# NYU student with 100K loan

#### atreides

I really symphatize with this individual. $200k in debt, at 23. Being an international that has gone through the US system for undergrad and now grad, I don't understand why some Americans follow a "swipe-the-card-now-and-ask-questions-later" approach (or take-the-loan-now) once it comes to student loans. I'm assuming this individual is a US citizen who by their status must have had opportunities to apply for scholarships or maybe they didn't even bother to look as getting the loan was easier. Back in college, a good number of my American friends all had full-rides. The first lesson this individual should have been taught is taking responsibility. While my heart goes out to them, my pocket remains tight shut. Currently, Northeastern alum Kelli Space, 23, is$200,000 in debt because of her student loans. She must pay federal student loan agency Sallie Mae $891 per month -- and by next November, that figure will nearly double. And although she has a full-time job, she doesn't make nearly enough to pay off her massive debt. So she's is turning to the public for help. Space started a website called Two Hundred Thou, which is devoted to telling her story and asking readers to chip in. On the site's FAQ page, Space explains her situation in earnest: At the moment, she has received$1,245.65 from donation.

#### DominiConnor

Rather than sympathise or criticise with an individual, I'd like to think in economic terms of the outcomes that the current environment produces.

If you model a degree as a simple investment for an increase in lifetime earnings, then defenders of the current system might say that it provides an incentive to choose subjects that are 'useful'.
First, of course we don't see that, indeed if you compare countries that have cheap/free high quality degree level education, kids are more likely to choose useful degrees, rather than hobby subjects.

High tuition costs interact with your appetite for risk, kids will tend to choose expensive places and subjects if they perceive the risk/return to be good. That neatly explains why finance courses are so expensive.

Note that I say 'kids'.
In most countries systems you start to choose your degree before you are legally an adult. Economics assumes rationality, not optimality, and thus kids choose degrees that seem to be just silly. They often over-specialise too early and take degrees that have the name that corresponds to the career they want. They are frequently wrong, but it does explain why we see degrees whose name is drawn from TV not academia (forensics, genetic engineering, criminology)

Also the value of a degree to an individual is often really rather different to the value to the country. US has a lot of very smart lawyers, most well educated in their profession. Since almost none of their work is exported, and a lot of their time is spent fighting with each other, the gain to the US economy from their work is quite small, some would claim that the net effect of US lawyers is to reduce GDP.
US lawyers often earn rather good money, and some would say that bankers are little different to lawyers.

In China or India engineers can earn a serious multiple of their parental income, and the cost of education for engineers there is typically much more affordable. So kids perceive low costs low risk high return investments, so becomes a viable option for smart people.

Any student of hi tech like myself (I used to be Test Director @ PC Magazine in Europe) knows that engineering is a risky career. Every 5-10 year you must bet on which tech will be in demand, and if you are wrong, your job prospects go down hard. That applies to cars, computers or aerospace. If you choose wrong in a boom, then you can move sideways, but in a downturn...

That tells us that India and China will have the best 21st century engineers. Chinese manufacturing will need smart people for years to come, and even if you bet wrong, it's hard to see immediate risk.
America will have the best lawyers, and given the sort of people on this forum, few will see that as good for the USA, but maybe we're wrong.

Although there is autocorrelation between intelligence of generations, it is not huge and many smart kids have parents who are poor through some combination of luck, choice of lifestyle or ability.
Risk aversion is not a constant, and kids from poorer backgrounds (like I was) will tend to be more risk averse (I chose a course that I rightly believed had both low risk and high returns). But many of my decisions at that age were really very poor, so I have to accept that I was more lucky than skilful.
That means that high risk subjects won't attract so many smart poor kids and that produces a workforce that doesn't have fat tails. By that I mean that I have no crystal ball for what skills will be best for a country or individual in the 2020s or 2030s, I can't say with complete certainty in my own speciality for 2012.
But I can be certain that things will change, and that the skills needed then will be different now, and that history is very clear that the needs for particular skills changes a lot faster than the workforce supply can respond to it. The greater the gap between skills that the world needs and the ones your country or your household has, the worse it will go for you, and that can happen very quickly and be very painful.

