Every few months I feel the need to share another story about how bad student loans have gotten. I find it interesting because for the first 5-7 years of writing this blog, the topic didn’t even occur to me. A few other personal finance writers would write an article or two, but I don’t remember reading much before 2010. Some advertisers asked me to write about student loans and I’d pass.
I didn’t feel qualified to write about student loans. I was blessed with a full scholarship. I didn’t have any clue how the system worked.
Fast forward to 2017 and it’s hard to stay away from the student loan news. Today, I wanted to share one instance of silver-lining to the student loan dark cloud.
“The system is broke and makes no sense!!”
A few weeks ago, NFL cornerback Logan Ryan announced something unusual on his Instagram. He paid off $82,000 of his brother’s student loans. Here’s what he wrote:
“Surprised my big bro and paid off his student loans for his 29th Bday!! My man got accepted to college, graduated with honors, and now works as an engineer. He did everything the right way and still lives with a ridiculous amount of student loan debt. The system is broke and makes no sense!!”
That’s a very nice thing that Mr. Ryan did for his brother. Of course Mr. Ryan signed a $30 million dollar contract for 3 seasons. On the surface, this isn’t too dissimilar than an athlete making millions and buying a new house for his parents.
However, let’s breakdown what we know (or at least what we are lead to believe):
- His brother graduated with honors.
- His brother graduated with a STEM degree.
- His brother is 29 years old. (We’ll presume he’s been out of school for 5+ years).
- His brother had $82,000 in loans (the check amount).
That’s a lot of student loans to have left after that long with what would seem to be a distinguished, high-paying degree/career. Logan Ryan is right, the system is broken and it doesn’t make any sense. It doesn’t take a financial expert to see it.
I wish there were a way to get some politicians elected who could help make things better. Just a few days ago, the LA Times wrote that “It’s Betsy DeVos’ job to protect students from predatory for-profit colleges. She should do it”. It’s so bad that nearly 20 states had to sue her andn the Department of Education over what she’s doing to prevent students from getting helped by what the times says is, “the worst fraud in the higher education.”
It is hard for me to wrap my head around so many states suing a government agency because the agency wants to protect companies committing alleged fraud. It makes as much sense as fire trucks going around burning down houses.
Sorry for the rant, let me reel myself in and close with a few words about Logan Ryan. He played for the New England Patriots until he was signed by the Tennessee Titans as a free agent. As a fan of the Patriots, I came to appreciate the stuff he did off the field. He’s been extremely active in rescuing dogs, which regular readers know is a cause near and dear to me. I hope Titans appreciate his performance on and off of the field as much as I did.
My student loans went from $12,000 to $19,000. I divorced, was working, but was on food stamps for six months until I got on my feet. Anyway, tried to get forbearance on loans, but needed docs from food stamp office. They left me on hold for an hour, while I was at work, and then I was disconnected. I didn’t want to lose my job (was a good one) and the loan went into default. I was charged $3,000 in collections when it defaulted & then $3,000 again…but I can’t remember what happened. These loans are 10 years old. I have paid for years and it is now $18,000. I am finally in a position, I hope, to move these loans where I can make some serious progress on them. I’ve paid nothing but interest it seems. What a rip-off just to get an education. These loans were supposed to be better than the bank. I would’ve gotten more cooperation from my bank.
Not sure what to do about the default rate to the for-profit colleges(though it’s hard to distinguish between those that are and aren’t at times).
The interest rate is too high, but I guess that’s what it cost given the default rate.
I’m a big fan of jr. college, but I understand the actual rate of students completing a degree after jr. college is low(I did, but I’m just one).
So I guess I wasted time here because I’ve got no solution.
LM —
Awesome article! Logan Ryan is a total stud!
I have brought this up in the past, but I just wanted to mention that the junior college route does seem to be the best. I was able to file a FAFSA (Free Application for Federal Student Aid), and I got more than enough to cover tuition and books for my JC and 4 year schools. I’m not sure why this isn’t being taught to more students. I believe the biggest crime is continuously pressing kids to get into out-of-state schools for undergraduate degrees. That doesn’t ever help the kids, and the loans are horrendous.
My younger sister struggled through school all of her life, and for god knows what reason, she went to an out-of-state state school. On top of that, her major was in a field that pays terribly, and she went for two extra years (four semesters), because she kept failing core classes. Last I heard, she finally graduated and has around $250,000.00 in loans. She has completely ruined her life and probably won’t even pay 10% of that back. I’m still in a daze about this because I can’t believe a school would have accepted her in the first place without going to a JC first, and I am furious that my idiot parent allowed her to plunge into this level of debt. She is the worst reason for why we have over a trillion dollars in student debts and will ultimately have to have a reset.
The system may be broken, but the people are broken too. Nobody wins in the situation I described above, and it will be societies problem if the student loans get reset to 0. There is a quake coming and very few people will have proper protection.
