Debt without the Degree

[cookiemdough]

College dropouts have debt but no degree

By Ylan Q. Mui and Suzy Khimm, Published: May 28

As the nation amasses more than $1 trillion in student loans, education experts say a vexing new problem has emerged: A growing number of young people have a mountain of debt but no degree to show for it.

Nearly 30 percent of college students who took out loans dropped out of school, up from fewer than a quarter of students a decade ago, according to a recent analysis of government data by think tank Education Sector. College dropouts are also among the most likely to default on their loans, falling behind at a rate four times that of graduates.

That is raising new questions about the wisdom of decades of public policy that focused on increasing access to higher learning but paid less attention to what happens once students arrive on campus. And some education experts have begun to argue that starting college — and going into debt to pay for it — without a clear plan for a diploma is a recipe for disaster.

“They have the economic burden of the debt but they do not get the benefit of higher income and higher levels of employment that one gets with a college degree,” said Jack Remondi, chief operating officer at Sallie Mae, the nation’s largest private student lender. “Access and success are not linking up.”

The Obama administration says it is trying to address the issue by coupling its goal of ensuring that high school students are prepared for at least one year of higher education with new targets for college graduation rates.

The plight of “non-completers” has grown in magnitude as student debt tops $1 trillion, according to the Consumer Financial Protection Bureau. In addition, the sputtering economy has forced a growing number of students to make difficult choices between the benefits of a degree and the burden of paying for it. More students are balancing their studies with full- or part-time jobs or signing up for a reduced course load to save money, increasing the likelihood that they will not graduate.

According to a 2009 study by Public Agenda, half of college dropouts said work was a major factor in their decision. Only a quarter said they had spent too much time socializing.

‘Money and time’

“In the end, it’s about money and time,” said Anthony Carne-vale, director of the Center on Education and the Workforce at Georgetown University. “There’s almost a synergy between the two that will knock you out of school.”

The cost to the economy is roughly half a trillion dollars, he said. Although college dropouts make more than those with only a high school diploma, he said they earn about a million dollars less than college graduates over their careers.

Malainie Smith spent a year at a small liberal-arts college in Massachusetts before deciding to go to nursing school. She was halfway through her program at Simmons College in Boston when she took what she thought would be a break of one semester. When she tried to return, she found she could no longer get a loan.

Smith said that left her in a Catch-22 situation. She had to quit school but still owed about $100,000 to the Vermont Student Assistance Corp. (VSAC), a public nonprofit student lender. Her monthly payments are about $400. Three years after she left Simmons, she is now a waitress — a recent promotion from her position as a hostess.

See the rest here:
www.washingtonpost.com/business/economy/college-dropouts-have-debt-but-no-degree/2012/05/28/gJQAnUPqwU_story.html?hpid=z3

[cookiemdough]

I couldn't get over the $100,000 in loans and no degree to show for it.

[ttt]

$100,000 for one year of college plus half of nursing school??

[wawa]

May 29, 2012 10:02:32 GMT -5 ttt said:

$100,000 for one year of college plus half of nursing school??

Ok, I'm not the only one confused then. I kept rereading thinking i was misunderstanding the timeline. How in the world did she rack up that much in loans in that short of a time?

[cookiemdough]

Also...

Not only do their students amass more debt, but for-profit colleges also saw the biggest jump in borrowers who drop out, although every type of institution saw increases. A study by the Education Trust found that more than half of students who take out loans to enroll in two-year for-profit colleges never finish. At traditional nonprofit and public schools, the percentage of students with loans who started college in 2003 and dropped out within six years is about 20 percent.

This is a huge problem. Why is the word not getting out that many for-profit schools are not leading to jobs that will provide salaries to cover these loans??? The online convenience is now offered at many state schools so the need to go the for-profit route is lessening.

[marie427]

My only guess is that she was found to be eligible for a whole bunch of money for student loans (more than she needed, which is typical), and she decided to borrow the max allowed and used it to pay for who knows what else.

