This is an issue taken up in today's New York Times. Over the past few years, there have been scads of articles featuring hapless recent grads of expensive private colleges, shocked at their loan burden. Interestingly, several of these students are grads of NYU.
Of course, this is an issue close to my heart, as my children regretfully declined acceptances from private colleges--complete with merit aid--and chose state institutions.
So I was inspired to pen a comment, which I am copying below. I wrote this in the heat of emotion without re-reading, fyi. So no guarantee of completeness or coherence.
I'm of several minds about this. Both my children got into prestigious private colleges--small liberal arts colleges. My husband and I had always dreamed of sending them to Oberlin, Kenyon,Reed, and the like. Yet when it came down to it, each chose a no-cost state institution--even at full-cost the price would have been very low.
Yes, teenagers are naive about money and the burden of interest payments. Yes, parents are complicit in urging the teens to go to a "top college." Yes, colleges have raised tuition in part BECAUSE of the ready availability of loans. And, as we found out last year, some college financial aid officers were receiving kickbacks from "preferred" lenders.
But I believe the laws were changed, in part, because graduates of law schools and med schools were declaring bankruptcy UPON graduation!
So I would suggest that colleges/banks be required--as credit card companies now are--to show what the payments will be down the road. But I also believe that families and students should take more responsibility about their college choices, especially when considering a private college. Tuition at private colleges has gone up at twice the rate of inflation.
Perhaps the ability to discharge student loans in bankruptcy will make the banks wary about lending vast sums of money to naive teenagers.
I think we've all seen the need to teach basic math skills and consumer awareness. I have heard from my own students, "I thought that it was an OK amount of debt because the bank said I could borrow it." Shades of the housing bubble.
What think you, dear readers? I said to Mr. FS--somewhat facetiously--that if we had known the laws would change we could have saved less money for the kids AND encouraged them to go for the prestigious college.
Frugal Note: Since I have copied and pasted this from a comment that will--perhaps--appear on the NYT website, I have created a twofer situation: two comments for the labor of one. This is more commonly known--in extreme couponing circles (of which I am not a part)--as a BOGO: buy one, get one free.