, as you point out, have unique challenges.

Alchemist had a good point: maybe it is the person and the plan as much as the major. The parents in the article wouldn't be any better off if their kid had studied petroleum engineering before heading to LA to act.

User avatar
AtlasShrugged?
Posts: 699
Joined: Wed Jul 15, 2015 6:08 pm

Re: Childrens' Student Loans Delaying Retirement

Post by AtlasShrugged? » Mon Dec 07, 2015 4:07 pm

texasdiver....I was struck by your comments. You perfectly captured my thoughts with your comment about much of it being dependent on circumstance. That is so true. I have two children, Child 1 is in a BS/MS program in biomedical engineering. We have co-signed loans ~30K for him. His career prospects are quite bright. He will come out with ~60K in total debt. Note that we made Child 1 take out a life insurance policy (which we pay for) to cover the amount of the co-signed debt should calamity strike. Child 2 is a very different case. He attends the local community college and we pay cash. He may get a chemistry degree, or take a shot at pharma school. There is no way we would co-sign loans with him. Child 2 is very different than Child 1 in terms of maturity. We don't love Child 2 any less, but we have a lifetime of observation and that gives us a certain perspective.

I also agree with you on the obligation of parents to their children. For spouse and I, we look at paying for our children's education as our duty. This is how we were reared. For myself, it has been very difficult emotionally to consciously prioritize the needs of our retirement OVER the educational needs of our children. It was not until we saw a financial advisor, and my subsequent speaking with my Rabbi on the specific obligations of parents to children from a halakhic perspective that I was able to really 'live with it'. It has not been an easy mental and emotional adjustment. What I chose to do in my specific circumstance was take a second part-time job and evenly use the income toward retirement and tuition payments for children.
“If you don't know, the thing to do is not to get scared, but to learn.”

Guest9876
Posts: 109
Joined: Fri Jun 19, 2015 10:21 am

Re: Childrens' Student Loans Delaying Retirement

Post by Guest9876 » Mon Dec 07, 2015 4:14 pm

If your child is born today, I would recommend saving maybe a few thousand and letting it sit, but no more than that---- we're in a world where ESAs, vouchers, and the like are disrupting education delivery.

I doubt that in 18 years the traditional degree model will be the only viable option. It may still be the norm, but the bubble cannot last 18 more years--- the bubble is already massive ($1.2 trillion + in student debt in the US). We're going to see some massive change. You can hedge with some saving, but I wouldn't recommend saving to meet inflation-adjusted current costs of college ($60,000 per annum per child or so).

I know that people can say "the sky is falling" and inertia can keep a system going for a while, but we're already seeing a la carte tutoring and online education exploding--- it will be institutionalized sooner than you think.

JimmyD
Posts: 768
Joined: Fri Sep 27, 2013 4:03 pm

Re: Childrens' Student Loans Delaying Retirement

Post by JimmyD » Mon Dec 07, 2015 4:21 pm

Guest9876 wrote:If your child is born today, I would recommend saving maybe a few thousand and letting it sit, but no more than that---- we're in a world where ESAs, vouchers, and the like are disrupting education delivery.

I doubt that in 18 years the traditional degree model will be the only viable option. It may still be the norm, but the bubble cannot last 18 more years--- the bubble is already massive ($1.2 trillion + in student debt in the US). We're going to see some massive change. You can hedge with some saving, but I wouldn't recommend saving to meet inflation-adjusted current costs of college ($60,000 per annum per child or so).

I know that people can say "the sky is falling" and inertia can keep a system going for a while, but we're already seeing a la carte tutoring and online education exploding--- it will be institutionalized sooner than you think.
I'm of a similar mindset. We have a 19 month old and have been saving just enough to get the state tax deduction in a 529 for him ($166/month) since he was born. Who knows what the higher education landscape is going to look like by the time he's ready for college, but I figure a) he can work b) he can get scholarships c) we can tap Roth IRAs if there's a need for additional funds when the time comes.

Guest9876
Posts: 109
Joined: Fri Jun 19, 2015 10:21 am

Re: Childrens' Student Loans Delaying Retirement

Post by Guest9876 » Mon Dec 07, 2015 4:32 pm

JimmyD wrote:
Guest9876 wrote:If your child is born today, I would recommend saving maybe a few thousand and letting it sit, but no more than that---- we're in a world where ESAs, vouchers, and the like are disrupting education delivery.

I doubt that in 18 years the traditional degree model will be the only viable option. It may still be the norm, but the bubble cannot last 18 more years--- the bubble is already massive ($1.2 trillion + in student debt in the US). We're going to see some massive change. You can hedge with some saving, but I wouldn't recommend saving to meet inflation-adjusted current costs of college ($60,000 per annum per child or so).

