Outlook Not Good for Universities, Says Moody’s Magic 8 Ball

Higher ed has had a negative grade since 2009, but in 2011, elite research universities were given upgrades, and now the entire field has been downgraded again. “Moody’s explained the change by saying that even the best colleges and universities faced diminished prospects for revenue growth, given mounting public pressure to keep tuition down, a weak economy and the prospect that a penny-pinching Congress could cut financing for research grants and student aid.”


“[Moody’s] maintained that the average debt load was manageable for most students, since 72 percent of student loans were held by borrowers with less than $25,000 in debt. Nonetheless, the report noted that the increasing focus on student debt and college affordability by the media and politicians puts additional pressure on college administrators to rein in costs.”

Okay then! What is YOUR student debt situation? Do you have loans? Public, private? Give it to me straight and I’ll put it on this website and TOGETHER we’ll, uh, “put additional pressure on college administrators to rein in costs” (that’s how it works, right?) (is that even what we want?) (or do we just want more money from the states and less money from students?) (let’s have a CONVERSATION!) GET AT ME: logan@thebillfold.com


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Can someone explain to me how we aren’t going to have a massive crisis in about 15 years when everyone who is currently on the IBR program (which should be almost everyone with student debt!) has their outstanding balances forgiven? It seems like a ludicrously complicated accounting trick to kick the can down the road by a decade rather than reforming tuition and the student loan system now.

ThatJenn (#916)

@stuffisthings I’ve been wondering this, too. I mean, the trouble is you can’t actually make debt disappear without screwing someone over, and the logic that “the banks [or whatever ginormous lender] can handle it because it’s only a small portion of the outstanding loans” has already bitten us horribly.

@ThatJenn It’s not so much that, but the federal outlays involved. These payments are going to end up an expense in the budget at some point. Since the Federal government also took over student lending from federally-guaranteed private servicers around the same time (which I was glad about, because that was a giant scam) I guess the best-case scenario is that these end of loan forgiveness payments are simply going to reduce the balance of funds available for new loans. Either way it *seems* to be basically just punting the problem, as our political class has become so fond of doing lately.

josefinastrummer (#1,850)

@stuffisthings So true. Do you think when it gets close to that time, they will end IBR and just make us pay up? Would that surprise you at all?

@josefinastrummer Nah, they would get the shit sued out of them, and also the IBR generation will have real political clout by that time. I suspect they will somehow take it out on the young and poor.

notpollyanna (#2,841)

@stuffisthings I haven’t bothered to do the math, but I wonder how much people will pay of their original principal. They could conceivably paid more than the original principal but still have a balance forgiven at the end, since they wouldn’t have paid all the interest. It is still a massive loss, but maybe not too massive? The government is also taking a kind of gamble on the economy being robust enough that all these people will have good enough income to pay back their loans in full.

@notpollyanna In my case — my loans are on the high side and my income is close to the median — my IBR payments are less then or maybe about equal to the interest on my loans. Even if I earn significantly more in the future, which I hope to, I believe the outstanding amount that will be forgiven at the end of IBR will be pretty close to the original principal.

Theda Baranowski (#2,989)

I have about $47,000 in student loans, one subsidized and one unsubsidized federal loan. Most of this is from graduate school, because I made the BRILLIANT OH SO BRILLIANT decision to to go to LIBRARY SCHOOL out of state (admittedly this was aided by the fact that one of my letters of reference never made it to my one in-state option). I left library school with $60,000 ten years ago.

I’d probably be paying it off for the rest of my life except that my parents and I made a deal: they’ll pay off my loans and I don’t get any money when they pass on. This is a decent trade-off, I think, for getting out from under an avalanche of debt.

So the moral of the story here is two-fold, I think: don’t go to library school, there are no jobs, and if you do go to library school, under no circumstances should you go out of state.

@Theda Baranowski Nobody has to pay federal loans “for the rest of their life” — under the income-based and income-contingent repayment program you pay for at most 25 years, or 10 years if in public service. Under the new Pay As You Earn plan they are forgiven after 20 years.

Theda Baranowski (#2,989)

@stuffisthings I checked into it and I don’t actually qualify.

@Theda Baranowski OK, I hate it when people on personal finance sites try to force others to justify their financial decisions. BUT: I’m genuinely curious how you don’t qualify if they are federal loans. Is it because your loans are too old? If your income is too high, then the standard repayment plan is actually only 10 years. (Again please don’t feel compelled to answer — not judging you, just wondering!)

Theda Baranowski (#2,989)

@stuffisthings To be more clear, I consolidated my loans back in 2005, when I graduated from library school. Since these loans (while originally federal) are consolidated with a private lender, they no longer qualify for IBR, and I’m stuck.

@Theda Baranowski Oh that sucks. I have some private loans too, so I feel for you!

Theda Baranowski (#2,989)

@stuffisthings If I’D had a magic eight ball during the Bush years and had predicted the incoming IDR program, I would have not consolidated. Of course, I think the non-consolidation payment was something like $600 a month, so I also would have been living on ramen for the last decade.

P.J. Morse (#665)

@Theda Baranowski Thank YOU! Keep spreading that word about library school. I knew someone who actually got a job out of library school and loved it, so I peeked at library school and then evaluated the costs against the number of job openings. Yeah, I’ll pass on that.

Theda Baranowski (#2,989)

@P.J. Morse It’s a dying career, unfortunately. I work on the corporate side and just suffered through six months of employment before finally landing a temp position in November.

chic noir (#713)

@Theda Baranowski -yeah that was cool of your parents. Your parents may still leave you something maybe 10k instead of 50k.

eagerber (#1,958)

My student loan plan: I have a few student loans (one small one from undergrad, and two from grad school and have nearly paid off a car loan (about $300 to go on that, which started at $8,800 25 months ago ago). Now that I moved from the suburbs into the city, and now that I have a job I can get to by metro or bus, I plan to sell my car this spring. The car’s worth about $8k (via bluebook), which I do hope to get considering it cost me nearly $10k+ ($8,800 loan plus down payment plus interest plus repairs/upkeep). I hope to sell it before it depreciates any further!

So I plan to use that money to pay off one of my graduate student loans so that by the time I graduate, I’ll have only the one small undergrad loan and one remaining grad school loan. I’m looking forward to having 0 car payments per month, and having a much smaller auto insurance bill! It sucks to have to trade my car for my student loan, but it all seems sorta relative. Like, I needed to have a car in order to work at my last job, and having a BA and masters are things I need continue down this career path. I’m just planning to do alot more biking and walking, and probably cut down on the amount I buy per grocery store trip. I think not having a car in the city will definitely help me pay off my student loans faster.

Beck (#2,269)

I’m a veterinarian and I have 90K in (public) student loans. 13K are from undergrad (private university but with LOTS of scholarships) and the rest from grad school (public, relatively cheap but still really expensive). I’ve consolidated and have them locked in at just over 3% interest, which seems pretty good. I’m down to about 75K after putting EVERYTHING I have into them for the past 2 years. I’m trying to pay the balance in the next five years. If I can do that I feel it will be my greatest achievement; greater even than graduating. I collect cans off the street for the bottle refund and mend clothes from the free-box to wear. I have an awesome job though so I really can’t complain.

selenana (#673)

I only have my 3% Stafford loan left (which I am paying off in the monthly check in). I didn’t (yet) go to grad school and I qualified for (full, I think) Pell grants in undergrad.

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