Cycle of student loan debt

**Sonnenwende** · 11-06-2011, 02:27 PM

I was reading some of the stories posted on Occupy Student Debt. I noticed that quite a few stories went like this:

1) Went to school first time, racked up some debt.
2) Started paying it off and got laid off/employer insisted on higher credential without paying for it.
3) Student went back to school and racked up more debt without ever finishing paying off the first debt.
4) Student finishes school the second time, but this time cannot find a job period. Debt is far higher this time sometimes with capitalized interest from old loans on top of the new loans.
5) Student considers going back to school a third time to defer debt and major in something else. More loans...

The definition of insanity is...?

**pollypurebred39** · 11-06-2011, 02:33 PM

That's what everybody was told to do the first go round.

Heard many stand on their soap boxes and say people just weren't trying hard enough, they need to go back to school so they can get back to work and not default on their loans. A lot of put on your big boy/girl pants and make it work at any cost out there. Including getting yourself in serious debt. Crazy Merry-Go-Round.

**Telephus44** · 11-06-2011, 04:33 PM

Yes, it's one of those popular beliefs - if you can't find a job, just go back to school. It'll defer the loans and OF COURSE you'll find a new job with your new degree.

Right now colleges are doing a lot of advertising. May be bad times for the economy, but schools are doing just fine.

**shoiji** · 11-06-2011, 04:47 PM

Realize the economy is bad however it always has good and bad times. Hearing about students having student loan debt is nothing new to me. Seems as if finding a job after college is always difficult and many times you need to work minimum wage jobs or lower paying jobs until you get the job or foot in the door when you first start out.

**pollypurebred39** · 11-06-2011, 04:55 PM

I remember the first time I heard it too. Bush was speaking to the U.S. and telling us our jobs were gone, and they were never coming back, that's progress. What people needed to do was go back to school, the government would help. Pharmaceuticals was where it was at.

So everybody went back to school to get a degree, and now the field is saturated. My son's pharmacy is hiring pharmacy techs for minimum wage, and there will be no raises. Try and pay your loan back on that!

Then it was education, and all the teachers here are being laid off left and right. My Sister got a job at a daycare, her degree is in early childhood education. She made minimum wage and was required to pay for all her classroom's crafts and toys! And she had a FULL class with no helper. Try and pay back a loan in those circumstances.

Then it was medical! That's where it's at. Everybody out here ran and got a degree in the medical field, well that's so saturated out here now you make more working fast food. Again, try and pay back your student loan working fast food.

Yes, somehow it feels like we were duped.

**AliciaKnits** · 11-06-2011, 05:24 PM

Or there are others like us who were able to go to school without student loans. I went to a community college first, then a four-year to finish my Bachelor's without incurring debt. For the last five years, I've worked and paid for each class with my own money. While it did take me five years, I will graduate June 2012 with an MBA and no debt at all. That's what hard work is all about.

**pollypurebred39** · 11-06-2011, 05:29 PM

Good for you! That's the only way to do it. Suffering and clawing your way up, one class at a time. The trick is knowing what to get your degree in so there's work available when you get out of school. Still trying to get that nailed down for our oldest. And of course still trying to come up with a way to pay for even one online community college class. He'll get a degree in something eventually.

**Nishu** · 11-06-2011, 06:20 PM

I know we preach a lot about paying as you go and just taking longer, but is that really so much better if you can leave school and make twice as much? My husband got his degree in 3 years. If he had taken 5-6 years like a lot of people are doing, that could have been 50K lost wages in that extra couple years for certain careers. Graduating without debt is an accomplishment, but it's not always a situation where you're going to come out ahead.

And secondly, I know there's a lot of grumpiness toward the people who are complaining about student loans, but they have a point. The price of college is inflated, even though it's partly due to student loans in the first place. The value of a college degree isn't nearly as good as it used to be when you compare the payoff to the cost. It doesn't matter how much we subsidize student loans or give grants, colleges will continuously soak up the extra because they can. Our interference is driving up the cost of college and college students today are paying the price for the misguided policies that they had no hand in.

Paying your way through college is a great accomplishment and definitely something to be proud of, but guess what, you're still paying too much!

**pollypurebred39** · 11-06-2011, 06:27 PM

That's very true Nishu, there's lots of variables when it comes to schooling, and not everyone's on the same playing field, that's for sure. The cost of schooling is highly inflated considering the pay scale out there. I concede that it does sometimes benefit one to do it all at once.

**Nishu** · 11-06-2011, 06:56 PM

And you know, I don't think anyone expected this recession to last as long as it has. If our economy had been in recovery already, I'm not sure we'd even be discussing this. Going to school when you get laid off and don't have prospects is actually a good idea most of the time and it's been the go to strategy for quite some time. If this had been a typical recession and if our real wages hadn't been going steadily down, these people would have been laughing all the way to the bank.

**pollypurebred39** · 11-06-2011, 06:59 PM

True, very true.

Edited to add:

They say it has recovered, we just don't know it yet. ROFL!

**Anastasis** · 11-06-2011, 07:10 PM

My undergraduate was paid for with a full academic scholarship.

I went back to graduate school and wracked up six figures in student loan debt but I'm lucky in that my prospective salary is twice what I spent on the degree (actually a little more).

But I have friends who have just as much debt as I do looking at a 60k a year salary and I am really afraid for them. I think it's really insane to accumulate more in student loan debt than you expect to make in one year. Don't know where I came up with that rule but it just makes sense to me. Especially in a field where it might be hard to find a job.

**pollypurebred39** · 11-06-2011, 07:15 PM

Anastasis! Wow! You're one smart cookie!

That's AWESOME!

**Sonnenwende** · 11-06-2011, 08:32 PM

I think in the case of these people on OSD, any income benefit from going back to school would be wiped out by the debt they needed to repay. The interest rates are simply too high now compared to the cost of education for the gamble to be worth it in most cases.

A few did realize that and stopped (very reluctantly), but I was struck by the number of people who just thought they simply had no other choice but to continue racking up debt. Like a kind of fatalism.

Personally, I have thought education to be in a bubble for a very long time and I believe it is about to explode. Tip of the iceberg what we see on that site, because I know at least two people who could be on OSD. Debt loads four times my own at interest rates nearly triple mine. They make between $14 and $16 an hour. One has two young kids and taking care of her parents who both are long-term unemployed due to the economy and their age. The other is single, but still, the burden is incredible on that salary. If they could do better, they would. But there is nothing better. They can barely pay the interest, so their balances are not going down despite years of repayment. :/ You don't trust a 17-18 year old with a beer, but trust them with tens of thousands in unbankruptable debt.

**mh3rdwheel** · 11-06-2011, 08:42 PM

Originally Posted by Sonnenwende

I was reading some of the stories posted on Occupy Student Debt. I noticed that quite a few stories went like this:

1) Went to school first time, racked up some debt.
2) Started paying it off and got laid off/employer insisted on higher credential without paying for it.
3) Student went back to school and racked up more debt without ever finishing paying off the first debt.
4) Student finishes school the second time, but this time cannot find a job period. Debt is far higher this time sometimes with capitalized interest from old loans on top of the new loans.
5) Student considers going back to school a third time to defer debt and major in something else. More loans...

The definition of insanity is...?

I know the insanity, I was told the same thing but I was not employed where the employer told me to go back to school. I now owe around $20,000 and no degree. I pay $196 a month i finanacial aid. In Jan I am going back to school for the last time online at age 44. I WILL GET A DEGREE THIS TIME.