Reply to As schools near $100K/year when will that affect the pool of students?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Just read on another post that someone is paying $95K/year for USC. 
Several kids from my kids' schools are starting there this fall.
 
I know most on DCUM can pony up $400K for 4 years but how many people like this are really out there?
I also know these schools have 40% (or whatnot) that pay $0/year. 
[b]At what point will the price of some of these schools begin to effect the size of their applicant pool?[/b]
Either because people don't have the cash or say "that is insane--screw it". [/quote]

When you’re no longer allowed to take out Parent Plus Loans up to the cost of attendance. NYU & USC graduates are #1 for PPL debt.[/quote]

Or how about when the schools are on the hook when people default on loans? At the moment, the schools risk nothing when they jack up costs.[/quote]

What?  Why would schools be "on the hook when people default on loans?"  Schools do NOT take the loans.  Plenty of people go to these schools withOUT PPL.  
If parents are dumb enough to take PPL, then they need to deal with the repayment.  Nobody is forcing you to do this.  There are literally hundreds of schools you can attend that will be affordable and not require more than regular student loans that max out at 27K for 4 years[/quote]

How can the PPL even work?  If you assume that most of these parents are 50+ years old at the time of signing the loan (and don't have cash in hand at the time) how the heck are they going to pay back $200-300K by the time 
they retire at age 65?  And yes, they can work until they're 80 but realistically not a huge percentage of people have significant earning power over the age of 65 (or are even employable!!)
And not to be too macabre but some (not an insignificant number) will be dead by 65.

I can't imagine 95% of these loans are paid back in full (and many go completely unpaid).
Does the school eat this cost or [b]the federal government? [/b]
[/quote]

The federal government. The school gets off scot-free. [/quote]

[b]+1 The Fed student loan program is the reason college tuition exponentially increased so quickly[/b].  As students could borrow more, the schools hiked tuition. They could care less about student debt (the colleges).  They get more $$$$$.

[b]The more money the federal government pumps into financial aid, the more money the colleges charge for tuition. Inflation-adjusted tuition and fees have tripled over those same 30 years while aid quadrupled; the aid is going up faster than the tuition.[/b][/quote]

Parent plus loans, more specifically. Traditional undergraduate students can only borrow up to $27k TOTAL throughout 4 years of college in their own name. Doesn’t matter what the school’s COA is. That $27k number hasn’t changed since 2007, if I recall correctly.

To be blunt, if you can’t pay off only $27k in federal student loans on a 10 year repayment plan, your degree wasn’t worth the paper it was printed on.[/quote]

You’re equating stafford loans (which have a limit) and parent plus (which don’t) 
[/quote]

There ideally should be a limit on PPL for undergrad.  If people are not able to save for $20-30K/year for their kid to attend college, it's not likely they are really qualified to take out loans for that amount at age 50.  So we shouldn't give the loans in the first place for undergrad (grad is different---med school/dental school is expensive and we need doctors who are not wealthy)

Just like I cannot get a mortgage for $1.5M for a house if I only make $200K/year, most of these parents should not be allowed to take $200K in PPL with their income and their inability to save over the past 18 years for college.  So if a student is only allowed $27K over the 4 years---which is reasonable---most should be able to pay those back in 10 years--just keep living frugally for 4-5 years.  There should be a cap of maybe $20K/year for PPL for a family.  Since people are too dumb to restrain themselves and not get into massive debt, we need a plan in place that wont allow them to do that.  It's ridiculous when there are plenty of schools that are affordable (defined by $25-30K/year) and with searching you can find lower with good merit awards to reduce the cost.  
However, it is never smart to pay full price at any school (including T20) if you don't have most of it already saved/cannot cash flow it.  If your kid can get into a T20, they can find a school somewhere for $20-30K/year, probably even less if you want less debt.  
[/quote]

I agree 100%.

Schools would never agree to your proposal because it would turn the spigot of nearly infinite, consequence-free money off. Revenue would drop like a hot potato.[/quote]

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