College students who borrow too much: 13 facts
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(MoneyWatch) I remember being startled earlier this year when I received an email from a mom who shared that she and her husband planned to borrow $200,000 for their son to attend Cornell University. Their son would also have to borrow the maximum in federal student loans to attend the Ivy League school.
What made this scenario even more preposterous was that the the bright child had also received a scholarship for an engineering honors program at Stony Brook University in New York and he could have graduated debt free.
The fifty-something mother rightfully expressed concern that she and her husband would keep their jobs long enough to repay this staggering college debt. I emailed the mom urging her to reconsider this college choice, but I never heard back.
Families that borrow six-figure amounts for college are the ones that you typically hear about in the media. But how common are they?
Students who borrow excessively for college
Mark Kantrowitz, the publisher of Fastweb.com and FinAid.org, released a white paper this week that concludes that extreme borrowing is far less common than you'd think. Here are Kantrowitz's key findings that are based on 2007-2008 figures:
1. Overall, 1.5 percent of all undergrads and grad students graduated with six-figure student loans.
2. Among students with six-figure debt, 10 percent were undergraduates and 90 percent were graduate and professional students.
3. Nearly 72 percent of undergrads with these huge debt loads graduated from non-profit colleges even though these institutions represent just 17 percent of total undergraduate enrollment.
4. Undergrads at expensive private schools are 12 times more likely to gradute with six-figure debt than undergrads at public institutions.
5. Twenty four percent of undergrads with staggering debt earned degrees at public universities.
6. Forty nine percent of medical students and 36 percent of law students graduated with six-figure debt.
7. Less than three percent of MBA students graduated with this high level of debt.
8. Students selecting more expensive colleges were more likely to graduate with six-figure student loan debt. In fact, more than three-fifths of bachelor-degree recipients with high loan amounts attended schools where the cost of attendance was $30,000 or more.
9. More than half of undergrads with six-figure debt attended the most selective schools.
10. Less than half of dependent undergrads who assume six-figure college loans do so because their parents are unable or unwilling to borrow from the federal Parent Plus Loan program.
12. Students who use private student loans are more likely to graduate with six-figure debt.
13. High-income students were more likely to graduate with onerous college loans than low-income students.
In my next post, I'll share ways that Kantrowitz suggests can decrease excessive borrowing for college.
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Students and parents need to start looking at college as a financial decision rather than just a right of passage. Too many students and parents think that it doesn't matter how much they borrow because:
* I'll make it back if I get that all-important degree.
* I have to get into XYZ College or my life doesn't matter.
* I have to get into XYZ College because that's where all the right connections are made.
* I have to get into XYZ College because it's on this list.
And it goes on and on.
How about asking questions like:
* Which colleges are going to be the best fit for my ultimate goals?
* What is the expected return on this investment?
* Which colleges are going to have the lowest net cost?
* What actually determines my individual cost for college?
We are woefully uneducated about what the real costs for college are. That must change.
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I also would be interested to know how high-income versus low-income is defined in #13. Is it based on family income?
I also would be interested to know how high-income versus low-income is defined in #13. Is it based on family income?
Wages have gone down, inflation has gone up, costs have gone up, loans are inevitable. Trying to keep it a contained, independent issue is misleading and myopic.
So let's have nobody go to college and then whine how nobody is spending and everything else... everything goes round and round with nothing positive being done. Unless you're a lobbyist...
It is a personal choice to attend College or not-well, at least it is today, the way this Country is turning so freakily liberal heaven knows what tomorrow will bring. Don't want debt, don't go or go part time. Get a room mate or two and share expenses. Get scholarships and financial aid-plenty out there. Use the brains in your head and figure it out. Stop expecting someone else to pick up the tab.
Only people I hear whining are the ones who got themselves in debt up to their eyeballs after taking 8 years to get an Underwater Bastketweaving degree. Too bad, so sad. Suck it up.