And that's yet another qualm I have with colleges and banks - no one should be allowed to borrow more than the total estimated amount in tuition, fees, housing, and books. I remember being floored at the amount I was shown to be eligible for each year in SLa because the numbers added up to much higher than my expected expenses. I thank my lucky stars I just signed off for the amount I needed for the aforementioned expenses.

[juris11]

Ugh-this is H's friend. Three programs and several thousands in student loans later, he still has no degree in anything. He was doing well in his latest program and we thought he might actually finish this time, but he's complaining about being broke and he just wants to make money. The idea that having training in something (he is in a medical assisting program now) will cause him to make more money in the long run does not compute with him.

[chichimi]

May 29, 2012 10:12:51 GMT -5 cookiemdough said:

Also...

Not only do their students amass more debt, but for-profit colleges also saw the biggest jump in borrowers who drop out, although every type of institution saw increases. A study by the Education Trust found that more than half of students who take out loans to enroll in two-year for-profit colleges never finish. At traditional nonprofit and public schools, the percentage of students with loans who started college in 2003 and dropped out within six years is about 20 percent.

This is a huge problem. Why is the word not getting out that many for-profit schools are not leading to jobs that will provide salaries to cover these loans??? The online convenience is now offered at many state schools so the need to go the for-profit route is lessening.

Ive always had a problem with some of the predatory tactics of for-profit recruiting but anytime there is proposed legislation about limiting federal funds to these schools, especially non-accredited schools, there is outcry about their unique need from an underserved population. That population may be underserved because it is not capable of college level work.

[charminglife]

May 29, 2012 10:17:37 GMT -5 marie427 said:

And that's yet another qualm I have with colleges and banks - no one should be allowed to borrow more than the total estimated amount in tuition, fees, housing, and books. I remember being floored at the amount I was shown to be eligible for each year in SLa because the numbers added up to much higher than my expected expenses. I thank my lucky stars I just signed off for the amount I needed for the aforementioned expenses.

I had no idea you could borrow for more than that. What does it fall under, 'living expenses'? Do lenders overestimate living expenses to get students to borrow more $$?

[marie427]

May 29, 2012 10:36:56 GMT -5 charminglife said:

May 29, 2012 10:17:37 GMT -5 marie427 said:

And that's yet another qualm I have with colleges and banks - no one should be allowed to borrow more than the total estimated amount in tuition, fees, housing, and books. I remember being floored at the amount I was shown to be eligible for each year in SLa because the numbers added up to much higher than my expected expenses. I thank my lucky stars I just signed off for the amount I needed for the aforementioned expenses.

I had no idea you could borrow for more than that. What does it fall under, 'living expenses'? Do lenders overestimate living expenses to get students to borrow more $$?

IIRC, yes. At first I thought they just miscalculated my expenses but the estimates were way off. Had I wanted all that money, I could have had it easily and used the extra money for whatever I wanted after depositing the check at the bank. Like I said, I managed to not get tempted enough to do that, but if it happens often enough, not everyone would make the same choice. It is the only way I can explain away these enormous balances for short periods of time in school.

[cookiemdough]

May 29, 2012 10:41:31 GMT -5 marie427 said:

May 29, 2012 10:36:56 GMT -5 charminglife said:

I had no idea you could borrow for more than that. What does it fall under, 'living expenses'? Do lenders overestimate living expenses to get students to borrow more $$?

IIRC, yes. At first I thought they just miscalculated my expenses but the estimates were way off. Had I wanted all that money, I could have had it easily and used the extra money for whatever I wanted after depositing the check at the bank. Like I said, I managed to not get tempted enough to do that, but if it happens often enough, not everyone would make the same choice. It is the only way I can explain away these enormous balances for short periods of time in school.

And it is really weird that statistically a lot are saying they didn't finish school because of work obligations. I would think the amount of aid taken out in some of these circumstances for living expenses should have taken the place of a significant number of work hours. A lot of mismanagement seems to be going on.

[munkii]

I had no idea you could borrow for more than that. What does it fall under, 'living expenses'? Do lenders overestimate living expenses to get students to borrow more $$?

Colleges and universities each come up with their own Cost of Attendance to determine a student's need and eligibility for all aid, fed and private. Banks do not determine these amounts.

