Student loans are not free money.

[CCTAU]

And the decision to take out loans for school should be done on the premise that you will get a degree that will actually help you pay back the loans. The example below is hilarious. The author actually attempts to blame the university for this. How stupid are people?

Placing the Blame as Students Are Buried in Debt
by Ron Lieber
Tuesday, June 1, 2010

provided by
The New York Times

Like many middle-class families, Cortney Munna and her mother began the college selection process with a grim determination. They would do whatever they could to get Cortney into the best possible college, and they maintained a blind faith that the investment would be worth it.

Today, however, Ms. Munna, a 26-year-old graduate of New York University, has nearly $100,000 in student loan debt from her four years in college, and affording the full monthly payments would be a struggle. For much of the time since her 2005 graduation, she's been enrolled in night school, which allows her to defer loan payments.

This is not a long-term solution, because the interest on the loans continues to pile up. So in an eerie echo of the mortgage crisis, tens of thousands of people like Ms. Munna are facing a reckoning. They and their families made borrowing decisions based more on emotion than reason, much as subprime borrowers assumed the value of their houses would always go up.

Meanwhile, universities like N.Y.U. enrolled students without asking many questions about whether they could afford a $50,000 annual tuition bill. Then the colleges introduced the students to lenders who underwrote big loans without any idea of what the students might earn someday — just like the mortgage lenders who didn't ask borrowers to verify their incomes.

Ms. Munna does not want to walk away from her loans in the same way many mortgage holders are. It would be difficult in any event because federal bankruptcy law makes it nearly impossible to discharge student loan debts. But unless she manages to improve her income quickly, she doesn't have a lot of good options for digging out.


It is utterly depressing that there are so many people like her facing decades of payments, limited capacity to buy a home and a debt burden that can repel potential life partners. For starters, it's a shared failure of parenting and loan underwriting.

But perhaps the biggest share lies with colleges and universities because they have the most knowledge of the financial aid process. And I would argue that they had an obligation to counsel students like Ms. Munna, who got in too far over their heads.

How many people are like her? According to the College Board's Trends in Student Aid study, 10 percent of people who graduated in 2007-8 with student loans had borrowed $40,000 or more. The median debt for bachelor's degree recipients who borrowed while attending private, nonprofit colleges was $22,380.

The Project on Student Debt, a research and advocacy organization in Oakland, Calif., used federal data to estimate that 206,000 people graduated from college (including many from for-profit universities) with more than $40,000 in student loan debt in that same period. That's a ninefold increase over the number of people in 1996, using 2008 dollars.

The Family

No one forces borrowers to take out these loans, and Ms. Munna and her mother, Cathryn, have spent the years since her graduation trying to understand where they went wrong. Ms. Munna's father died when she was 13, after a series of illnesses.

She started college at age 17 and borrowed as much money as she could under the federal loan program. To make up the difference between her grants and work study money and the total cost of attending, her mother co-signed two private loans with Sallie Mae totaling about $20,000.

When they applied for a third loan, however, Sallie Mae rejected the application, citing Cathryn's credit history. She had returned to college herself to finish her bachelor's degree and was also borrowing money. N.Y.U. suggested a federal Plus loan for parents, but that would have required immediate payments, something the mother couldn't afford. So before Cortney's junior year, N.Y.U. recommended that she apply for a private student loan on her own with Citibank.

Over the course of the next two years, starting when she was still a teenager, she borrowed about $40,000 from Citibank without thinking much about how she would pay it back. How could her mother have let her run up that debt, and why didn't she try to make her daughter transfer to, say, the best school in the much cheaper state university system in New York? "All I could see was college, and a good college and how proud I was of her," Cathryn said. "All we needed to do was get this education and get the good job. This is the thing that eats away at me, the naïveté on my part."

But Cortney resists the idea that this is a tale of bad parenting. "To me, it would be an uncharitable reading," she said. "My mother has tried her best, and I don't blame her for anything in this."

The Lender

Sallie Mae gets a pass here, in my view. A responsible grownup co-signed for its loans to the Munnas, and the company eventually cut them off.

