I’m not sure why, but apparently piece of junk studies and I have been strangely attracted to each other lately… This one comes courtesy of a post at MainStreet.com called “The Other Student Loan Problem: Too Little Debt.“ Apparently, “as college prices and average student loan debt rise, educators in some sectors of higher education report they’re also seeing plenty of students…determined to avoid loans no matter what.” Sounds like a good thing, right? Well, from the post:
What’s surprising is this: Educators aren’t sure that’s always such a good thing.
Students who take extreme steps to avoid debt at all costs, they say, may get stuck with something much more financially damaging than moderate student loan debt. They may not wind up with a college degree.
Really? That’s surprising? Obviously colleges want you to borrow money to pay for school! Also, bloggers say you should send them cold hard cash (paypal accepted). Wait, there’s more:
What’s the upside of borrowing? Federal data analyzed by Santiago’s group and The Institute for Higher Education Policy (IHEP) in 2008 shows roughly 86% of students who borrow for college are able to attend full-time, compared to 70% of students who don’t borrow. That matters because roughly 60% of full-time students receive a bachelor’s degree within eight years, compared to 25% of part-time students.
Really? In case you’re wondering, ^^ this quote ^^ is a bunch of crap. The first sentence may just be poorly worded because “are able to” is a pretty useless phrase. My guess is they meant 86% of full-time students borrow money versus 70% of part time students. The second sentence has nothing to do with student loans – it just compares full time versus part time students and concludes that full time students graduate at a higher rate within an eight-year time frame versus part time students. Is this revolutionary? I’d hope the ones who are full time get done faster… (Also isn’t 8 years a bit long for a full-time student to get a 4-year degree?).
Then how the heck do they tie the two sentences together? My guess is the people who are smart and hardworking enough to pay for things they buy and work so they don’t have to borrow are probably better off than Sallie “I’ll sign anything” Student….
Also, if those stats are somehow true and related, it means 40% of full time students don’t graduate! 40%! That’s right – no bachelor’s degree (maybe an associates, I guess…). So borrowing money probably wasn’t a good idea for at least 40%! A bunch of loans but no degree leaves you in a bit of a jam, don’t you think? Seems like a pretty big risk to me. If I told you to close your eyes and there’s a 40% chance of me kicking you in the throat would you do it? I know I wouldn’t…
I know… it’s a bit “glass housey” for me to get up on a soap box and yell at you for taking out student loans. But that was a different Nick. No way I come out with over $100,000 in student loan debt today, even if it meant taking an extra year or so. So don’t let some loony toon tie two unrelated figures together to convince you to go in a ton of debt to get a degree, ok?
What’s with it with these piece of crap studies?
Anyone regret borrowing for school? I was lucky enough to come out of school with debt that, while enormous, was manageable. So I wouldn’t say I regret it, but I definitely wouldn’t do it again.
Until next time, put your credit card down and slowly step away from the mall!
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{ 18 comments… read them below or add one }
Yes they must be including the people who do 2 year college programs in these stats. The post secondary I took was a 2 year diploma program and you needed 2 years work experience after that to do the additional 2 year bachelor degree. That might explain the 8 year window they mention.
Still colleges are making a killing and they want everyone to go into massive debt so they profit more. It's a shame they don't stop to consider why people are avoiding student loans. Maybe because education prices have soared so high that the post-college debt is often too large to properly manage.
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Good analysis–they are engaging in a logical fallacy and misusing statistics–it's along the lines of a non-sequitur. Plus, they imply a false causality–as we all know, correlation does not equal causation, so even if the statistics they cite were related, it would identify a correlation at best.
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But not to say you should take on debt all willy nilly!
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No one should ever borrow what they can't pay in less than 5 years after having their first paycheck. Period!
Nice article. I always like the idea of attending community college for few years before enrolling into any college to save bundle of money.
I was fortunate – a small inheritance, living at home, fairly low tuition, and working 30 hours a week allowed me to graduate with my Bachelors with no student loan debt. My son is 15 and while we are putting money away for him, we have also told him he will have to work, save, apply for scholarships, live at home, and WORK to pay for college. We're again fortunate that we live in a city with two very good schools for him to choose from.
I can't imagine the trouble I would have had paying off student loans; I graduated in the early 1990s, the recession was bad where I lived, and I worked 3 part time jobs just to pay rent for my first 2 years after college!
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When I started college the President of the university told the incoming class "Take a look around you, half of you won't be here 4 years from now". And he was right! Although I took out more loans then I would have liked to, I busted my butt to pay those off in about a year and a half after I finished grad school. I have several good friends/co-workers with over $120k in student loan debt. One recently told me she owes $700 per month over 20 years… ouch.
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Colleges today are hugely overpriced by almost any measure. The pace of tuition inflation has way outpaced inflation over the past 3 decades. Some degrees may well be worth it, but many are simply not, and will leave graduates ill prepared for that second mortgage (well, it isn't a mortgage, but for many it is just as high).
What strikes me as funny is how universities are not being "occupied" like Wall St, etc.
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I hate the environment that we have created where is completely acceptable for anyone to owe between 20-30k for school. More often than not, the degrees aren't that useful and you end up needing further education later on.
While I understand that it is almost impossible to work and go to school full-time in some fields, that doesn't excuse my lazy ass from owing money at the end of my undergrad.
Off the soap box I go.
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My university had a small Occupy encampment before winter break. I don't know if they were protesting the university or the general profile of Occupy causes.
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I agree. It never gets more depressing than trying to figure out how much you need in a 529 to pay for college 18 years from now if the college inflation rate continues… ouch!
Thanks Kooz. Hit the nail on the head. I'm glad they did it though… If it weren't for articles and studies like this there wouldn't be angry posts by me
I was a bit willy in undergrad… even used a student loan to buy a motorcycle!
Thanks Shilpan! I like that idea too. Community college and then state schools with in-state tuition can make for a great education value. I know if I were interviewing someone who told me that's what they did, it would impress me. But I'm a bit odd perhaps.
Sorry about the circumstances with the inheritance BML. Great job rocking with your bachelors, too. You can't downplay the work! It sounds like your son is going to follow in your footsteps!
Wow – 3 part time jobs! That's dedication. Good stuff.
Great job pounding down the student loans, Kari! I'm in the same boat – mortgage balances for student loans around the office. I've saved up enough to pay them off but am holding that $$ in an account to put more $$ on a house (higher interest rate and doesn't disappear when I die). But I also may be overthinking it…
I can't believe how fast tuition has inflated either. I've been standing on a soap box for years begging people to do a full value analsis for college. And then they want teenagers to make all of these decisions, sometimes without parents helping them.
Oh, I'm sure the protests are coming… we had one around NYC recently (http://newyork.cbslocal.com/2011/11/28/students-plan-another-demonstration-at-baruch-college-to-protest-planned-tuition-hike/)” target=”_blank”> http://newyork.cbslocal.com/2011/11/28/students-plan-another-demonstration-at-baruch-college-to-protest-planned-tuition-hike/)” target=”_blank”>(http://newyork.cbslocal.com/2011/11/28/students-plan-another-demonstration-at-baruch-college-to-protest-planned-tuition-hike/)
I think we'll see a lot more of that in the coming years… something has to change either in how the colleges are run or the students choose and pay for schools. It's not sustainable at this rate…
Haha! I owed about $37,000 after undergrad and another $65,000 or so for law school and I worked my tail off and made a bunch of money bartending throughout. I totally could have paid my way through. Still kicking myself quite a bit about that. Live and learn – and start a blog to beg others to not make the same mistakes!