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A lot of people seem to assume you get handed a 18 point font piece of paper that says, "You agree to borrow $70,000 for a student loan." Mine was hundreds of

A lot of people seem to assume you get handed a 18 point font piece of paper that says, "You agree to borrow $70,000 for a student loan." Mine was hundreds of pages of legalese and I didn't even know what the total of my 11 loans were until I graduated and consolidated.

umanwizard 11y ago
So you signed on to borrow money and had no idea how much you were borrowing? That's even worse than the alternative.
- deleted 11y ago
  [deleted]
patio11 11y ago
Your impression of the documents you were asked to sign does not comport with my recollection of the contracts I was presented with. As federal loans are a fairly standardized product, you can trivially find their contracts online. Here's one of the examples for Sallie Mae: http://www.studentlendinganalytics.com/images/Sallie_Mae_Prom_Note_0409.pdf http://www.studentlendinganalytics.com/images/Sallie_Mae_Pro... This document, in style and length, comports with my recollection of what I signed ~15 years ago. 8 pages; approximately the length of an apartment lease. The language should not tax the reading comprehension abilities of a college student. Representative sample: Interest on this note will accrue at the Variable Rate (as defined below), beginning on the first Disbursement Date, on the principal balance advanced and on the Capitalized Interest, Fees, and Other Amounts, until the principal balance and all interest are paid in full. The Variable Rate will be used to calculate interest during the entire term of this Note, and following the maturity of, or any default under, this Note; there is no initially discounted, premium, or other rate that will be used to calculate interest under this Note.
- kefka 11y ago
  Better question: Why are Federally subsidized educational loans at 8% interest, whilst the Big Banks get their money at 0%, or thereabouts? One invests in the future, while the other breaks it. You can probably guess which does which.
  - patejam 11y ago
    Because college students are a much higher risk. You can argue that 8% is too high, but you can't argue that college students are more likely to pay back loans than big banks.
    - kefka 11y ago
      > but you can't argue that college students are more likely to pay back loans Well actually, yes you can. Student loans are not dischargable in bankruptcy proceedings. That distinction is only shared with criminal court ordered penalties. In other words, they are guaranteed a payback of the loan, plus fees and interest. Even if that means garnishment of your Social Security. But look at the bright side: they do go away if you're dead. Edit: Evidently mentioning that Educational Loan debt is not dischargable is somehow a very unpopular thing (given my and other karma scores). It will also be a very unpopular thing for the 43 million people with their collective $1.3 trillion in debt. I wonder how many have or will default? And, what will that do to our economy?
    - danharaj 11y ago
      You can't cancel student loan debt. There's not even a risk of default.
      - harryh 11y ago
        Default rates on student loan debt are somewhere between 10% and 15%. https://www.washingtonpost.com/local/education/national-student-loan-default-rate-declines-to-137-percent/2014/09/24/d280c8bc-43ee-11e4-b437-1a7368204804_story.html https://www.washingtonpost.com/local/education/national-stud...
    - jaynos 11y ago
- noonespecial 11y ago
  I don't think this comment should be downvoted, it was so have an upvote BUT: I don't think this matches most peoples' experience. I think it usually goes like this... You walk into the "financial aid" office where you sit nervously while they ask you meaningless (to the cost) questions while they click at a spreadsheet. After you stew for a while they present you with a price that looks like it could fund a trip to the moon (the 'list price'). You panic and then they say "but don't worry, financial aid"! What you don't know is that while they're piecing together your "package" what they are really doing is figuring out how much they can borrow on your behalf to claim for themselves. After they've exhausted every external loan, grant and scholarship out there (its a big list and they are good at their job) they declare the rest of that impossible number a generous scholarship provided by the university. You made it! Welcome to Scruew U! You're so relieved just to be in the door you start signing paper as fast as it comes at you. That number looked impossible but somehow you're in! It looks like they busted their butt to help you out, but really, they figured out how to extract maximum payment from you, used car salesman style. It will take you a long time to figure out exactly what your responsibilities are with regard to that witch's brew of loan, scholarship, and grant. Just wait until next year when you're invested and some of your grants and scholarships expire or reduce!
  - umanwizard 11y ago
    What kind of school was this? Public or private? All of my financial aid application was done online (Univ. of Arizona).
matthewmcg 11y ago
This is something that the Consumer Financial Protection Bureau has been working on. They've hired designers have A/B tested different versions of a simplified disclosure forms. You can see examples here for other loan types: http://www.consumerfinance.gov/know-before-you-owe/compare/ http://www.consumerfinance.gov/know-before-you-owe/compare/
rhino369 11y ago
You pretty much do get a piece of paper that says you borrow X dollars. One problem is you get one piece of paper each year for 5 years. The total amount sneaks up on kids. If they had to see an estimated borrowing amount for the total degree, they might do things differently. Especially since families tend to blow their wad the first year. Use their small savings to pay for the freshman year and then all the sudden there is no money for two.
- dragandj 11y ago
  Wait a minute, we are talking about college age, not about 6 year olds. How difficult it is multiplying x with 4? It is not a precise amount, but if the parents have $10,000 and x is 8.000, how hard is it to figure out upfront that college is going to cost a LOT more than that?