COA includes tuition, fees, books and supplies, room and board, transportation, personal expenses, and sometimes other expenses if students (and their parents in some cases) can prove a hardship.

Unfortunately, it's up to the school educate borrowers on why they should not borrow the max amounts regardless of what they're eligible for, but that education typically only comes in the form of the ED required entrance counseling and nothing more.

[Daria Morgandorffer]

May 29, 2012 10:36:56 GMT -5 charminglife said:

May 29, 2012 10:17:37 GMT -5 marie427 said:

And that's yet another qualm I have with colleges and banks - no one should be allowed to borrow more than the total estimated amount in tuition, fees, housing, and books. I remember being floored at the amount I was shown to be eligible for each year in SLa because the numbers added up to much higher than my expected expenses. I thank my lucky stars I just signed off for the amount I needed for the aforementioned expenses.

I had no idea you could borrow for more than that. What does it fall under, 'living expenses'? Do lenders overestimate living expenses to get students to borrow more $$?

Not only that but you can get private student loans and not use a penny of them on actual school expenses.

I may or may not have done this when I was 18 and dumb.

[ttt]

May 29, 2012 10:17:37 GMT -5 marie427 said:

My only guess is that she was found to be eligible for a whole bunch of money for student loans (more than she needed, which is typical), and she decided to borrow the max allowed and used it to pay for who knows what else.

And that's yet another qualm I have with colleges and banks - no one should be allowed to borrow more than the total estimated amount in tuition, fees, housing, and books. I remember being floored at the amount I was shown to be eligible for each year in SLa because the numbers added up to much higher than my expected expenses. I thank my lucky stars I just signed off for the amount I needed for the aforementioned expenses.

Me too. I didn't even know at the time that it was possible to borrow more than the amount to cover your tuition and fees. Thanks Mom!

[Deleted]

You can rag on me if you like but this is the number one reason I left college. I was racking up debt and I couldn't see the pay off. I didn't know what I wanted to do, the things I was thinking of doing didn't require a degree or at least required a specific type of degree/schooling and I was terrified I'd wake up in a few years with a mountain of debt and nothing to show for it.

I thought I'd take a break and work until I figured it out.

[Deleted]

May 29, 2012 11:16:30 GMT -5 ttt said:

Me too. I didn't even know at the time that it was possible to borrow more than the amount to cover your tuition and fees. Thanks Mom!

I didn't know either. Fuck, I didn't even know I could borrow to cover the cost of books. Hell, I didn't know I had to pay for books. Yes, I was a moron. Story of my pre-22 year old life.

[MrsAxilla]

Non-accredited schools are not eligible for federal funds. At all. For-profits are not eligible until they are fully accredited; non-profits are eligible when they are in candidacy status, which means the for-profits are scrutinized much harder before they can get federal funds.

[emilyj]

May 29, 2012 10:36:56 GMT -5 charminglife said:

May 29, 2012 10:17:37 GMT -5 marie427 said:

And that's yet another qualm I have with colleges and banks - no one should be allowed to borrow more than the total estimated amount in tuition, fees, housing, and books.

I had no idea you could borrow for more than that. What does it fall under, 'living expenses'? Do lenders overestimate living expenses to get students to borrow more $$?

Complete anecdote, but you want to hear something frightening? When I was getting my PhD, I was an in-state student, and I had an assistantship, so I had my tuition/fees/insurance covered, and we got travel money awards for conferences. I was responsible for books and living expenses.

The federal government was willing to lend me $20K/year for that if I wanted to take it. In Alabama, that's fucking asinine. But all I would have had to do was sign on the dotted line, and I could have been $60K in debt by the time I was done.

[cookiemdough]

May 29, 2012 11:50:26 GMT -5 MrsAxilla said:

Non-accredited schools are not eligible for federal funds. At all. For-profits are not eligible until they are fully accredited; non-profits are eligible when they are in candidacy status, which means the for-profits are scrutinized much harder before they can get federal funds.

