Student Loans: Yes or No?
Considering the current state of the economy, the rising costs of tuition, and after the wake of the Occupy Wall Street movement, you may be wondering if student loans are really worth it.
The premise seems simple enough: borrow some money for school, graduate, get a good job, and then pay off the loan with all the mad cash your making from your new career. However, in reality, it doesn’t work out that way for many people. The jobs simply aren’t as plentiful, and even if you’re lucky enough to find a job right away, tuition debt has become so high that the payments are a struggle for those who are supposedly making an above-average wage.
Plus, just being weighed down with $30,000 of unsecured debt (yes, the average student loan debt is near $30,000) is enough to cause a large amount of stress and anxiety in your life. College Humor has a good video that sums up the feeling….
Most loan companies make you go through some type of pre-loan counseling (which is a joke) to supposedly make sure you understand what you’re undertaking. But, young people with little life experience and no history with debt can’t fully comprehend the impact this obligation will have on their future lives. Still, the student loan companies continue to provide students with easy access to thousands and thousands of dollars. Doesn’t it seem strange most student credit cards won’t offer more than $500 to $1000 worth of credit, but these same students can go strap themselves with $30,000 worth of debt… something is not right here.
Adding insult to injury, unlike other debts, there is virtually no amount of misfortune that can get you out of your loan. Filed for bankruptcy? Too bad – student loans aren’t included. Have you had the debt for more than 20 years? It doesn’t matter – there’s no statute of limitations on this type of debt. There was an article on foxbusiness.com (of all places) describing how “Draconian” the laws are regarding student loans. According to the article, the only way you can get a reprieve is:
1. Prove that based on your current income, you have absolutely no money left after paying for bare necessities such as food, housing, etc.
2. Demonstrate that your financial situation is never going to improve for the rest of your life. “You can’t be temporarily down-and-out and get rid of your student loans,” says Brewer.
3. Made a good faith effort to repay the money. Unfortunately, the minute you fall into default, you are no long considered to be acting in “good faith.”
The article goes on to describe a situation where a 67-year-old woman was still struggling with $116,000 worth of student loan debt. She was earning $26,000 per year at a clerical job and receiving $250 per month for social security. Her home state of Virginia released her from the loan; however, the federal government appealed the decision saying the loan could not be forgiven. Oh well…
My advice: If you’re not lucky enough to have rich parents or a full scholarship, save up enough to pay for the majority of your tuition with cash and attend a cheap college. Take summer jobs and don’t be afraid to skip a semester if you don’t have enough money to pay. Just don’t get distracted from your main goal – earning a degree – and you’ll feel so much better when you graduate debt free.
Topic: Student Loans: Yes or No?
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