How do people get so much student loan debt?

[GoodSteward]

So, I can understand why some people have large student loans, but after reading the other posts about how they work, how can a non-med school or lawyer, etc rack up massive student loan debt? I hear the calls on dave ramsey. Normal teacher with near 100K$. From what it seems there are low limits on the loans on avg, so how do you do it?

[disneysteve]

It's not hard at all. Many schools now cost well over 50K/year. If a student borrows just half of that annual cost, they will graduate owing over 100K.

[creditcardfree]

I would guess private loans come into play for many at some point.

[disneysteve]

I would guess private loans come into play for many at some point.

I'm sure. The 4-year limit on Stafford loans is $29,000. The rest has to come from either parent PLUS loans or private loans.

[bjl584]

College is ridiculously expensive, when you are 18 you often have no idea what you want to do with the rest of your life, so you pick a major that has no marketability, or you change majors 3 years in to another major that has no marketability. Fresh out of high school, most people don't understand the impact or long term consequences of taking on tens of thousands of dollars worth of student loan debt with no solid plans or ability to pay any of it back.

[disneysteve]

College is ridiculously expensive, when you are 18 you often have no idea what you want to do with the rest of your life, so you pick a major that has no marketability, or you change majors 3 years in to another major that has no marketability. Fresh out of high school, most people don't understand the impact or long term consequences of taking on tens of thousands of dollars worth of student loan debt with no solid plans or ability to pay any of it back.

We've had this conversation multiple times here.

1. College can be ridiculously expensive but doesn't need to be.
2. Parents need to be involved in the process. You can't let that 16 or 17 year old pick a school based on online videos, where their friends are going, what they see on facebook, etc. It needs to be a family decision and a financial discussion needs to be a part of it. Our daughter is attending a costly school but we all knew going in that we could afford it. She also knew that if she lost her scholarship, she'd be out of there.
3. Parents also need to be guiding the kids in regards to student loans. Of course, as with so many other things, most parents are clueless when it comes to money management so they aren't always the best mentors in that department.

[Singuy]

1. Students and parents are into brand name universities because of the prestige it brings to the family. Parents are at their proudest when they tell their friends about their kids going to an ivy league..I believe this level of status trumps any keeping up with the Jones items.

2. A lot of students doesn't have the discipline to study with a hands off approach. Too many lose their scholarships because they are no longer being cradled like in HS with extra credits and plenty of homework to pad their grades. Also the party culture takes place of studying.

3. Only 58% of students graduate..while the rest simplely wasted their time. Not to mention some takes 6-7 years to graduate from major swapping.

4. Let's just say your child did everything right, graduate school doesn't get the luxury of scholarships. Most loans are now unsubsidised and not a lot of kids sit down and calculated cost vs benefits of a particular graduate degree. Most have no idea what their interest rates are or how it compounds. They only look at the end goal... "Everything will be fine, I'll be making 6 figures"... Then graduate living the 6 figure lifestyle while putting their student loans in the back burner.

5. Work hard and play hard is the culture of a lot of students. Too many justify their lavish lifestyle while on student loans because they feel like its entitled due to studying hard.

6. The "undecided" major is what I believe to be the most costly. Too many students are undecided...or find the major they were studying to be uninteresting. Every year wasted is 50k/year gone especially after you lose all your scholarship.

7. Students find themselves stuck in an expensive university due to credit transfer complications (every school have different pre-req for a particular graduate/or bachelors degree..macroeconomics is required in school A but not physics, but in school B, physics is required and not macroeconomics). They feel stuck paying the high price of out of state/private school tuition after the loss of their scholarship due to this. Also they feel they are already invested, no use going backwards and cutting your losses.

These are some of the reasons I can think of right now. I teach graduate students about finances and have encountered many of the following above.

[GoodSteward]

My question would be unless you happen to need to go to an out of state school for a speciality degree, or you really want to go for something that isn't offered in state, why do so many kids go out of state? My understanding is that this is the major reason why it normally gets so high. We have several universities and colleges, and as long as you are a state resident the cost is cut significantly.

[Singuy]

My question would be unless you happen to need to go to an out of state school for a speciality degree, or you really want to go for something that isn't offered in state, why do so many kids go out of state? My understanding is that this is the major reason why it normally gets so high. We have several universities and colleges, and as long as you are a state resident the cost is cut significantly.

1. Prestige, name brand
2. Scholarships cover a good portion of the cost
3. Want to leave home, change of scenery
4. Perhaps that university offers a better path to a particular major (but the kid may or may not be decided)
5. Smaller classrooms

I would say majority of graduated kids end up in the state

[Nutria]

3. Want to leave home, change of scenery

Bah. Unless you live in Rhode Island, that's the worse reason ever.

[moneybags]

My question would be unless you happen to need to go to an out of state school for a speciality degree, or you really want to go for something that isn't offered in state, why do so many kids go out of state? My understanding is that this is the major reason why it normally gets so high. We have several universities and colleges, and as long as you are a state resident the cost is cut significantly.

Many Illinois students go out of state and pay cheaper tuition! Our schools are expensive and not generous with scholarship money.

[disneysteve]

My question would be unless you happen to need to go to an out of state school for a speciality degree, or you really want to go for something that isn't offered in state, why do so many kids go out of state? My understanding is that this is the major reason why it normally gets so high. We have several universities and colleges, and as long as you are a state resident the cost is cut significantly.

This partly depends on where you live. It also depends on what you are looking for in a college. There are many reasons why people choose one school over another. When we were looking for a school for our daughter, we toured 9 schools in 4 states. That was partly because during the process she changed her mind about what she wanted to do, but every one of those campus visits helped her, and us, hone in on what features were and were not important to us. She ended up at a school in our home state, but that wasn't because it was here. It was because we all felt it was the best fit for her.

As for cost, the in-state/out-of-state differential often only applies to the state schools, not the private schools. Her school is the same price for everyone regardless of where they live.

[LivingAlmostLarge]

depends on where you live. I can see kids not going public because it's too big and not the right fit.

[clatoden99]

How do people get out of debt without getting more loans?

Debt is like a hole in the ground. You don't get out of the hole by digging it deeper. You don't get out of the hole by moving it around.

Fill it with dirt.

Pay off your debt. Read on Dave Ramsey's debt snowball method. Studies have proven that paying off smallest to largest is the best way to get out of debt. Ignore the interest rate. Just make progress.

[bigdaddybus]

Many Illinois students go out of state and pay cheaper tuition! Our schools are expensive and not generous with scholarship money.

If you have any advice here I would love to hear it. I currently have a daughter going into her JR year and we have been to one college fair. I went to college in IL on the Illinois Veterans Grant and GI Bill and that is my only experience paying for college.

My daughter says she wants to major in psychology now, but I would say that is just her initial pick.