It is not so much the curriculum that I think is bothersome about for-profits, it is that there seems to be less standards in terms of admittance so kids who really shouldn't be in school anyway are more likely to fall through the cracks. I am also concerned that there is not enough support available to guide students and help them make practical decisions, but this problem is not one that is limited to for-profit schools. I think all schools should provide more guidance to students who take on significant amounts of financial aid.

[PinkSquirrel]

H racked up a ton of student loan debt and they would have kept handing it over. He had no idea what it would look like as far as monthly payments when he got out. It ended up taking him 8 years to finish because when he started dating me he had less than a semester left and I pretty much put my foot down and said "no more student loans."

The nice thing was that 2ish years later when he went back to take a class the school decided to let a few classes count for requirements they initially weren't going to let them count for ie they told him he needed a Psych seminar, he took a Psych seminar and after the fact they said "oh, well that Psych seminar actually didn't count for the Psych seminar requirement." What does this teach you 1) college advisers at our school were useless and 2) If you leave for long enough they start caring more about getting you to count as graduated than getting every penny their grubby little hands can get off of you.

I have a lot of friends that have perfectly good jobs that quit with 1-2 semesters left. They dont' feel like their degree is going to get them any additional money in their field (it won't because of the experience they have at this point) and they don't want to pay $25k for a semester.

[sam20]

This is me. When I first left high school I thought I needed all the money that they offered me and nobody ever told me any different. I dropped out after a year and a half due to some mental issues. Went back to a community college about a year later and was smart enough to only take about half of the loan amounts that they offered me but now I'm about 20K in debt and have nothing to show for it.

[MrsAxilla]

May 29, 2012 12:13:12 GMT -5 cookiemdough said:

May 29, 2012 11:50:26 GMT -5 MrsAxilla said:

Non-accredited schools are not eligible for federal funds. At all. For-profits are not eligible until they are fully accredited; non-profits are eligible when they are in candidacy status, which means the for-profits are scrutinized much harder before they can get federal funds.

It is not so much the curriculum that I think is bothersome about for-profits, it is that there seems to be less standards in terms of admittance so kids who really shouldn't be in school anyway are more likely to fall through the cracks. I am also concerned that there is not enough support available to guide students and help them make practical decisions, but this problem is not one that is limited to for-profit schools. I think all schools should provide more guidance to students who take on significant amounts of financial aid.

I agree, but I think the problems with the shift in educational culture and the accrediting agencies not keeping up. There are no standards related to who is admitted, except that a school has to have standards. The accreditors don't have an opinion on how strict they are, only that they're followed. Until just last year, there were no standards related to job placement and loan repayment rates. There is still a fight over what those rates should be. They're also putting in standards related to marketing and recruitment - basically truth in advertising. "Accreditation" is basically a stamp of approval, so if schools are getting that stamp when they shouldn't be, then that's a problem the Department of Education need to address with the accreditors.

[msmerymac]

My BFF has a year "left" to get a degree and student loans. Why? Because she received no family assistance. She worked 3 jobs in college, went to a state school, worked all summer. Maybe some of these people are idiots who decide attending a $50k/year school with absolutely no grants, scholarships or family assistance is a good idea (my BFF had to turn down many better schools, including an Ivy, because she just couldn't afford it).

As more parents won't be able to afford college at all (not even talking about covering it completely), I think this problem will continue.

[ttt]

May 29, 2012 14:14:35 GMT -5 msmerymac said:

My BFF has a year "left" to get a degree and student loans. Why? Because she received no family assistance. She worked 3 jobs in college, went to a state school, worked all summer. Maybe some of these people are idiots who decide attending a $50k/year school with absolutely no grants, scholarships or family assistance is a good idea (my BFF had to turn down many better schools, including an Ivy, because she just couldn't afford it).

As more parents won't be able to afford college at all (not even talking about covering it completely), I think this problem will continue.

This is odd to me, as most Ivies have more generous financial aid than your average private school and some end up cheaper than state schools (Harvard, for example, is free to anyone whose family income is under $60k a year).

[druidp]

::raises hand:: I'm in this category. I made it to what would probably equate to about a junior level in college courses, got KU'd and dropped out. I also was a total dumbass and decided to take generalized courses at a private university, so... yeah, I'm smurt.