But what was Citi thinking, handing over $40,000 to an undergraduate who had already amassed debt well into the five figures? This was, in effect, a "no doc" or at least a "low doc" subprime mortgage loan.

A Citi spokesman declined to comment, even though Ms. Munna was willing to sign a waiver giving Citi permission to talk about her loans. Perhaps the bank worried that once it approved one loan, cutting her off would have led her to drop out or transfer and have trouble paying back the loan.

Today, someone like Ms. Munna might not qualify for the $40,000 she borrowed. But as the economy rebounds, there is little doubt that plenty of lenders will step forward to roll the dice on desperate students, especially because the students generally can't get rid of the debt in bankruptcy court.

The University

The financial aid office often has the best picture of what students like Ms. Munna are up abbgainst, because they see their families' financial situation splayed out on the federal financial aid form. So why didn't N.Y.U. tell Ms. Munna that she simply did not belong there once she'd passed, say, $60,000 in total debt?

"Had somebody called me and said, 'Do you have a clue where this is all headed?', it would have been a slap in the face, but a slap in the face that I needed," said Cathryn Munna. "When financial aid told her that they could get her $2,000 more in loans, they should have been saying 'You are in deep doo-doo, little girl.' "

That's not a role that the university wants to take on, though. "I think that would be completely inappropriate," said Randall Deike, the vice president of enrollment management for N.Y.U., who oversees admissions and financial aid. "Some families will do whatever it takes for their son or daughter to be not just at N.Y.U., but any first-choice college. I'm not sure that's always the best decision, but it's one that they really have to make themselves."

The complications here go well beyond the propriety of suggesting that a student enroll elsewhere. Colleges don't always know how much debt its students are taking on, which makes it hard to offer good counsel. (N.Y.U. does appear to have known about all of Ms. Munna's loans, though.)

Then there's a branding problem. Urging students to attend a cheaper college or leave altogether suggests a lack of confidence about the earning potential of alumni. Nobody wants to admit that. And once a university starts encouraging middle-class students to go elsewhere, it must fill its classes with more children of the wealthy and a much smaller number of low-income students to whom it can afford to offer enormous scholarships. That's hardly an ideal outcome either.

Finally, universities exist to enroll students, not turn them away. "Aid administrators want to keep their jobs," said Joan H. Crissman, interim president and chief executive of the National Association of Student Financial Aid Administrators. "If the administration finds out that you're encouraging students to go to a cheaper school just because you don't think they can handle the debt load, I don't think that's going to mesh very well."

That doesn't change the fact, however, that the financial aid office is still in the best position to see trouble coming and do something to stop it. University officials should take on this obligation, even if they aren't willing to advise students to attend another college.

Instead, they might deputize a gang of M.B.A. candidates or alumni in the financial services industry to offer free financial planning to admitted students and their families. Mr. Deike also noted that the bigger problem here is one of financial literacy. Fine. He and N.Y.U. are in a great position to solve for that by making every financial aid recipient take a financial planning class. The students could even use their families as the case study.

The Options

The balance on Cortney Munna's loans is about $97,000, including all of her federal loans and her private debt from Sallie Mae and Citibank. What are her options for digging out?

Her mother can't help without selling her bed and breakfast, and then she'd have no home. She could take her daughter in, but there aren't good ways for her to earn a living in Alexandria Bay, in upstate New York.

Cortney could move someplace cheaper than her current home city of San Francisco, but she worries about her job prospects, even with her N.Y.U. diploma.

She recently received a raise and now makes $22 an hour working for a photographer. It's the highest salary she's earned since graduating with an interdisciplinary degree in religious and women's studies. After taxes, she takes home about $2,300 a month. Rent runs $750, and the full monthly payments on her student loans would be about $700 if they weren't being deferred, which would not leave a lot left over.

She may finally be earning enough to barely scrape by while still making the payments for the first time since she graduated, at least until interest rates rise and the payments on her loans with variable rates spiral up. And while her job requires her to work nights and weekends sometimes, she probably should find a flexible second job to try to bring in a few extra hundred dollars a month.

