TechSpot

Don't turn to Amazon (or anyone else) for a student loan

By Shawn Knight
Jul 21, 2016
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  1. Amazon and Wells Fargo on Thursday announced a partnership in which Amazon Prime Student customers that apply for any of the lender’s private student loan products will receive a 0.50 percent interest rate discount.

    John Rasmussen, Wells Fargo’s head of Personal Lending Group, said they are focused on innovation and meeting their customers where they are – and increasingly that is in the digital space. Rasmussen added that this is a tremendous opportunity to bring together two great brands.

    I couldn’t disagree more and quite frankly, I see this as a new low for Amazon.

    Student loan debt is at an all-time high in the US. According to Market Watch’s student loan debt clock, the nationwide tally sits at more than $1.3 trillion dollars and is growing by $2,726 every second. This, folks, is what’s called an epidemic. I mean, seriously, have you seen Reddit's personal finance and student loans subreddits?

    Burdening young people with thousands or even hundreds of thousands of dollars (depending on their major) of student loan debt that must be paid back fresh out of college has become such commonplace that most don’t think twice about it.

    As respected financial expert Dave Ramsey proclaims, your most powerful wealth-building tool is your income. If you’re giving it away to student loan providers every month for the next 30 years, you’re being robbed of your ability to build wealth. How can you ever plan to win with money following this formula?

    The fact of the matter is that, despite what our culture tells you, it is possible to go to school without taking out student loans. Here’s how.

    The easiest route is if your parents have the ability to fund your education. Granted, most people aren’t in such a fortunate situation but for those whose parents have saved for education over the years or can cash flow it, by all means, take advantage of it!

    For those on the opposite end of the spectrum that come from low-income families, you’ll likely qualify for need-based assistant based on your parents’ income such as the Pell Grant which doesn’t have to be repaid.

    If neither of these avenues exist, turn to scholarships. For those that are still in high school, work your tail off to get your grades up and apply for academic scholarships. A little-known tip is that many companies and businesses offer small scholarships that are handed out based on essay writing. Make it your duty to apply for at least one such scholarship each day over the summer. You won’t get most of them but even if you get just a few, that can save you thousands of dollars.

    Another viable option is the military. I know that enlisting isn’t for everyone but if you think it’s something you’d be interested in, the G.I. Bill can pay for much of your education.

    Also note that it’s not a crime to work while you’re in college. A part-time job can go a long way in helping to pay for college and yes, you can still find time to study alongside work (but you might not have as much free time for beer pong).

    Those already in school and planning to get their PhD should know that many universities will fully fund their doctorate students by covering tuition and even offering a stipend for living expenses. Similarly, fellowships are worth looking into if you’ll be in school for several more years.

    What if you’re already out of school and have loads of student loan debt?

    If you’re a teacher, look into teaching at an inner-city school or in an area that has a shortage of teachers as these often offer student loan forgiveness programs. Similar programs also exist for doctors and other healthcare professionals.

    A word to the wise – if you do go this route, try to avoid plans like the Public Service Loan Forgiveness program which requires you to work in your field for a whopping 10 years before they’ll forgive the remaining balance of your loan. If you have a lot of student loan debt, look for a plan that’s five years or less. After all, who wants to be in student loan debt for a decade? Being tied to a single job or area for 10 years may mean missing out on other, more lucrative opportunities.

    Above all else, make sure that if you’re going to college, you get a marketable degree. Seriously, why burn through so much money just to end up with a degree that has zero market value? As Rachel Cruze would say, don’t get a degree in left-handed puppetry.

    All I ask is that you think twice about taking out student loans. They may seem convenient at the time but they’re a royal pain once you graduate (assuming you do graduate which is far from a given). Student loans aren’t bankruptable meaning unless you become permanently disabled or die, they’re sticking around until you roll up your sleeves and attack them with a vengeance. Trust me, I speak from experience.

    Image credit: Darren415, LifetimeStock, karen roach and zimmytws, Shutterstock

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  2. TomSEA

    TomSEA TechSpot Chancellor Posts: 2,559   +598

    Excellent article, especially pointing out alternatives to student loans.

    A good friend of mine is a director of a student financial aid department at a local college and she says the amount of students who fail to apply for alternatives - even after being spoon fed the info - and the amount of scholarships (there's a scholarship for pretty much anything apparently) that go unclaimed is ridiculous.

    Apparently those alternatives take a little extra work, and many students can't be bothered so they just roll over and do the student loan thing.
     
    Reehahs likes this.
  3. ikesmasher

    ikesmasher TS Evangelist Posts: 2,561   +862

    I go to a relatively well known, large school. Student loans ARE the only reasonable choice alot of people have here. Every scholarship has at least dozens of applicants and the majority are rewarded to the best 1% of students and/or minorities. The military is not something the vast majority want, and plenty of people work alongside their loans. Large quantities of people get pell grants and many other grants and STILL have some loans. As much as id like to agree with this articles apparent sentiment that all student loans are avoidable, that is far, far from the truth.