I know that people can say "the sky is falling" and inertia can keep a system going for a while, but we're already seeing a la carte tutoring and online education exploding--- it will be institutionalized sooner than you think.
I'm of a similar mindset. We have a 19 month old and have been saving just enough to get the state tax deduction in a 529 for him ($166/month) since he was born. Who knows what the higher education landscape is going to look like by the time he's ready for college, but I figure a) he can work b) he can get scholarships c) we can tap Roth IRAs if there's a need for additional funds when the time comes.
I think that makes good sense. $2000 per year for 18 years at 5% interest ends up being $60,000, or one year of private school tuition and board, and that's not to mention the tax deduction.

Impromptu
Posts: 388
Joined: Mon Nov 03, 2014 10:09 pm

Re: Childrens' Student Loans Delaying Retirement

Post by Impromptu » Mon Dec 07, 2015 5:57 pm

Most of these posts are attempting to fix a symptom of a problem. High tuition is the problem.

Here is a solution to high tuition. Colleges and universities must be responsible for 50% of the student loans should the student default. That will put pressure on them to only admit students whom they think will graduate, find jobs for their graduates, and keep costs down.
I'll gladly pay you Tuesday for a hamburger today.

joebh
Posts: 1708
Joined: Mon Mar 02, 2015 3:45 pm

Re: Childrens' Student Loans Delaying Retirement

Post by joebh » Mon Dec 07, 2015 6:28 pm

Impromptu wrote:Most of these posts are attempting to fix a symptom of a problem. High tuition is the problem.

Here is a solution to high tuition. Colleges and universities must be responsible for 50% of the student loans should the student default. That will put pressure on them to only admit students whom they think will graduate, find jobs for their graduates, and keep costs down.
Unfortunately, none of us have a magic wand that can cause your solution to be implemented, even if we thought it made any sense.
Thus, we must rely on our own means to implement our personal solutions for our own children. Those are the only solutions we currently can control.

User avatar
ruralavalon
Posts: 16481
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Childrens' Student Loans Delaying Retirement

Post by ruralavalon » Mon Dec 07, 2015 6:37 pm

EmergDoc wrote:
What do you think? Would you borrow for your child's education?
I think that $189k is a lot of loans for two four year degrees. That is $23.6k per year. Did the children not work part time or summer jobs? Did the parents pay nothing out of income or savings?

Would we borrow for a child's college education? We didn't for our four daughters. We paid out of income, they worked and contributed, 3 went to flagship state universities, and the other went to a private university with a scholarship (net cost equal to a state university).

I agree with EmergDoc's five principles.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

tj
Posts: 2601
Joined: Thu Dec 24, 2009 12:10 am

Re: Childrens' Student Loans Delaying Retirement

Post by tj » Mon Dec 07, 2015 8:49 pm

My parents paid for my performing arts degree. Hindsight is 20/20, but I feel like if I was footing the bill and had to work during college, I might have made more practical decisions.

So, I don't like the idea of paying for a hypothetical child's education, but I also would hate to have them not have the same advantages I had in starting my adult life.

I like the idea that I've seen here in other threads, of making the kid think they are on the hook for the education, but then paying them after they actually graduate. This probably would cut down on folks like my sister who would literally be in school forever if it wasn't costing her anything.

snowman
Posts: 934
Joined: Thu Jan 31, 2013 12:59 pm

Re: Childrens' Student Loans Delaying Retirement

Post by snowman » Tue Dec 08, 2015 12:25 am

WageSlave wrote:snowman, thank you for sharing, that was great reading. Would you be willing to share where you live, just out of curiosity? Though I have a nagging suspicion your experience is probably typical of upper middle class suburbia in the USA.

I have two girls and the scenario you painted scares the heck out of me. As someone who has been reading Mr Money Mustache since he started, this scene is the exact antithesis of his philosophy. Fortunately, it sounds like your daughter is well-adjusted, in contrast to many of her peers. Any tips you can share? My kids are both under five, so I (hopefully) have time to plan and prepare...

As I said before, I can't help but wonder if this environment is fairly common, and maybe it can be offset by strategic relocation. A lot of upper middle class suburbia appeals to me: generally safe, clean, quiet neighborhoods, big yards, good schools... but it seems like in your case there is a hardcore "keeping up with the Joneses" (KUWTJ) mentality that is actively being instilled in the kids. I'd argue that KUWTJ is not only the antithesis of MMM, but of Bogleheads in general (or maybe commonsense personal finance in general).
Oh boy, where do I begin! This will be the longest post ever, but hopefully helpful to you and maybe other parents out there. This is strictly my experience, not a suggestion on how to raise your kids.

