Bright Side Of Student Loans Increasingly Getting Darker
Tuesday, June 26, 2012, 2:00 AM | Leave Comment
These days if you pick up any newspaper, magazine or click on a finance website, there is some talk of the overflowing cup of student loans and debt. It seems like the coffee commercial “Fill it to the brim” is always on. However, more than $1 trillion in student loans is no filling to the brim. It’s more like another stain on the nation’s already stained financial shirt.
Student loans of this magnitude create many questions one of which must be whether it’s worth going to college any more. This seemingly is on top of the credit card debt shit that students keep stepping into.
Many kinds of debt is no less than shit. Some folks keep stepping in it because they need to buy food, clothes and have a roof over their head which otherwise would be hard to get.
Student loans may have an option attached to it, an option to skip college for a while. Work hard, save enough to decide then whether it’s time for you to go to college – a community college to be more specific.
The good old days…
It used to be that students would get good education at the price that most families could afford.
In return, they would get good jobs across this vast landscape of the United States.
The huge debt of today was almost non-existent. Except for today’s technology, U.S. education in basic Science and Math was superior to most other developed nations.
That dream has died down for many. Either they don’t go to college or when they do they are so financially overburdened with students debt that it takes them years to pay it off.
Problem…
The problem is many folds. You name any reason and that’s a problem of why so much of a debt can be put on students shoulders.
The more students borrow, the more expensive education becomes. Students borrow even more and this vicious cycle keeps playing to the detriment of folks who just keep getting into debt deeper and deeper.
On top of borrowing from the government where the interest charges may be more manageable, many students borrow from private lenders where the rate can be higher and under stricter conditions as well.
What you can do…
Before they borrow for college, parents and students can do a few things on their own:
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State-sponsored 529 college-savings plans
State-sponsored 529 college-savings plans are one of the best ways to save for college. Join it and it will put less burden on parents’ shoulder at college time. The earlier you start adding to the plan, the more money your kids will have.
Assets in 529 accounts topped $158 billion in the first quarter of 2012, reports the College Savings Foundation.
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Choose college you can afford
I am strongly in favor of community colleges. Get a 2-year associate degree. Work for a couple of years.
Save money to pay for the next two years of college. You don’t have to finish undergraduate degree in four years.
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Go for Federal loan
If you do have to borrow, go for Federal loan. It is much better than private loan. It has fixed rate and flexible repayment plan.
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Co-op way of studying
Some colleges offer courses one quarter and next quarter students work. Here in New England, the industry is quite helpful in providing opportunities for part-time work.
They have arrangement with colleges to offer students work during alternate quarters or semesters. That way, the students can save money and pay for the next session classes.
The upside is that students get experience in their field during their studies and when they get out of college, most companies historically have extended candidates full-time jobs.
The not-so-downside is that it takes more time to graduate. But that is not such a big deal.
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What we do in our family…
I told my son the same thing. He works for a semester. Take courses in next semester, paying for courses with what he saved the previous semester.
Hopefully he would finish 4-year college in a little less than 6 years. That’s no big deal – 4 years or 6 years. I don’t see “no difference.”
He is getting good experience along with education. We as a family have no student loans thus far and hopefully we won’t apply for a loan either.
The company he works for has promised him to extend his part-time work to full-time with new pay scale when he graduates next year.
His non-exempt status will be converted to exempt status as well.
In a Nutshell
Those days may be over when students finished undergraduate degree in four years. Economy is bad. Education is a lot more expensive.
You don’t have to finish 4-year college in four years. If you can, work and study during alternate semesters or quarters.
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