    Anyway, this is techspot, not /r/personalfinance. not to come across as rude or anything :p
     
  4. Shawn Knight

    Shawn Knight TechSpot Staff Topic Starter Posts: 8,102   +96

    Thanks for the input but I would still politely disagree. Nobody dictates that you must to go to college directly out of high school. It's entirely plausible that one could continue to live at home for a year or two, work a mediocre full-time job (or a couple of part-time jobs) for those couple of years then head off to college and fund it with the money they saved. Alternately, one could work and save up for a semester, then take the next semester off to work full time, then back to school and so on. Sure, it'll take longer doing either of these methods but the point is, it CAN be done without loans.
     
  5. Satish Mallya

    Satish Mallya TS Addict Posts: 125   +92

    Techspot likely has a relatively young readership, and if you're young and reading Techspot, chances are pretty good that you're going to go for higher education.

    While not technical in nature, the advice is good, and (hopefully) falling on the right ears.

    Practically a PSA, really.
     
    Uvindu likes this.
  6. Shawn Knight

    Shawn Knight TechSpot Staff Topic Starter Posts: 8,102   +96

    I completely forgot to mention that choice of school plays a large role in things (I knew I was forgetting something). If you go to an in-state school, you'll pay far less than you would by going out-of-state. What's more, knock the basics out at your local community college then transfer and finish up at your in-state college or university to save even more money.
     
    SNGX1275 likes this.
  7. davislane1

    davislane1 TS Evangelist Posts: 3,564   +2,372

    1. Start an online business in high school.
    2. Profit.
    3. Congratulations, you've won the game.
     
    Reehahs likes this.
  8. DA027113

    DA027113 TS Rookie

    I genuinely do not understand how people think these "alternatives" are enough. By filing my FAFSA with the parent making the least income, I qualify for the most they can give, which isn't even enough to cover a semester's tuition, particularly given that all federal aid is split among semesters. The first school I went to I had a $45,000 scholarship and still had to pay $10K out of pocket, thus wiping out my parents. When I transferred due to developing health problems my grades dropped, making it impossible to obtain a scholarship. At my school all scholarship applications carry a minimum 3.5 GPA requirement. Any less get the absolute least priority. Once I found out I could appeal my grades due to my medical issues it was too late. I've been working on getting my GPA up ever since, which requires taking more credits, and that requires: more money. I work part-time in a college town. I only get 8-10 hours each week during the school year, and that's all I really have time for. I take an over-max course load. By the time I get off around midnight, I'm up doing homework until seven in the morning then go back to class at noon and repeat the cycle. You can't teach without a degree so yes, it's necessary for me, and no community colleges in my area carried classes I could take that the school would accept credits from. The only real way to avoid student loans is to decrease the cost of college. Not sure how I would start a business. They don't teach that in high school. In fact, that's the reason many business owners carry a degree in business management. Not going to school straight out of college would mean not going at all. The time I took off to work full time was merely a year, and after going back everything went to hell because I couldn't adjust amidst the health problems. I'm very thankful to have parents who fully understand, "this is the cost of college these days" as my Boomer pa says. We shouldn't chastised for taking out loans when it's out only option, and I have yet to hear many people actually understand the situation disagree. VERY far from the reality of things for most middle and low-income students.
     
    Reehahs likes this.
  9. ikesmasher

    ikesmasher TS Evangelist Posts: 2,561   +862

    Id agree that is an option, but more and more lately ive seen lots of people "wait a year" or two only to get so bogged down financially to just stay afloat that they can never return without taking out insane quantities of loans. Just personal experience I guess too, but of all the people I am aware of I haven't seen a single one go without loans without parential assistance or being a supergenious.
     
  10. Evernessince

    Evernessince TS Evangelist Posts: 1,201   +595

    It takes allot more than one semester of work to pay off one semester of college. My first semester of college my entire summer's pay went to books. I had maybe $50 left. Unless you get a great job you are going to be making around $19k a year. If we assume you have no taxes or living expenses, which no one does, you are still looking at less than one semester for a whole year of work at a public state university. God help you if you go to a school above $22k a year. Tap and Pell have been getting reduced over the years, along with other federal aid. Even if everyone started rushing for scholarships, the amount of aid money is far exceeded by the amount of debt being generated. You almost make it sound like students want to be in debt.
     
  11. poohbear

    poohbear TS Addict Posts: 104   +62

    Mean while in most of Europe Universities are free for its citizens (for everyone in the case of Germany).
     
