Rants like these about evil student loans (these examples by ToughMoneyLove) are how holier-than-thou people feel about student loans. Student loans are for the poor (just use your college trust!) or for the wasteful (why not a state school like Mississippi State?).
Well, I'm proud of my six-digit student loans.
I'm going to see Dave Ramsey later in the month, and I've been thinking about my beefs with Dave Ramsey. His position on student loans is, by far, my biggest beef.
I have over 200K in education from two elite private schools. At one point, my loans were well over 100K. Today, I'm in my mid-twenties and debt free. I have followed (or could have followed) Ramsey more or less except for this major deviation.
I think Dave Ramsey has two problems with student loans: (1) too much risk and (2) he sees no value in high-dollar schools.
The latter is a different discussion. But, if I were forced to generalize for millions of people every day, I would probably agree. Most expensive schools aren't much different than state schools. Some are. Mine was. I knew that, heck Ramsey would too, but in general most aren't. That's the problem with one-size-fits-all personal finance.
As for risk, Ramsey hates all student loans, even modest ones, because he sees people fail. They drop out of school, they change their mind, and they're stuck with huge loans. Fair enough. College isn't for everyone. Me, I knew I had to succeed and put my skin in the game to back it up. When Ramsey says, "don't take out medical school loans," he says, "I don't think you are going to finish. You're not going to make it." Fine, maybe that's true for some. Maybe it's true for most, but it's not true for me.
My biggest beef with Ramsey is that in Ramsey's world, the only way to go to med school or any really expensive school is to have a trust fund. I am grateful for the many, many student loans that were extended to me. They were the price of admission to a new world. They allowed me to be near, befriend, and learn from trust fund kids, from brilliant professors, and from brilliant alumni.
I'm not bashing state schools. I'm just sick of people bashing or fearing my path. If you don't like/are scared of/can't afford student loans, don't take out any. I don't want pity, and I don't want disdain. I'm grateful every day for all the doors my education opened. The only way I could have gotten there (at least back then) was student loans.
Tuesday, January 13, 2009
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Ever since tuition/room/board rates hit $30K/year, I concluded that it was only worth it for about 15 universities in the country - and they're worth every penny of that debt for the doors they open. Otherwise, you need to feel really directed and driven to put yourself in that kind of debt for a middle-of-the-road school. Sounds like maybe you had both going for you :)
Agreed. While I hate my student loans, I'm so thankful I was able to obtain them. I wouldn't be where I was today if it weren't for my education. So while I wish they were already paid off, they are good debt and I'll keep hacking away and being thankful they got me through school.
i agree that most private schools are just not worth the money. but there are about 15 of them that are, either because of the education that they can afford you or the contacts you can make. nice blog, I look forward to reading more.
I didn't go to a private school, but I went to a state school that was not in my state. Its a top-ranked school for my degree. Although my student loans are nothing compared to yours ($35k...then again I think my pay is probably proportional, lol) I could've probably gone to school in state for free.
I don't regret a single decision I made. I'm proud of my education, and proud that I'm going to be paying it on my own. It was well worth the money.
Dog, how did you pay off over $200K of student loans in such a short period of time? That's very commendable and while I don't have any student loans (I had a small $6500 loan when I graduated but other than that, I "paid" for school through scholarships), I think many people could learn from any suggestions you may have.
Disregard my question about how you paid for school. I see the link in your post.
I agree he's making it seem that only people from wealth should be doctors, lawyers, etc. Which is not the point of having student loans. Anyone smart enough should go.
I'm not sure I agree with his assessment that college is worthless.
There was an article on colleges in Money or some other magazine where a college official said that they were having trouble getting students to apply... until they doubled tuition. This tripled the number of applications & raised their ranking because they accepted a smaller percentage.
The stories about how college graduates earn millions more in their lifetime are also contributing to the fact that so many more people are going to college now than ever before.
I agree with you - I think college was invaluable and I'm OK with my student loans. And while it didn't really matter for my field, there are times when a private education really can make a difference in your earning potential.
100% agreed
I was happy to pay for my business school (even if I hated the bill), because the name of the school got me into doors that would not have opened otherwise.
College is not useless. Even if you don't follow your major, college teaches you basic skills from just following the courses, doing the work (good or bad), dealing with bitchiness on campus (aka office politics) and getting harsh feedback from profs (sounds like a workplace, non?)
Whatever.
Fabulously Broke in the City
"Just a girl trying to find a balance between being a Shopaholic and a Saver."
If it is so hard to get kids to finish college, borrow only what they need, have a plan to pay the money back, etc then the failure in that system happened long before college; it happened when those kids were raised to expect that they wouldn't have to work hard and that they could buy things on credit and not really worry about the debt. My guess is that they learned a lot of those bad values from the example of their parents.