Ms. Munna understands this tough love, buck up, buckle-down advice. But she also badly wants to call a do-over on the last decade. "I don't want to spend the rest of my life slaving away to pay for an education I got for four years and would happily give back," she said. "It feels wrong to me."

http://finance.yahoo.com/college-education/article/109701/placing-the-blame-as-students-are-buried-in-debt?mod=edu-collegeprep

Look at the degree. You have got to be kidding me. $200,000 for THAT?

[JR4AU]

And the decision to take out loans for school should be done on the premise that you will get a degree that will actually help you pay back the loans. The example below is hilarious. The author actually attempts to blame the university for this. How stupid are people?

Look at the degree. You have got to be kidding me. $200,000 for THAT?

There was a lot to read there...verbose I think it's called...where did the author attempt to blame the university? 

I'll throw this out there...If I "loan" you money to start a company selling ice in Alaska, and you fail to pay it back because the business went belly up, you're a deadbeat because you failed to pay back a loan.  But if I "invest" in your upstart "Alaskan Ice Co." and get zero return on my investment, I knew the risks, and I made a bad investment.  In reality, what's the difference?  The analogy to the mortgage debt crisis is right on...when the schools and lending institutions loan out thousands of dollars to people earning worthless degrees, they have some culpability in their losses.  Call it a loan if you want, it's really an investment.  A bad one in this case. 

[Pell City Tiger]

My degree in African American studies from Talladega College has gotten me nothing but a poorly worded letter from State Representative John Rogers and a WTF look from Sheila Smoot.

[wreckingball]

I saw this article on Yahoo frontpage earlier and I just thought it had to be a slow news day. I know plenty of law school kids with around $200,000 out in loans. Thats why you should try to get a job with the government or nonprofit after you graduate. After 10 years of the minimum payments, the loan is forgiven. This person is hard to feel sorry for, especially since she looks like a tranny.

[JR4AU]

I saw this article on Yahoo frontpage earlier and I just thought it had to be a slow news day. I know plenty of law school kids with around $200,000 out in loans. Thats why you should try to get a job with the government or nonprofit after you graduate. After 10 years of the minimum payments, the loan is forgiven. This person is hard to feel sorry for, especially since she looks like a tranny.

I Sallie Mae if they would they forgive my loans if I gave back my law degree?  No deal! 

[CCTAU]

I saw this article on Yahoo frontpage earlier and I just thought it had to be a slow news day. I know plenty of law school kids with around $200,000 out in loans. Thats why you should try to get a job with the government or nonprofit after you graduate. After 10 years of the minimum payments, the loan is forgiven. This person is hard to feel sorry for, especially since she looks like a tranny.

It's not her fault. Someone made a bad investment in her?

[wreckingball]

Maybe she studied Women's Studies because she is a tranny.

[JR4AU]

It's not her fault. Someone made a bad investment in her?

Yeah, that's exactly what I said.   

[AUTailgatingRules]

Hey, I'd like to live in a big house on Old Overton golf course.  Too bad I realize I can't afford it.  If the bitch can't make it in San Fran, she should move to somewhere a little less expensive.

I feel no pity for this chick or anyone else in her shoes.  If you borrow it, PAY IT BACK!!!!

[JR4AU]

Hey, I'd like to live in a big house on Old Overton golf course.  Too bad I realize I can't afford it.  If the bitch can't make it in San Fran, she should move to somewhere a little less expensive.

I feel no pity for this chick or anyone else in her shoes.  If you borrow it, PAY IT BACK!!!!

Agree 100%.  But IF you went and tried to get a loan to buy a house there, and the lending company knew you couldn't afford it too, and loaned you the money anyway, do they have any responsibility at all?

[AUTiger1]

Agree 100%.  But IF you went and tried to get a load to buy a house there, and the lending company knew you couldn't afford it too, and loaned you the money anyway, do they have any responsibility at all?

I know it's not this simple b/c the loan is insured and a lot of fine print.  IMO, the financial institution that made the bad loan should have to eat it.  Enough of them and they would be driven out by bankruptcy and the bigger, stronger institutions would come in and buy them up and all their assets.

[War Eagle!!!]