    Reehahs and Uvindu like this.
  12. captaincranky

    captaincranky TechSpot Addict Posts: 11,704   +1,887

    Well, I read somewhere that, "the United States is a nation of salesman". And you really do need good salesman to sell college educations at rather a high markup, especially when there are no jobs connected to the degree you're issued.

    Here in the US, we're too stupid to be able to distinguish, "democracy" from "capitalism", and every other alternative is "too socialist".
     
    Reehahs likes this.
  13. Raoul Duke

    Raoul Duke TS Guru Posts: 930   +354

    I had academic scholarships, I had bursaries, I stayed in my home city despite being qualified for more prestigious universities because I could live for cheaper. Tuition was never the problem, it is trying to pay for rent, food, expenses for the 4-5 1/2 years it takes for just an undergraduate degree, much less a Masters or Ph.D Even worked part-time during the year and full-time whilst not in school. Still not enough, result, large student debt. It really does suck.
    As far as the usefulness of university degrees go, universities are not supposed to be business or trade schools. For example, if you take an astrophysics degree, going to be tough to find employment, but we need them, the point is to further knowledge, not to manage or create business for the generation of money.
     
    Phr3d likes this.
  14. Tanstar

    Tanstar TS Guru Posts: 410   +88

    The cheapest school you could go to was $55k a year (or semester?)? It sounds like this is where you failed. If the JC classes won't transfer then your state government has failed you, as that means they are paying for two systems that aren't compatible.

    I didn't grow up in Tennessee, but I'm glad I'll be raising my kids here. Two years of JC is provided by the state and everything is guaranteed to transfer to any public university in the state. The closest public university to me charges under $5k a semester for in-state full-time students. Between that and the must lower cost of living (housing in particular) in the rural South, I don't understand why anyone lives where the costs are so high on EVERYTHING.
     
  15. Moneyd623

    Moneyd623 TS Member

    The scholarship route is nice for those who can manage to get them. However as someone already mentioned previously, many of them won't even consider you unless you have a 3.5 or above. Well, that's all fine and dandy, you should be rewarded for your high GPA right? Except, not all majors are created equal, and I would argue a 3.5 is much harder to maintain in some majors compared to others, in particular those that require large amounts of high level math and science courses. So if you are in one of those majors, and hope to obtain scholarships, I hope you went to a high school where you learned high level math and science as early as possible... oh wait, that would mean you either went to a wealthy school or a private school. Sorry all you kids living in poverty that want to go into STEM majors, you're pretty much SOL.
     
    Phr3d likes this.
  16. captaincranky

    captaincranky TechSpot Addict Posts: 11,704   +1,887

    It's convenient to blame the school system for lack of educational opportunities. But realistically, the parents are every bit as at fault, perhaps more so. We've now gone through several generations raised on the income of social entitlements alone. Education isn't stressed, and the parents simply aren't capable of doing their parts in furtherance of the child getting a break.

    You grow up, you become someone's "young boy", learning to count to 10, dollar bill at a time, while handing out bags of drugs. That is, until you're old enough to buy a "9 mil", and go into business for yourself. Then come the rewards, subwoofers, rims, iPhones and whatnot.

    But wait, there's still hope. You get all your welfare collecting, rights demanding cohorts together, and picket in the streets demanding, "parity in education", despite the fact you've never worked a day in your life, nor paid a penny in income or real estates taxes. You are aware that that's where the money to fund the schools comes from, real estate taxes. No? I didn't think so.

    Personally, I'm really sick of people blaming the system, who are completely incapable of accepting any personal responsibility for anything and everything that doesn't go their way.
     
  17. Moneyd623

    Moneyd623 TS Member

    Parents can stress Education, and provide as much as they possibly can. If there are no opportunities for you to get the education, outside of trying to teach yourself, then what can you possibly do?

    I'm well aware that the money to fund schools comes from real estate taxes, why else would there be much nicer schools in richer neighborhoods?

    I'm not saying I have an answer to this problem, or that "social entitlements" or "welfare" is the way to fix it. On the contrary, I feel in a way, they add to the problem. All they really are is someone at the top saying "here, lets just throw money at the problem until it goes away". That rarely ever fixes anything.

    What I am saying is there IS a problem, and the personal responsibility argument only goes so far with me, when the system is so damn uneven that people are at huge disadvantages from the start. There will always be people like what you described, who are basically taking advantage of the system. You can't completely rid the world of ignorant people. But for the few who actually try to make it, and are hit with constant wall after wall, while others barely even try, but *Silver Spoon* so it doesn't matter they become wealthy anyways. You've gotta admit, it's pretty ****ed up.
     
