Half Sigma has pointed me to two stories that I think are of some interest, and illustrates a general trend. JOBLESS GRAD SUES COLLEGE FOR 70G TUITION:
The Monroe College grad wants the $70,000 she spent on tuition because she hasn’t found gainful employment since earning her bachelor’s degree in April, according to a suit filed in Bronx Supreme Court on July 24.
The 27-year-old alleges the business-oriented Bronx school hasn’t lived up to its end of the bargain, and has not done enough to find her a job.
The information-technology student blames Monroe’s Office of Career Advancement for not providing her with the leads and career advice it promised.
Then there is this story of a woman with $120,000 in student loans, working for $7.25 plus tips, Student loans puts college graduate into deep financial hole:
But six months after graduating with her bachelor’s degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She’s nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.
The second case is clearly one where an individual who shouldn’t have gone to college, did. Not only was she academically not up to it, neither she nor her parent had the background to be able to navigate the paperwork which would have smoothed her path. She kept not filing FAFSA, and so took out more onerous loans from Sallie Mae. She also took out loans above her minimum needs. It seems this was a case where a kid from a lower middle class to lower class background did not understand that middle to upper class status does not entail from simply matriculating at a university, you have to do a lot of other things, or, you parents have to hold your hand along the way. In other words, if you have money and connections you can party your way through college, but if you have neither, you better focus and get your educational money’s worth.
In the first case there are fewer details, but the bigger issue seems to be the marketing that goes along with many universities, promising jobs magically at the end of a bachelor’s degree. There really should be “entertainment purposes” only advisories stuck on to those brochures. It seems the biggest problem here are unknown private universities which charge many times more than a public institution without offering many times more the name recognition and prestige.
Student loans can not be discharged in bankruptcy. This of course means that lenders are eager to push money at students, since they can’t be written off so easily. This is good for responsible students, or those whose parents can bail them out if they are irresponsible, since that means lower interest rates and no worry about not being approved. But it is a different proposition if you don’t have a parental back up and also don’t have the skills or outlook which would have made you a good bet in the first place.
Here are some data for 2007-2008:
– Undergrads who graduate who have debt (2007-2009): 66%
– Average debt on graduation for those who have debts: $27,803 (includes PLUS loans, $23,186 excluding PLUS loans)
– 25% bachelor’s degrees recipients have more than $30,526 in loan debt
– 10% bachelor’s degree recipients have more than $44,668 in loan debt
Aside from the issue of inflation in this sector due to “cheap money” flooding in due to subsidized loans and grants, taking out loans is probably good bet for most who do take them out. The problem are the minority who a) were never cut out for college, b) who college won’t improve and c) who don’t have familial resources to allow them absorb the negatives of their problematic life choices. They’re saddled with debt which is nearly impossible to get rid of.
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