It’s not easy these days to navigate the “KUWTJ” minefield, I certainly was not prepared for it. I came here 25 years ago from a poor European (former communist) country, and even there my family was poorer than most. I landed at JFK with $100 in my pocket (borrowed from my cousin), did not know a soul on this continent, and my English consisted of “Hello”, “How are you”, “Thank you”, and “My name is...”. All I had was a desire and determination to succeed. I mention this because it gives different perspective on things, vs. you or my wife who grew up here and were familiar with the KUWTJ concept. BTW, my wife comes from poor background too, but the concept of poor here vs. elsewhere on the planet is very different, as I am sure many BHs are aware of.

I think we held up OK, but it wasn’t easy; in fact, sometimes you need to make some very tough decisions. It’s extremely important that you and your spouse are on the same page all the time, every time! We live in Colorado, in one of the many upper middle class subdivisions growing up everywhere around us. We don’t have too many rich people here, but we have a lot of people with high incomes. A lot of transplants from other states, mostly from CA, who think that buying a $500K house here is a bargain.

Why did we buy here? For the same reasons you mentioned – safety, natural beauty, recreational opportunities, clean, quite, excellent schools, not necessarily in that order. Was it expensive? Yes, it was. Do we like it here? Yes, we love it! Would we have done it again if we could? Yes, without question! Are we going to stay here for the rest of our days? Nope, the house goes on the market when the youngest one goes to college.

We had a concept of how we wanted to raise our kids. You have to start early, and you cannot veer off when first headwinds arrive. If you wait till Middle school age, it’s too late.

My wife started reading to both kids from day 1, I think that made a big difference. I read them as well, though not as often as I was tired after work, but I did read to them in my language only. They knew mommy and daddy speak different language, and THAT was normal to them; when they first made friends, they were surprised both of their parents spoke English. Looking back, I think that was important fact, because it established in their mind very early on that we are different, and that it’s OK.

They loved going to friends’ birthday parties (some of them so lavish they made me feel very uncomfortable), they asked if they can have one like that too. We said no, it’s not something we do, instead we will spend a day together as a family having fun, then mommy will make you a meal of your choice, and she will also make you a really great cake! It became a tradition everyone loves to this day, although as they grew up we started having 2 b-days – one with friends coming over for a sleepover, and one just us. But we never jumped on the bandwagon of throwing big b-day parties just because everyone around us was doing it.

Instead of hiring landscaping company planting large trees and such that every neighbor was doing, I took my kids to HD, loaded the van with dirt, plants, trees etc, and than planted my garden with their “help”. I did it mostly myself, but little kids love to help and they love to play in the dirt, so we spent a lot of time in the yard planting and working together. We played soccer or volleyball or whatever they wanted to play afterwards, so they got used to the idea that work and fun can coexist. I also built a small vegetable garden for my wife, and the kids helped her plant seeds and water the ground, and learned where the food comes from (this may sound funny, but most kids these days believe food just “happens” in the grocery store).

When grocery shopping, my wife would tell them we had a budget of say $30, and we have some coupons, and we need to figure out how we buy what we need and stay within the budget. Oh, what a game that was for them – they calculated in their heads running total and other math problems without knowing they are doing math. While other kids where whining and begging for stuff, ours were solving problems. Kids love doing math, and ours got a chance to do it in 2 different languages - a bonus.

For vacations, we went camping. We love the great outdoors, and wanted to share that love with our kids. The kids love being outside if you are spending quality time with them – hiking, biking, fishing, or just hanging around. Every trip is an adventure, bonds the family together, creates positive character traits and memories, and is super cheap! Those expensive cruise and beach trips friends were taking? They were not interested – instead, they asked when and where the next camping trip is going to be. As they became older, we involved them in the planning part as well, which especially my daughter enjoyed.

They were also spending good amount of time with my relatives overseas over the summers. As money was tight and those flights expensive, they went alone. Those trips I think were very important for several reasons: 1. They grew up knowing there is another world out there, very different from theirs; 2. They now had 2 anchor points – not just the Jones’s here, but the “poors” over there; and 3. They learned financial aspect of decision-making process – i.e. this is how much the ticket costs, this is how it affects our budget, what are we willing to give up as a family; it was a financial sacrifice, they knew it, they were part of it.

In another thread, I outlined my idea of teaching them financial responsibility starting at age 6 or so – you get tiny allowance (to them getting $5/week was huge, to our Jones's it was probably child abuse), you get excel spreadsheet, you track that money in 3 categories: 25% to investments (VTI), 25% to savings, 50% spending on whatever you want. I don’t think they ever spent that 50% part; since they saw us always talking about saving money for a purchase (airfare, trees, car, clothes etc.), they naturally did the same. At about 8, when they could comprehend better, I showed them the table with compound interest, they were at awe, they said “it’s like free money!”, and I am like “yep, it is, but it requires sacrifice, you cannot touch that money for a long, long time”. They both were fine with it – now they don’t even blink when they move 25% of their earned money to TDA.