  18. SNGX1275

    SNGX1275 TS Forces Special Posts: 10,715   +397

    You didn't pick a state school or a community/junior college. You picked a private school.
    Its far more complicated than that. Getting a PhD in Germany is a lot different than getting one in the US.
    I went to a HS that had 'college algebra' as its most advanced course (just below was algebra II). I went to a STEM school with a strong emphasis on the engineering. I STRUGGLED initially, and decided engineering wasn't where I wanted to be - perhaps with a better HS I would have made a different decision, however I found a science that I enjoyed and while I don't think I became any better of a student (at least not a lot) I got a lot better grades in the science related classes. So I don't buy your argument that you need to be rich or go to great HSs to succeed in STEM fields - however I will concede it makes it a bit harder. I think the answer to that through is go to community college to boost up on the 'core' classes your HS didn't do a good job at preparing you for.

    Source:
    I spent 5 years to get a BS with a GPA of 2.78
    1 year to get a MS with a GPA of 3.1
    4 years off working
    4 years attempting a PhD with a GPA of 3.4
     
  19. captaincranky

    captaincranky TechSpot Addict Posts: 11,704   +1,887

    Whether or not it does much good, an unwillingness to "self educate", indicates a lack of motivation, interest, and even curiosity resident in the individual.
    It seems to me that a lack of ability to get to a place where you "have the privilege of paying those high taxes", is pretty much incumbent on the previous generation(s).
    ^ Fixed*.

    There is a certain cyclical nature to that issue. If teachers fear for their lives at "problem schools", it's pretty much a given you're not going to be able to lure the best and brightest to that particular school district

    Well, quite frankly, the House of Windsor is still running England. I don't really see how to to get around the concept of "old money", or the laws of inheritance, without setting guillotines up in every town square, (again). And even at that, the first ones who get to the palace to loot it, are likely the ones who will be called, "the nouveau riche". It's just the way of the predator, the one who does the killing, more often than not, gets the meat.

    Moving on, once upon a time, not that long ago somewhere in South Africa, white landowners farms where seized by black "revolutionaries". Hunger and food shortages ensued, because the ones who were experts at revolt, didn't know s*** about running a farm. So, self education can pay off, but you have to study bread and guns at the same time.

    And keep in mind, when I went to a "blue collar" high school, (back when dinosaurs were still roaming the earth), stupidity was the accepted norm, to know big words was considered, "unmanly". With said, you could always loaf through as the school bully, and work at the factory after you just barely graduated by the skin of your tattoos.

    Son of a B**ch, those rich devils moved all the factories to China..
     
    Last edited: Jul 23, 2016
    Yynxs likes this.
  20. Moneyd623

    Moneyd623 TS Member

    Eh, it's a somewhat interesting conversation, so... why not.

    Couldn't agree more. In fact, to take it a step further, even with the proper coursework and guidance, an unwillingness to self educate will result in falling behind your peers anyways. However, willingness to self educate without the presence of coursework or proper guidance, in most cases will result in the same. Granted there are exceptions to this, those exceptions are far from the norm.

    Correct. This situation causes a cycle which repeats itself generation after generation. In some cases, people make it out of this cycle, but it's much harder to break this cycle and become successful than it is to reap the benefits of a previous generation breaking the cycle. I'd like to think that there is a solution to this issue, but of course, people have to first see it as an issue. It's easy to ignore the problem (or just throw money at it and say you've tried) when you're not the one living it.

    I really don't want to get political with this, as my personal political views don't really fit in with the status quo, but I will say that it's a much safer bet to vote for "money being thrown at the problem" than "If it really is a problem, let it fix itself"

    Again, you've made another great point. Which is why the solution to something like this has to be bigger than money. It is going to take effort on everyone's part to change this situation for the better, rich, poor, teachers, government, police officers, mentors, everyone must be on board. The scope of what it would take to actually fix things for the better is astronomical. But again, it starts with everyone actually recognizing it's a problem, and wanting to actually do something drastic to fix it. Would someone who is not living the problem want to actually give up their comfort to solve a strangers problems? The sad truth is, not likely.

    I'm sure there are plenty of examples of failed takeovers from history, and many of them do teach valuable lessons. It's also easy to look at failed attempts at solving complicated problems that were attempted via legitimate means. These lessons provide the most valuable insight. However these lessons are about how not to go about solving a problem, and are not meant to scare people away from even trying.

    It's easy to look at history and say, "well, guess there's nothing we can do about it, look what happened to X, Y and Z, when they tried to do A, B, or C". However, I think there's a better way. If I knew what the answer was, I would be a politician and not an engineer, but I know the solution will not come by ignoring the problem until it fixes itself, or by throwing money at it so that I can give the illusion that I'm trying.
     
  21. Yynxs

    Yynxs TS Enthusiast Posts: 87   +16

    Good article Mr. Knight. People forget that wherever it shows up, good information gets passed to those in need of it by the finders. At least it should be.
     

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