I agree that the people are broken too. This might be up your alley, but maybe they are brainwashed.
How many people are taught that you only get married once so spare no expense? How many people are taught owning a home is “The American Dream?” How many people are taught that college is investing in yourself or your future?
I wonder if the broken system is a result of broken people or the other way around.
It is ridiculous 100%. Nowhere in the world is it as bad as the states. My friend’s younger brother is almost finished becoming an MD, and he’s only paying like $2K a year for it. He can probably take some sort of test afterwards to transition to the US. That’s nuts. Not sure how anyone domestic can compete with that, financially. As for me and my wife, we’re lucky that we have a high income that we’ve paid off all of our debts, and most recently I’ve cash-flowed her $50K a year private school tuition for her NP school. Debt, especially student loans, is going to implode soon. I just don’t see the way around it. It’s like a noose over the neck of all millennials, Gen X, and even the Boomers who’ve taken a hit on their retirement accounts by helping out their children. So it’s pain all around!
I asked my wife and she said that FMGs (Foreign Medical Graduates) are pretty common. It’s not her area of expertise, but said that they’d probably have to take the boards and put in hours to transition to the US. Sounds like a legitimate plan to me if you can work that out-of-country degree.
Like you, I don’t see how student debt isn’t going to implode. It seems so obvious to me that it is like the mortgage crisis in 2008 where people were encouraged to simply get more and more debt and kick the can further down the road (remember 50 year and interest only mortgages?).
What kills me is how many phone calls I get from people saying they are calling to help me pay off my student loans. I DON’T HAVE ANY STUDENT LOANS, HAVE NEVER HAD ANY STUDENT LOANS. Seriously, I paid for my college degree as I went. If that meant I took one course that semester, I dealt with it. If that meant I took the summer off, I dealt with it. I made up my mind from the beginning, I was not going into debt for a degree. How did I get on their calling list and how do I get removed?
These are good comments. My daughter just graduated high school and son is a junior. I have said these exact things to them. Student loans are a no! My daughter did FAFSA, got nothing. Graduated with 26 hours college credits, 90 or above gpa and her certified medical assistant certification…not one scholarship or grant. We have friends whose son made perfect score on his SAT…no scholarships, nada. middle class get debt or no college while the poor and minorities get free education. Something is wrong with this picture. I know I sound bitter, and it’s probably not as clear cut as that, but is super frustrating for sure.
Lesley,
I have just started to wrap my head around FAFSA now (I have a 3 and 4 year old, but I like to get started early.) I can see why how you are caught in the middle. I don’t know if I have an easy answer. We are going to use my wife’s GI Bill to cover half of the costs for the kids. We’ll be considering state schools (which for Rhode Island is offering a couple of free years for qualifying students). We’ll also be looking into getting them as much college credit as possible through community college while they are in high school.
Sheila —
I also get those calls from random area codes. Some automated message will come up and say, this is your LAST and FINAL warning about your student loan debt being restructured or something like that. Then they ask me to push “1” on the phone and a bubble sound will pop and someone with a heavy accent will ask if I want to refinance my student loans. I know they aren’t responsible for making the call to my number, because I used to be in telemarketing and they are using a program that auto-dials, but I still mess them a bit because I know I can’t be removed. I’ll say something to the effect of, “Thank goodness you called! I’m literally drowning in…gurgle debt gurgle…oh god I’m drowning HELP!”. Then they usually hang up and that will be my little fun moment for the day.
I agree with Geoff. There’s not much you can do to get away from robocalls on any topic.
I get calls about solar power and I have solar power. It doesn’t matter how many times I tell people.
I also get tons of calls from “Microsoft service centers” who are trying to get me to install spyware on my computer so that they can take it over. It just seems it is impossible to get away from.
Part of the student loan “problem” is that we seem to think that kids NEED to go to college right out of high school and complete all four years immediately and that if they get a J-O-B, they won’t be able to keep up their grades. There are a lot of things wrong here.
1: kids can wait a few years to start college. They can get that J-O-B and *gasp* SAVE THE MONEY while living at home.
2: Kids can take gap years and finish as they can afford it.
3: If a kid can’t manage three classes and a full-time job, two classes instead of three will not make them a social outcast.
Let’s be honest – not all kids should be in college. Some should go to trade school, especially if they are just plain tired of school.
I have a son who went into the Air Force reserves to get tuition help, plus he works full time and lives modestly with his wife. He is committed to not incurring student loan debt.
I have another son who doesn’t know what he wants to do with college yet, so he’s living at home while he works full time. Right now college isn’t even an option, despite very good ACT scores, because he never knows what time he will be home from work, and when he gets home, he’s just too tired to deal with something like school. When he gets more clarity on where he wants to end up, he can make some changes. In the meantime, he’s making more money than most entry-level 4-year grads. Nothing wrong with that.