Be forewarned before you borrow money to go to college.
As high school graduation nears you have decided you want to be an Artist. You like millions of other students and parents are trying to put together financing for your education. What I am going to tell you is the truth about borrowing money to go to Art School or for that matter any other kind of school you may be thinking about.
Not long ago I wrote about the mess Annie Leibovitz the photographer got herself into with predatory lenders… read
Annie’s story is about an artists life at the other end of a career, a successful career. It is about the complexity of making a lot of money and the predators who glean money from the most successful artists.
The biggest predators in the industry are waiting for you!
They are your guidance counselors, your financial aid advisors, your bankers and the very schools you hope to attend. They want to help you borrow money or loan you money to get an education.
Student Loans in any form are a predatory trap and you had better know what you are getting into before you sign any agreements as a student borrower or as a parent cosigner. The education you are buying may not be worth the cost. Worse yet it may cost you, the student, your financial future and condemn you to live a life ravaged by debt you cannot repay. A less fruitful life, than you have been told an education will provide you by everyone up to this point in your life. Further as a cosigner if your student cannot repay their debt you will be held to the same standard as they are and you will have to pay the debt. Neither borrower or cosigner have any real consumer protection from lenders. The fact is, if you cannot earn enough money to support yourself and pay back your loans your life and your cosigners life will be a nightmare.
There is no forgiveness of government subsidized student loan debt today for the student or the cosigner. You will be hounded to the gates of hell for the money regardless of your situation. If you as a student default you can be sure you will experience the full weight of the government when they come to collect the debt. As for your cosigner they too will be subject to every legal measure the government has at its disposal to collect the money you owe, which may be many times the amount you originally borrowed.
There exists a statute of limitations on most major crimes but not on Federal Subsidized Student Loans. As a student you may never have to worry about losing your home if you can’t pay your loans right away, you will never own one. Your credit will be trashed. Even if you do manage to make a living for a while and something like this recession happens and you lose your income you can lose your home and even your drivers license. As a cosigner the same applies to you. The Government can attach liens to your home, your assets and your future assets if you cannot pay. Yes, you can lose your home or the equity in your home if a student loan goes into default. Your wages even social security can be attached if you don’t pay and you signed an agreement to repay a Federal Subsidized Student Loan. You may be thinking this can’t happen to me. Well, think again it can and it may happen to you.
Today millions of Americans are unemployed. They were and are still responsible people who had good jobs and good credit scores and they have ended up defaulting on their student loans. Think about that for a moment. Perhaps everything is good today. But what about ten years from now or how about six months from now. All of us are living in the middle of a severe economic disaster and all of us are at risk.
Having said that Federal Student Loans do have benefits if you choose to go forward. First you can defer your loans in times of trouble with reasonable costs unlike private student loans. You can work with the Feds to establish manageable restructured payment agreements. You may even be able to exchange debt for public service. Using these benefits may save your credit and your parents home or their social security and other assets. But YOU WILL PAY THE MONEY BACK!
Private student loans are different sort of?
One major difference is, it is still possible to discharge a private student loan in bankruptcy. But it is difficult, you have to prove that forced repayment would cause undo hardship. If you are a cosigner and have lost your income or are retired on a fixed income you might be successful in discharging the student loan in bankruptcy. However if you are young and able to work in the foreseeable future probably you won’t be able to retire the debt. Further more with private student loans interest and fees can add up fast to unreasonable amounts of money. Additionally you may find that private banks like Chase or Bank of America will not defer your loans for any extended period of time. Like the time it may take you to recover from this recession or an illness. They will use every measure of the law to screw you at their disposal. That is how B of A is building America. In 2005 the bankruptcy laws changed to benefit the lenders and left consumers without any real protection.
The school you choose may be an even bigger risk that you never thought about!
What I will call the best kept secret in education is the student loan default rate of schools selling you a degree. Yep that’s right the school you attend may be misleading you on career outlook and job placement and retention facts. In fact some schools do not offer Federal Student Loans because they can’t. Their default record is so high the government won’t let you borrow money to attend the school. However Private Student Loans, banks will still loan you the money to go. The banks don’t care how bad the schools record is because they know they are going to get paid one way or the other. The really sad part is the schools themselves know what a poor investment their programs are and they encourage you to borrow the money to attend their school. They will even help you borrow the money. The worst schools will even loan you the money themselves. And you will be surprised to find out which schools and programs have the highest default statistics.
Why are Student Loan Defaults so high and growing? Its the real economy, it is the lack of good paying jobs. All that crap you here about earning up to a million dollars more in your life as a college graduate is mostly untrue today. The statistic is averaged over all college graduates, it the statistic is a generalization of the real facts. Sure its true when you average in Doctors, Lawyers, famous artists, actors, musicians and Wall Street bankers and everybody else into the general equation.
But as an Artist or any other worthy profession, don’t count your chickens before they hatch. You will make more money waiting tables or tending bar in a fine dining restaurant than as an art teacher or adjunct college professor. In fact you may make as much or more money that a Full Professor of Art. In fact you can apply that tidbit of information to almost any of the hundreds of different jobs in the Arts or Education. You would be further ahead financially to work your way up to management at McDonald’s. At least you would have health insurance and a 401K. Well, and you would still have clients or customers as long as McDonald’s has Fries, unlike many artists today in this recession.