#### Namitha

Using Quant Network Program Selector | Quant Network , i was able to sort by tuition of the US programs and there are a few programs that have very low in-state tuition (majority of the students don't qualify anyway).
It's also interesting how programs categorize their tuition. Some list per credit cost, some list per year fee so it's hard at first glance to compare the cost.
Hi Andy,

I was trying to do a search on the list of schools and couldn't get it to work. When I select relevant criteria, nothing changes on the right side of the page; for instance, when I select USA, I should only be seeing schools in the US right? Am I missing something here?

-Namitha

#### Andy Nguyen

Namitha,
Looks like that script goes "rogue" on me so I'll take a look to see if I should fix or replace it.

#### didje

##### French Student
Well, maybe I think the way I think because I'm French but... Don't you think that maybe the problem is the tuition costs themselves? I mean, 50k is A LOT of money! Maybe the campus is fantastic and the professors are great but does it really worth all that money ? If the tuitions for NYU were like only 10k, maybe students wouldn't have to take these loans and find themselves in some crazy situation 4 years later...

I don't understant the logic behind charging 50k a year for an undergraduate...

#### Andy Nguyen

Private universities in the US can set their tuition and there are more demands than supply so there is no incentive to concern about the cost.
Keep in mind there are many financial aid, loan, scholarships for US residents. Foreign students pay full price, by the way.

#### alain

##### Older and Wiser
I don't understant the logic behind charging 50k a year for an undergraduate...

Very simple, if you want an education from NYU, they think it's worth 50k a year. If you don't think it's worth that much, you don't need to apply at NYU. As you might know, NYU denies a lot of people so there plenty of people willing to pay.

#### didje

##### French Student
Private universities in the US can set their tuition and there are more demands than supply so there is no incentive to concern about the cost.
Keep in mind there are many financial aid, loan, scholarships for US residents. Foreign students pay full price, by the way.
I know that. What I meant is that, even though the demand is higher, at the end the universities offer their services only to the selected people. I don't understand why those students have to pay the price for the increasing number of students willing to pursue their dreams. I mean, I've been a student at one of the best universities in France and I got my Bachelor degree in CS for "free" (300€ a year). And now I'm a student at one of the best computer engineering school for my Master and I pay 5000€ a year (and that's enormous for a french stud). And the demand, like in the US, is getting higher and higher for education.

I just want to understand how can an institution charge its student 50k a year for a degree ?

#### didje

##### French Student
Very simple, if you want an education from NYU, they think it's worth 50k a year. If you don't think it's worth that much, you don't need to apply at NYU. As you might know, NYU denies a lot of people so there plenty of people willing to pay.
Ok so let's say tomorrow they charge 100k a year for tuition only (I think that is where US schools are heading), will you find it "normal" ?
I understand that institutions need to get money too. After all, higher education is not mandatory to get a job (high school is), so if someone is willing to pursue his education, it's normal to pay a certain price. But come on, 50k ? My mum need to work 3 years to earn that much, taxes not included.

My point is, I think that universities like NYU don't need 50k/year/student to give their students the best teaching and career services. There should be a limit, in my point of view, with those things.

#### Andy Nguyen

Higher education in the us is a business with its president acting like CEO of the big firm. That its the model you are looking at.

#### didje

##### French Student
Higher education in the us is a business with its president acting like CEO of the big firm. That its the model you are looking at.

And there is a lot of things that I admire about that system. But the costs seems to have no limit. I really would like to enter an US university later but the costs give me bad headache :-p !

#### DominiConnor

There's an interesting ethical issue here, something that intersects with my work both as a headhunter and educator.

At what age do you treat people like grown ups ? In most places that's 18 which means some critical decisions about your university education are made when you are legally a child. My parents found out I was going to university when I thought it appropriate for them to know, but if any of my kids came home saying they wanted to study bullshit, they'd face the full wrath of Dom, it would not be pretty.

This girl is a fuckwit, a few more years over 18 ain't gonna fix that and I don't even have sympathy for the mother who should have locked the stupid bimbo in her room, faked an application to a proper course and presented her with a fait accompli. My mother could barely write but even she would have spotted that this course only has value if you're pretty and good at blow jobs, maybe just maybe that will land her a rich husband, which frankly is her only chance of a life.

As a HH I know stuff junior people don't even know to ask about, but newbie in this context can be a post PhD entrant at 27, which is an adult by any legal measure, so should I respect their decisions ? These people may or may not be smarter than me on whatever IQ scale you favour, but I do this for a living, they don't so its reasonable not to know things.

