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Great. So what is your plan to educate the 17 year olds taking out these loans?
And their parents? Many of whom are immigrants or not college educated themselves with zero financial literacy.
That’s where the system breaks down first.
If you don’t know what you’re gunna do with your education you shouldn’t be borrowing money you can’t pay back to get it. Should financial literacy be taught in schools? Yes. But that doesn’t mean we need to also keep saddling young adults with debt for degrees that have no ROI. We can start with the easy thing which is to add restrictions to federal student loans. No one should be able to borrow tax payer money if they don’t have a plan for how they’re gunna pay it back, i.e. a career path that will pay them enough to afford the payments. If private companies what to give unsecured loans to students who have no idea what kind of career they want to have after college, they can do that. And then instead of the taxpayer footing the bill for defaulted student debt it will be the bankers.
I don't disagree but most people don't actually have a clue where they are going to end up after university, how much they are going to make, etc. etc.
Good luck with that. We wouldn't have any teachers if that was how everyone thought.
There are no salary guarantees. I was in industry before coming to consulting. I most certainly didn't make 6 figures. It must be nice to have so much privilege.
I think that's a good idea, if you can't pay off the loan quickly then you should avoid taking student loans but the system is set up so you can take as much as you want for whatever you want and then don't have to pay back for as long as you are taking any courses. Something is wrong with our system and that needs to be addressed, can't have students taking loans they know they can't take pay back and everyone else has to end up paying for them.
Umm... Yeah what about having school teachers and nurses they don't make six figures.........
So, should lenders be allowed to offer loans for majors/careers that won’t make six figures in 5-10 years?
That’s the point. The OP is moot.
I get the idea behind this but there are a lot of fields that need people that will never deliver that income. And the people who can afford those degrees on their own won't touch them.
Simple answer - never take out more in total student loans than your anticipated first year starting salary - and be realistic. If you take out 40k in loans and make 75k starting - youll be fine with budgeting.
I have a friend whos husband took out 95k in student loans to be a social worker making 60k after years in the field. Hes buried.
I’d go further and say make six figures almost immediately upon graduating
I’d say 30k in loans for a starting salary of 50k isn’t egregious. If it’s a career with a lot of upward mobility and you’ll be making a quarter million by year 10. As is the case with certain lines of service in public accounting. The point in my opinion is whether you went in with a plan to get into a career that you’ll be able to afford your payments without feeling like you’re drowning.
We have to control how much people can borrow regardless of career choice; if we control how much people can borrow, school are going to have to lower tuition costs. Lower tuition costs means less debt.
Simpler way... get rid of federal student loans. Once the Department of Ed got involved is exactly when student loans went ballistic. If you make an 18 year old prove its a worthy investment or make parents cosign loans then the parents can help control the nature of their investment.