Another pressure point came from travel sports and activities – that’s where we spent IMO an enormous amount of money. I struggled with that all these years, I think it’s just insane, particularly if your child is talented and your only 2 choices are recreational league where they get bored and will quit, or travel which literally means travelling all over the country and costs you $5K+/year. I have seen parents spending $15-$20K/year/child, which really is insane! I think a lot of parents struggle with that, both financially and emotionally. We did our best to keep expenses down, but the peer pressure to spend is immense! Parents pick the best and most expensive restaurants when travelling to eat at as a matter of fact, when we would not even consider that for a special occasion within our family. Same with hotels. Stuff like that.

it does get especially hard when your kid tells you he is the only one in the locker room without an iPhone, for example, and other kids are making fun of him. At first, I thought he must be joking; he wasn’t as I found out. And what made it particularly hard for him was the fact that he had just bought himself the best smartphone he could afford to buy with his own money (our deal with both kids was if you want smartphone, you buy it yourself). It almost made me cry. I spoke with one of the parents who I knew did not have high income – he said that’s why he just buys stuff, he knows it’s wrong, but he does not want his kid to be “left out”. He said most parents do that, that I am truly unusual (gee, where did I hear that? Oh yea, my daughter). And don’t I care for the feelings and well-being of my son? My thought was – how do we, parents, expect our kids to handle peer pressure, when we ourselves are not capable of resisting it? I also learned that a lot of parents are financing these activities with HELOC, or they get financial help from their parents.

It actually gets harder with girls. Below that confident, mature skin of my daughter is a fragile human being. Girls can be very mean creatures, especially in middle school, but also in HS. The peer pressure is unimaginable, constant, everywhere. How you look, how you dress, your make up, shape, brains, boobs, shoes, phone, lunch, friends, clicks, everything! She earns most of her money babysitting, she has several clients in our neighborhood and very little competition – most girls don’t work. So it actually works out well for her. We also decided to give her clothing allowance in HS – it’s not big, but it helps her buy the clothes herself, and forces her to find bargains. She really likes this system, and so do we.

Also, as I mentioned before, none of this would be meaningful if us parents were not behaving the same way. It would not work if we were the spenders while asking the kids to be frugal. My car is 13 years old, and it’s only my second car ever. That’s very uncommon. Kids see that. They realize we sacrificed a lot for them, and they clearly appreciate it. Our son, now in college, told me he is really glad we raised him the way we did, so that’s the ultimate reward you can get as a parent. He already has a plan, he says, how to raise his future kids to be good people and hard workers – he says “the key is to know to say NO, and stay firm, while giving them unconditional amount of love”. I told him sounds good, you just need to marry the right person, but that’s a different topic.

Could we have avoided KUWTJ by “strategically relocating” to a different area? Not sure, probably not, peer pressure would still be there, just different. I see it now even in my old country, it’s crazy! Our main draw were the schools, and we made the right decision there, so no regrets. We did not want to deal with lower income neighborhood if it meant higher crime, worse schools, boats and trucks on the street, barking dogs, noise at night, etc. Financially we could afford to live in this area, we have no debt besides mortgage, our other expenses are low, like MMM’s – cooking at home, shopping on sale, cheap hobbies and vacations, I can fix and maintain almost anything myself, so we don’t really have large recurring or one time expenses. Also, in the 2008-2012 housing debacle, our property values barely budged, despite the wave of foreclosures – exactly the kind of stability you expect when buying in an upper income area with top rated school district.

But you need to be aware there is a price to be paid for all that - the pressure to “belong” will be huge on your little girls, multiplied these days by social media and all that nonsense. I can shrug it off and not give it a second thought, and so can you. For the kids, especially girls, it’s much, much tougher, you will see. Talking to them, earning their trust, leading by example, just being there for them as they are growing up is very important, as is your unconditional support when they hit hard times. Boys get over stuff quickly, girls will hold it in for a long time. I wish you good luck, it’s a wonderful journey!

MathWizard
Posts: 3561
Joined: Tue Jul 26, 2011 1:35 pm

Re: Childrens' Student Loans Delaying Retirement

Post by MathWizard » Tue Dec 08, 2015 1:34 am

snowman wrote: ....
Oh boy, where do I begin! This will be the longest post ever, but hopefully helpful to you and maybe other parents out there. This is strictly my experience, not a suggestion on how to raise your kids.
Snowman, excellent post.

It sounds like your kids are doing well, and that says a lot about you as a parent.

Post Reply