Did you catch the TK forum thread “My kids are going to make me crazy?” Seems like, coast to coast, many parents are getting into harrowing conversations with their kids, fresh from graduation. Top 3 Crazy-Making Statements seem to involve the words “backpacking”, “film school”, and “cookie dough” (as a chief means to make money-dough).

It’s definitely tough out there for graduates this year – and student loans don’t make life any easier. I’m curious what you all think about The New York Times’ “Room for Debate” column, “How Much Student Loan Debt is Too Much?” It raised all kinds of fascinating questions, like: What’s a smart rule-of-thumb in this area? Are colleges getting away with murder with their astronomical tuition hikes? Should student-loan forgiveness be part of our economic stimulus strategy? And could the next credit crunch come in the form of tightening up student debt?

What’s your take on all this?

[image: Cap Toss by Herkie on flickr]
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This topic infuriates me.

How much student loan debt is too much?  Anything over $0.00 is too much.  It's that simple.  There is absolutely no reason (and no return on investment) for a student to go high into debt at an expensive school than to stay locally and pay in-state tuition at a state school.  The differentiation between the education at the "upper end" schools (which are exponentially more spendy) vs. the traditional state schools is insignificant.

On average, tuition for in-state schools is around $6000 / year (two semesters).  That's literally $500 / month.  Who can't afford that?  Simple budgeting and cash flow affords that education.  For $12000 / year, or $1000 / month, a student can stay at the dorms with a meal plan.  What's exactly wrong with flipping a burger or delivering a pizza while attending school?  How hard exactly is it to earn $1000 / month??

See, the "entitlement" mentality is infecting us, and debt has become the facilitator to these entitlements.  It's absolutely criminal that parents are setting up their children for a large debt obligation right at the start of their adult life.  Student loans are particularly nasty, since they don't disappear during bankruptcies, etc.  How many people do you know in their 30's and 40's still paying off student loan debts?  I actually knew this number at one point, but have forgotten, but it's exceptionally high.

My children are going to earn their way through school.  I hope to have saved a little up for them, of course, and I hope they get scholarships.  But, ultimately I hope they learn the value of hard work, budgeting, and staying off the American crack which we call debt.

Buffett, excellent points, all.

I hear you, guys. I'm also more than a little outraged at the recent runup in college tuition, especially considering that many kids nowadays will need to get post-graduate degrees, too. I like Risk Capital Pursuit's creative approach - keeps the kids motivated to finish as well as motivated to keep the loans to a minimum.

I read somewhere recently that expensive, endowment-driven schools like the Ivies are suffering a lot more in the recession than state schools, where tuition payments make up a greater percentage of the schools' operating budgets. Who knows: maybe an outcome of the recession will be a renewed interest in, and respect for, a reasonably-priced public university education in America.

I go to a top tier school right now. Though I understand the argument for state schools and smaller local schools, it all depends on many factors. For example, if you want to become a doctor, you need to go to a good school, because Med schools do not even look at your application if it is from a small unknown school, a 4.0 GPA and high MCAT scores mean nothing. Yes, they may think you are smart enough, but they do not know the program of the school you went to, whereas they do know the pre-med program of Harvard, UC Berkley, University of Rochester, UCLA, and the top 50 schools. And they will have plenty of applicants from those top school with just as good creds.

Now if you want just a BA and are not seeking to get an advanced degree such as PHd, MD, DO, Pharm. D, etc, then a smaller and cheaper school may work for your needs.

And to comment on the Ivy school loosing endowment, that is true, partly to the fact they invested heavily in the stock market and also less alumi donations are coming in because of the economy.

I guess the worst off are the middle-upper class. The lower class get more financial aid and the upper crest have enough money. BUT, many schools are doing something about that already. Atg the Ivies, any family making less than $130 combined, gets a full tution paid. So in average, the cost of going there, if you can get in, is actually equal or lower than a state school.
 

Thanks for your comment, coolfez. It's great to have a current student weigh in on the issue; I may be dating myself when I compare current tuition prices to the price tags of my own education, which ended, shall we vaguely say, more than a few years ago. ;-)

Definitely a lot of factors to consider nowadays as students choose the right school, and your point about the Ivies reducing tuition for upper-middle class students is very encouraging. Thanks for bringing a more nuanced view into this discussion!

Don