Mon 1 October 07 · Filed under Fraud News Stories
Experts are concerned by the growing level of student loan debt, and its potential impact on our future economy. Especially concerning are the “private loans” students use for college, which can have variable interest rates as high as 20%. These differ from traditional “student loans” which are backed by the federal government and have controlled interest rates. In 2001, private loans in the U.S. totaled $4 billion, while in2006, they totaled $17 billion.
The increase in loans is due, in part, to the significant increase in the cost of college tuition over the last decade. And for those in careers that aren’t typically lucrative, the student loan burden can feel even heavier. It is reported that over the last 10 years, consumer prices rose 29%, while college tuition and fees rose 65% to 79%.
The main concern is that young adults coming out of college will be so burdened with student loans that they will have to delay purchasing homes and do without some luxuries in favor of paying off the student loans.
While the concerns about student loan debt are real, and the financial burden is undeniable, this issue must be kept in perspective. College is a choice, and students may need to plan their finances more carefully to avoid a huge loan burden. More students may have to work while going to college or look for alternatives to help control the costs.
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Rachel wrote @ October 2nd, 2007 at 1:49 pm
Too bad the cost of going to college goes way beyond what a person can earn with unskilled labor.
Tracy wrote @ October 2nd, 2007 at 2:40 pm
I disagree. There are very cost effective programs and lots of scholarships and financial aid programs. I do acknowledge that students may have to make sacrifices and may not be able to be full-time students. But I think for those who really want to get a college education, there is a way to do it. I did it.
Sarah wrote @ October 10th, 2007 at 2:57 pm
The entire system is still geared towards expecting kids to live on campus for a few years, to get the whole thing done in about four years, to do unpaid internships for two or three summers, to get good grades, to get some meaningful extracurriculars in (preferably with leadership experience) and to do the whole thing at the best possible college they can get into, and to get good grades while doing it. And most of the loans are still coming out with a projected 10 year repayment schedule, even though wages haven’t kept up with tuition at all.
Especially when you examine the relationship between government subsidies (including loans) and the spectacular rise in tuition and fees, the whole thing really does look more than a little unhealthy.
Full disclosure: I have about $40k in debt, which is as low as it is because I worked during the school year and got several scholarships, including a co-op dorm scholarship that saved me about $6k in my first two years. I just love questions like “what do you want to be doing in five years” and “why do you want this job” during job interviews, because the honest answers would be “I’d love to go to grad school, which is what I’d been hoping to do until I realized what kind of repayment schedule I would be facing after four to six more years of tuition at even a state school” and “would you like to see my repayment schedule?,” respectively. If I went to law school, for instance, fear would keep me at the lowest-ranked schools possible, because there’s no guarantee that $70k in debts could ever be repaid, and the lower tier schools would let me go for free thanks to my GPA and LSAT score.
outback71 wrote @ October 11th, 2007 at 6:12 am
The upside to an increasing debt load is that students and their families will start to look for cost-effective alternatives. That may put downward pressure on tuition.
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