Agree 100%.  But IF you went and tried to get a load to buy a house there, and the lending company knew you couldn't afford it too, and loaned you the money anyway, do they have any responsibility at all?

Responsibility? For what? Giving someone money that couldn't pay it back? Yes. They made a bad choice. They will get what's coming to them when they don't get paid back and lose out on the money. That's capitalism at it's finest. BLAMING them for the shit though is ludicrous.

The problem is, the government will come in and bail the company out of it somehow...

[JR4AU]

Responsibility? For what? Giving someone money that couldn't pay it back? Yes. They made a bad choice. They will get what's coming to them when they don't get paid back and lose out on the money. That's capitalism at it's finest. BLAMING them for the shit though is ludicrous.

The problem is, the government will come in and bail the company out of it somehow...

Well, giving them all the blame is ludicrous...not blaming them at all...just as ludicrous.  If a known crack-head asks me for a "loan" to buy a car, and I loan him the money, personally I think I bear 50% of the responsibility for never seeing my money again.  Loaning someone $100K to get a degree in basket weaving comes pretty close to that. The chick was dumb for going in to that kind of debt to get that fucked up degree, but she was given some assistance in being that stupid. 

[AUTailgatingRules]

Well, giving them all the blame is ludicrous...not blaming them at all...just as ludicrous.  If a known crack-head asks me for a "loan" to buy a car, and I loan him the money, personally I think I bear 50% of the responsibility for never seeing my money again.  Loaning someone $100K to get a degree in basket weaving comes pretty close to that. The chick was dumb for going in to that kind of debt to get that fucked up degree, but she was given some assistance in being that stupid. 

The problem with your comparisons to the sub prime mortgage mess is that it was not the sole decision of the lender to make these loans.  They were forced by the feds under the community reinvestment act to make these loans to people who had no business getting these loans.  If the lender did not comply, they were risking being fined or sued due to discrimination.  If you want to lay blame on anyone other than the loan recipient, blame your friendly neighborhood democrat politician.  See Bill Clinton, Barney Frank etc.

As far as the people that took loans they could not aford, it was their only chance to get a home they did not deserve.  Many people took this chance and found a way to pay off their debt, many others remained dead beats.  For those that got undeserved loans and made them work, you better never move because you will never get the same chance again.  To the deadbeats that now want to blame everyone else for their situation, go fuck yourselves.  We gave you a chance you did not earn and now will have to live with the fact that you are simply a deadbeat.

I gaurantee you that the credit rating of these folks is no worse after a foreclosure that it was prior to getting their sub prime loan.  These folks are simply back in the position they were in prior to said loan. 

[JR4AU]

The problem with your comparisons to the sub prime mortgage mess is that it was not the sole decision of the lender to make these loans.  They were forced by the feds under the community reinvestment act to make these loans to people who had no business getting these loans.  If the lender did not comply, they were risking being fined or sued due to discrimination.  If you want to lay blame on anyone other than the loan recipient, blame your friendly neighborhood democrat politician.  See Bill Clinton, Barney Frank etc.

As far as the people that took loans they could not aford, it was their only chance to get a home they did not deserve.  Many people took this chance and found a way to pay off their debt, many others remained dead beats.  For those that got undeserved loans and made them work, you better never move because you will never get the same chance again.  To the deadbeats that now want to blame everyone else for their situation, go fuck yourselves.  We gave you a chance you did not earn and now will have to live with the fact that you are simply a deadbeat.

I gaurantee you that the credit rating of these folks is no worse after a foreclosure that it was prior to getting their sub prime loan.  These folks are simply back in the position they were in prior to said loan. 

I'm ok with blaming the ones that sought out loans they couldn't afford in the first place.  In SOME instances, it's solely their fault.  If the lenders were forced to make bad loans, then it's partially the fault of the one's forcing them to.  When a loan is so obviously bad from the outset, some of the responsibility rests on the one making the loan.

[War Eagle!!!]