umanwizard 11y ago

So you signed on to borrow money and had no idea how much you were borrowing? That's even worse than the alternative.

deleted 11y ago
[deleted]

patio11 11y ago

Your impression of the documents you were asked to sign does not comport with my recollection of the contracts I was presented with. As federal loans are a fairly standardized product, you can trivially find their contracts online. Here's one of the examples for Sallie Mae: http://www.studentlendinganalytics.com/images/Sallie_Mae_Prom_Note_0409.pdf http://www.studentlendinganalytics.com/images/Sallie_Mae_Pro... This document, in style and length, comports with my recollection of what I signed ~15 years ago. 8 pages; approximately the length of an apartment lease. The language should not tax the reading comprehension abilities of a college student. Representative sample: Interest on this note will accrue at the Variable Rate (as defined below), beginning on the first Disbursement Date, on the principal balance advanced and on the Capitalized Interest, Fees, and Other Amounts, until the principal balance and all interest are paid in full. The Variable Rate will be used to calculate interest during the entire term of this Note, and following the maturity of, or any default under, this Note; there is no initially discounted, premium, or other rate that will be used to calculate interest under this Note.

kefka 11y ago
Better question: Why are Federally subsidized educational loans at 8% interest, whilst the Big Banks get their money at 0%, or thereabouts? One invests in the future, while the other breaks it. You can probably guess which does which.
- patejam 11y ago
  Because college students are a much higher risk. You can argue that 8% is too high, but you can't argue that college students are more likely to pay back loans than big banks.
  - kefka 11y ago
    > but you can't argue that college students are more likely to pay back loans Well actually, yes you can. Student loans are not dischargable in bankruptcy proceedings. That distinction is only shared with criminal court ordered penalties. In other words, they are guaranteed a payback of the loan, plus fees and interest. Even if that means garnishment of your Social Security. But look at the bright side: they do go away if you're dead. Edit: Evidently mentioning that Educational Loan debt is not dischargable is somehow a very unpopular thing (given my and other karma scores). It will also be a very unpopular thing for the 43 million people with their collective $1.3 trillion in debt. I wonder how many have or will default? And, what will that do to our economy?
  - danharaj 11y ago
    You can't cancel student loan debt. There's not even a risk of default.
    - harryh 11y ago
      Default rates on student loan debt are somewhere between 10% and 15%. https://www.washingtonpost.com/local/education/national-student-loan-default-rate-declines-to-137-percent/2014/09/24/d280c8bc-43ee-11e4-b437-1a7368204804_story.html https://www.washingtonpost.com/local/education/national-stud...
  - jaynos 11y ago
noonespecial 11y ago
I don't think this comment should be downvoted, it was so have an upvote BUT: I don't think this matches most peoples' experience. I think it usually goes like this... You walk into the "financial aid" office where you sit nervously while they ask you meaningless (to the cost) questions while they click at a spreadsheet. After you stew for a while they present you with a price that looks like it could fund a trip to the moon (the 'list price'). You panic and then they say "but don't worry, financial aid"! What you don't know is that while they're piecing together your "package" what they are really doing is figuring out how much they can borrow on your behalf to claim for themselves. After they've exhausted every external loan, grant and scholarship out there (its a big list and they are good at their job) they declare the rest of that impossible number a generous scholarship provided by the university. You made it! Welcome to Scruew U! You're so relieved just to be in the door you start signing paper as fast as it comes at you. That number looked impossible but somehow you're in! It looks like they busted their butt to help you out, but really, they figured out how to extract maximum payment from you, used car salesman style. It will take you a long time to figure out exactly what your responsibilities are with regard to that witch's brew of loan, scholarship, and grant. Just wait until next year when you're invested and some of your grants and scholarships expire or reduce!
- umanwizard 11y ago
  What kind of school was this? Public or private? All of my financial aid application was done online (Univ. of Arizona).

matthewmcg 11y ago

This is something that the Consumer Financial Protection Bureau has been working on. They've hired designers have A/B tested different versions of a simplified disclosure forms. You can see examples here for other loan types: http://www.consumerfinance.gov/know-before-you-owe/compare/ http://www.consumerfinance.gov/know-before-you-owe/compare/

rhino369 11y ago

You pretty much do get a piece of paper that says you borrow X dollars. One problem is you get one piece of paper each year for 5 years. The total amount sneaks up on kids. If they had to see an estimated borrowing amount for the total degree, they might do things differently. Especially since families tend to blow their wad the first year. Use their small savings to pay for the freshman year and then all the sudden there is no money for two.

dragandj 11y ago
Wait a minute, we are talking about college age, not about 6 year olds. How difficult it is multiplying x with 4? It is not a precise amount, but if the parents have $10,000 and x is 8.000, how hard is it to figure out upfront that college is going to cost a LOT more than that?