If you think I am wrong then prove it, read all the articles I have sourced for you and then let me know what you think!
I don’t want to break your heart or crush your dreams I want you to be a successful artist.
I want you armed with information. I want you to have a great life. A life in the arts is a great life, but it does have challenges and disappointments. Most of us will never be an Annie Leibovitz, we will not be in the right place at the right time in history to enjoy the fruits of our labor. After all everybody doesn’t say wait till your dead to be famous for no reason. You can live a full and comfortable life as an artist if you stay out of debt. But we artists do seem to accumulate too much debt.
I don’t want to leave you without any answers so here is my advice.
Unless you have solid financial support like your parents or you have the money in the bank or you have a full or nearly full scholarship or grant that pays the bulk of education costs, money you do not have to pay back wait to go to Art School. Borrow money only as a last resort and then borrow as little as possible. Take a couple years off and work while waiting to go to college and save the tuition. I know your parents want you out of the house as much as you want out, but chances are you will be moving back home after college if you acquire too much debt. If you can earn your tuition up front and pay as you go I promise you you will never regret waiting. Being debt free is real freedom.
The other thing you can do is find a local community college that has a good art program, because many do. In fact I think some of the small community colleges offer a far better education that the big schools. You can pay as you go, tuition costs are often much lower for in state residents. The other benefit of going to a small school is a more personal experience for you the student. Stay in state, you will save major money. Once you get your undergraduate degree completed you can apply to graduate schools that offer full scholarships in exchange for teaching. After all that sort of famous Art Professor that teaches at the big school most likely only directly works with more advanced students, like seniors or graduate students. You will mostly be taught by Graduate students and Adjunct faculty for the first couple years at a big school. Thats how it works.
Another thing you can do while your waiting is take art lessons from local artists in your community. There are a lot of artists teaching the skills you want to know.
Get a job working around art like at a gallery, museum or any other kind of art program you are interested in. If they are not hiring volunteer while you wait tables. You might meet a benefactor who will help you. A good word from a museum director or symphony conductor can go a long way towards scholarships.
If you are really born to be an Artist it won’t matter; you will draw in the dirt with a stick or beat a rhythm with the same stick on anything that will make a note. You will write if you are a writer and sing if you are a singer. Your happiness will only be more sweet if you are not a prisoner burdened by debt.
Look up your schools student loan default record:
Federal Student Aid Data Center
Read This Article… But come back because you need to read all the articles I have sourced before you make one of the biggest decisions of your life.
The Chronicle of Higher education
December 14, 2009
New Measure of Student-Loan Defaults Could Threaten Hundreds of Colleges
By Paul Basken
More than 220 colleges have long-term student loan default rates so high that they would lose all federal student financial assistance under the terms of a new law that eventually will measure those rates over a three-year time scale, according to new Education Department figures.
That’s more than six times the number exceeding the current limit, in which the department considers defaults over a two-year period and makes colleges ineligible for federal aid—a source of money that is critical to the survival of most institutions—if too many of their past students fail to pay back their loans on time.
The change from a two-year to a three-year measure doesn’t take full effect until 2014. The Education Department calculated compliance rates under the three-year period and publicly released the numbers on Monday as a way of helping institutions prepare. (The figures are available from the department’s data center; click on “Trial Three-Year Cohort Default Rates.”) more… http://chronicle.com/article/New-Measure-of-Student-Loan/49484/
My Debt, My Life
NEA members are struggling with student loan debt of unprecedented proportions. Here’s why it matters, even if your college days (and bills) are a thing of the past.
By Cynthia Kopkowsk
‘The Student Loan Scam’
May 5, 2009
Not everyone would willingly choose to become the public face of the debt-ridden. Alan Collinge didn’t exactly choose to do so, defaulting on $38,000 in student loans only after a series of missteps and strokes of misfortune, but he has embraced his situation with gusto, founding StudentLoanJustice.org to advocate for distressed borrowers and now writing a book, The Student Loan Scam (Beacon Press).
Read the Alan Collinge Interview INSIDE HIGHER ED
An important note; The Alan Collinge website has been highjacked by a student loan advertiser. I suspect his domain name came up for renewal and the high jacker jumped on the opening. But you can go to his Face Book Site.
Facebook Page: Student Loan Justice .org
Facebook Page: Forgive Student Loan Debt To Stimulate the Economy
WSJ: The Student Loan Effect
… there’s some $730 billion in outstanding student-loan debt, only 40% of it being actively repaid. Although some of that other 60% is from those currently in school, there are also borrowers who are delaying payments either by deferment or defaulting.
WSJ: The $550,000 Student Loan Burden
… as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as “good debt,” because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Dr. Bisutti learned, responsibility.
Well, here is a new twist on getting money for your education.
Sell a percentage of your future income to an investor?
At least you will only owe money on what you earn as an artist.
Betting on Bob
The next thing in student loans: Investors pay your bills. You give them a share of your future.
There may be hope on the horizon but don’t bet the farm on it.
Finally take a look at this article about a recent study “The National Arts Index”