Well, giving them all the blame is ludicrous...not blaming them at all...just as ludicrous.  If a known crack-head asks me for a "loan" to buy a car, and I loan him the money, personally I think I bear 50% of the responsibility for never seeing my money again.  Loaning someone $100K to get a degree in basket weaving comes pretty close to that. The chick was dumb for going in to that kind of debt to get that fucked up degree, but she was given some assistance in being that stupid. 

How do you blame someone for being stupid with their own money? In your example, you should bear 100% of the responsibility that you will never see your money again. Your decision what to do with the money should be at your sole discretion. But in context of your example, the NY Post would do a story on said crackhead and say that this is all your fault for lending the money, and then sue you. The crackhead being a fucking crack head and defaulting on the loan you gave him is 100% the crack heads fault.

This was a poor pitiful girl article while saying that the company should bear responsibility for her stupidity. Bullshit. The company should only bear responsibility for the money they lost. That's it. It's not their fault that the chick borrowed $100,000 worth of shit she can't pay back. The responsibility that falls on them is solely financial...nothing more, nothing less...

[JR4AU]

How do you blame someone for being stupid with their own money? In your example, you should bear 100% of the responsibility that you will never see your money again. Your decision what to do with the money should be at your sole discretion. But in context of your example, the NY Post would do a story on said crackhead and say that this is all your fault for lending the money, and then sue you. The crackhead being a fucking crack head and defaulting on the loan you gave him is 100% the crack heads fault.

This was a poor pitiful girl article while saying that the company should bear responsibility for her stupidity. Bullshit. The company should only bear responsibility for the money they lost. That's it. It's not their fault that the chick borrowed $100,000 worth of shit she can't pay back. The responsibility that falls on them is solely financial...nothing more, nothing less...

Umm, did I misread, or did your firs paragraph say that I'm 100% at fault, and the crack head is 100% at fault? 

Was there something in that long story suggesting that someone should be sued for lending this chick the money she can't pay back?

[War Eagle!!!]

Umm, did I misread, or did your firs paragraph say that I'm 100% at fault, and the crack head is 100% at fault? 

Was there something in that long story suggesting that someone should be sued for lending this chick the money she can't pay back?

Maybe I wasn't clear. The company has a responsibilty for their money, and their money only. That's it. They have no responibility to the girl borrowing money to help her make a sound decision. None. Business is business and as long as there is nothing illegal going on, the company will keep giving money. Why? Because they know the risk involved and the money they can make from people borrowing from them. So their responsibilty lies with only protecting their money.

The company, IMO, is in NO WAY responsibile because the girl was too dumb to realize she was in over her head. None. They are in no way responsible for her taking stupid courses. They are in no way responsible for her not being able to realize that a bull shit diploma was going to pay peanuts compared to what she was borrowing. They are in no way responsible for the resulting bankruptsy that is sure to happen. They are in no way responsible for the fucked up credit that this girl will have to live with. It's called personal responsibilty. And we live in a world were there is none. Is it the school's fault that this chick paid $50,000 per year for a bull shit degree? Nope. I would teach the fuck out of women's studies to a bunch of fucking morons for that kind of pocket change. If they pay for it, or keep borrowing it, keep selling it.

Personal responsibilty. It's obvious the girl has none because she has a picture, in the NY Post for god sakes, crying because she can't pay. I'll be damned if I make a dumb ass decision and call the fucking papers to do a story on how fucking stupid my ass was. But she doesn't see that. Why? No personal responisibilty for shit.

[CCTAU]

This definitely proves that just because you went to college does not mean you are smart. With the gubment indoctrination of our children today, telling them that everyone deserves a college diploma, what do we expect. Getting a college diploma is hard, and expensive. Be smart about it and you can create an asset. Otherwise, you are this chick.

And under federal guidelines, bankruptcy does not cover student loans. She is stuck with this for the rest of her life. Teach your children to choose wisely and to never marry a person that makes choices like this.

[Snaggletiger]

I still make that monthly payment on the loans I got for law school 10+ years ago.  I tried to pay for as much of it as I could as I went through school but I still came out with a pretty good chunk to pay.  Nothing like what the average graduate comes out with today but still a monthly hit to the budget. You just have to be smart enough to not bite off way more than you can chew and responsible enough to handle your bidnezz.