I for one am grateful that student loans were available to me. I feel smart that I picked a career that was stable and pays decently and where I could pick up a second job to pay for the loans. Thanks to college and student loans I have a good, well-paid career and no more debt.
I think education is valuable, but I also think it's unfair to stick young people with the amount of student loan debt we do. I think there should be better alternatives to taking out loans, our system is broken. Not that I have any solutions!
Mr M and I were talking yesterday about why he had to drop out of school. He couldn't get financial aid for college because of his mom's wealth. She had abandoned him and he was a ward of the state of California, but all financial aid calcs are done assuming your parents are helping to pay for your education. It's crazy.
I wouldn't say I'm proud of racking up a six figure student loan bill, but it is what it is. One investment they can't take away from you is knowledge. While I may not be a doctor or a lawyer or some other shining example of success, I knew I had the potential. With that said I do agree with a lot of what Dave Ramsey says regarding student loans and debt in general. You have more freedom without debt. It is possible to live on a very small salary starting out with no student loans.
I don't take school for granted either. Some people go to college and get a degree in nothing just because that's what everyone else was doing. I've been doing the job I have now well before I got my degree, but it was something that helped the pay grade and proved I know what I'm doing.
Run to student loans to pay for school? If I had to do it over again I would try to work more and get more scholarships to reduce my debt load. While college helped create a path for my future, I'll spend some time paying back those loans to truly be free.
There's nothing wrong with a six digit student loan if that six digit education helps you land a six figure salary (plus) to pay for it.
Although I disagree with DR's opinion about SLs, I do understand where he's coming from. Many people put stock in elite educations, but the average person doesn't do anything with it when they're finish - IF they finish.
Further, I don't understand the value of an expensive education. I went small and private for undergrad and public for B school - completing both with about $14k in SLs. I'm also proud that completed graduate school with ONLY $14k in loans. And guess what? Most of my colleagues are ivy educated and our salaries are the same. So in my opinion, an accredited degree is important - period - it doesn't matter WHERE you get it from. With career planning and assertiveness, I can break into any business related career field my little heart desires.
Ramsey is right in a way, but as in most things, he oversimplifies it. You shouldn't go to college without considering the costs and the potential increase in earnings it will provide. At the same time, getting an education isn't just about earning more money afterwards. I went to a private school but don't have any student loans because the Army paid for my tuition - which I'll be "paying off" but not in student loan payments. I think student loans are a good option for many people, but they shouldn't be taken lightly.
DH and I had over $300K in student loans for college, law school and med school (all state schools, btw). I believe these loans to have been well worth it. Mine were gone within 4 years of graduation, and DH's are 3/4 gone 10 years after graduation. We would never have been able to enter our chosen professions without the loans, and since we both enjoy our fields, that makes them worth it.
I agree with you almost entirely. Because of the incredibly high cost of college in the U.S. today and the near non-existence of grant programs anymore, it's pretty unrealistic to think that someone would go to college without taking on debt, especially if you're going for an advanced degree. I did my bachelor's and master's at a state school, but am still $25K in student loan debt. Granted, I happened to grow up in a the state with the second highest state-school tuition in the nation, but I do feel that I received a really exceptional education. The bottom line is, I think everyone needs to strike a balance between finding the school that "fits" them and the practical concern of comfortably paying for that education after the fact.
I think students should be taught to way the degree with the amount of debt. Someone who becomes a surgeon can support much larger student debt than someone becoming a teacher.
we are really very lucky in Australia that our loans for university education are not charged interest, they are tied to the inflation rate and we don't have to pay any back until we are earning over $38,000. The repayment is calculated as % of income and if you die with loans they are forgiven.
are loans forgiven in US this way?
In some professions it really does make a difference what university you went to, it'd just the way is. I think that we need loans, so many people wouldn't get there higher education without them. I
Many of us even need loans for state schools!
The problem with student loans is SOME people foolishly sign up for them without thinking, then call it good debt. Getting six figures of loans for a med degree or whatever degree you have is much different than coming out of school with 75k for a teaching degree in a low paying state. Teaching is a great profession, but the pay isn't there.
But it is just as foolish to avoid them at all costs without thinking about it and calling them bad debt.
I have 166,000 in loans from going to an out-of-state public school, which I loved, and a private law school, which I also loved and was the highest ranking school I could get into. I wish I didn't have this much debt but I had no trust fund either and there is no way I could be a lawyer today without those loans. I LOVE what I do, I am so happy I'm a lawyer. So in that sense it was worth it. But the monthly payments really hurt and I have no discretionary income. How did you get out so fast?
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