Same with education, if a 20 something adult wants to waste money doing something I think is just a waste, should I stop him/her ?

Medics use the term "competent" which isn't the same as age at all, since you can be 14 and competent to make medical decisions, but some people lose competence through age, illness, etc. There is Gillick competence where the act of seeking medical advice means you are demonstrating competence. As you can imagine, the Catholic church and other paedophile groups threw a fit when that bit of law got made.

#### DominiConnor

There's an interesting ethical issue here, something that intersects with my work both as a headhunter and educator.

At what age do you treat people like grown ups ? In most places that's 18 which means some critical decisions about your university education are made when you are legally a child. My parents found out I was going to university when I thought it appropriate for them to know, but if any of my kids came home saying they wanted to study bullshit, they'd face the full wrath of Dom, it would not be pretty.

This girl is a fuckwit, a few more years over 18 ain't gonna fix that and I don't even have sympathy for the mother who should have locked the stupid bimbo in her room, faked an application to a proper course and presented her with a fait accompli. My mother could barely write but even she would have spotted that this course only has value if you're pretty and good at blow jobs, maybe just maybe that will land her a rich husband, which frankly is her only chance of a life.

As a HH I know stuff junior people don't even know to ask about, but newbie in this context can be a post PhD entrant at 27, which is an adult by any legal measure, so should I respect their decisions ? These people may or may not be smarter than me on whatever IQ scale you favour, but I do this for a living, they don't so its reasonable not to know things.

Same with education, if a 20 something adult wants to waste money doing something I think is just a waste, should I stop him/her ?

Of course most of you will be bankers if you're not already there, so how do you feel about making money off people who are making mistakes ?

#### WYoung

The American public is infatuated with brand names and will pay almost anything for them in cases such as this. It's all about the money in the schools' eyes.

#### Aaron Wong

That people are trying so hard to get into these programs, and are willing to mortgage their future for this, is indicative not so much of obtuseness as of the unpromising character of the job market. People with undergrad, grad, and even doctoral degrees in engineering and the exact sciences are applying to these programs not so much because of a get-rich-quick mentality but because the job market is so very dismal. It is desperation. And it's this desperation that leads them to take literally unrepayable loans in a winner-take-all game, one where many are called but few are chosen.

A bit off topic but dang that paragraph seriously gave me chills.

I'm an undergraduate and I expect to graduate with $50k debt if all goes well. I don't even want to think about what that number will look like by the time interest and graduate school loans are factored in... #### Abdel ##### Economist I don't understant the logic behind charging 50k a year for an undergraduate... It's the governement fault. By trying to make college accessible via student loans guarantees (good intention), now the universities can jack up the prices and ask for these ridiculous tutions (unintended consequence, as usual with governement programs). They don't care if the student goes bankrupt, the governement will pay the loan. This allow colleges bureaucracies to give themselfs unjustified high salaries & pensions on the back of students. Also, since more people are in college, a bachelor degree is not worth much today (need at least a M.Sc) and the quality of education went down. With all the students there and the technology that facilitates the tracking, prices should be falling (economies of scale) but yet, they keep raising. Yet, another good intentioned governement program turned into a desaster. #### Abdel ##### Economist ... you clearly have never gone to college in America, have you. Look, If you don't have valid counter-arguments, such as : '' no, the federal governement doesn't guarantee student loans to colleges and here is the proof''; Then keep your condescending manners to your family & your entourage, understood son? Learn how to talk to people you don't know. Thank you. #### MRoss My undergrad loans (private school) + My grad school (city college) + My wife's grad school (private) loans <$100K...

Still a sad story. Sadly, it is very easy to get caught up in debt these days. Even credit card debt.

#### Aaron Wong

Look,

If you don't have valid counter-arguments, such as : '' no, the federal governement doesn't guarantee student loans to colleges and here
is the proof'';

Then keep your condescending manners to your family & your entourage, understood son? Learn how to talk to people you don't know.

Thank you.

I actually don't think the federal government guarantees student loans. Even in bankruptcy student loans are among the few things that don't get discharged.

#### Andy Nguyen

Yes, student loans will stay with you till you die or pay it off, whichever first.

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