College Education Loans Keep Ballooning
The cost of college, as you probably know, keeps grinding higher and higher. The recent recession hasn't slowed it down at all. And so the inevitable has occurred: college loans have ballooned. In other words, more college graduates are graduating with more loans. And apparently its reaching a critical state.
Ratings agency Moody's weighs in with this:
"Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place."
Mark Kantrowitz, publisher of FinAid.org has testified before Congress. He says:
"The total student loan outstanding debt exceeded outstanding debt for credit cards for the first time in 2010," he said. "At the end of this year or early next year, outstanding student loan debt is expected to pass the trillion dollar mark for the first time."
I'm not at all surprised. Serving on a college board, I see the rise in costs like food, supplies, maintenance, teachers' salaries and benefits - you name it. And this is a college that struggles mightily to keep tuition and fees, room & board, and fees as low as possible. In fact, we pursue a policy that limits the amount of debt a student can take on by the time they graduate. Too bad more schools don't do this too.
Then there are the discussions I have with parents who want to send their kids to the "best" colleges. The discussions typically result in the parents spending money they'll need in retirement, or taking on debt they really can't afford, or the students accepting "financial aid" packages that consist of lots of loans that they can't afford - or some combination of the above. In a few cases, parents can afford to pay, and won't wind up poor - but those cases are getting rarer by the year.
The bottom line is that the parents - especially parents who make a few bucks - paint themselves into a corner. The kids are told they have to go to an Ivy or some equivalent (there are about 20 - 25 schools kids in the Northeast try to get into) and the parents feel guilty if they don't do whatever it takes to get their kids into those schools.
That's all fine if the parents can actually afford to pay the tuition and room & board. But frequently they really can't.
But as long as parents and students keep applying and are willing to take on loans if necessary, schools will keep charging.
For some, it'll work out if the kids get a decent job and can pay down their loans. Of course, getting a decent job these days isn't all that easy. Nor is keeping that job if you get it.
And, of course, all this impacts the increase in defaults on college loans.
What now? Do we just add this to the mountain of debt out there? I'm afraid so.
The alternative is not to follow the crowd when it comes to sending your kids to college. But most people aren't willing to do something different - at least that's been my experience.
Hey, you can even consider whether going to college at all makes any sense. In case you're wondering whether that's a reasonable consideration, check out this article: The College Scam.
Ratings agency Moody's weighs in with this:
"Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place."
Mark Kantrowitz, publisher of FinAid.org has testified before Congress. He says:
"The total student loan outstanding debt exceeded outstanding debt for credit cards for the first time in 2010," he said. "At the end of this year or early next year, outstanding student loan debt is expected to pass the trillion dollar mark for the first time."
I'm not at all surprised. Serving on a college board, I see the rise in costs like food, supplies, maintenance, teachers' salaries and benefits - you name it. And this is a college that struggles mightily to keep tuition and fees, room & board, and fees as low as possible. In fact, we pursue a policy that limits the amount of debt a student can take on by the time they graduate. Too bad more schools don't do this too.
Then there are the discussions I have with parents who want to send their kids to the "best" colleges. The discussions typically result in the parents spending money they'll need in retirement, or taking on debt they really can't afford, or the students accepting "financial aid" packages that consist of lots of loans that they can't afford - or some combination of the above. In a few cases, parents can afford to pay, and won't wind up poor - but those cases are getting rarer by the year.
The bottom line is that the parents - especially parents who make a few bucks - paint themselves into a corner. The kids are told they have to go to an Ivy or some equivalent (there are about 20 - 25 schools kids in the Northeast try to get into) and the parents feel guilty if they don't do whatever it takes to get their kids into those schools.
That's all fine if the parents can actually afford to pay the tuition and room & board. But frequently they really can't.
But as long as parents and students keep applying and are willing to take on loans if necessary, schools will keep charging.
For some, it'll work out if the kids get a decent job and can pay down their loans. Of course, getting a decent job these days isn't all that easy. Nor is keeping that job if you get it.
And, of course, all this impacts the increase in defaults on college loans.
What now? Do we just add this to the mountain of debt out there? I'm afraid so.
The alternative is not to follow the crowd when it comes to sending your kids to college. But most people aren't willing to do something different - at least that's been my experience.
Hey, you can even consider whether going to college at all makes any sense. In case you're wondering whether that's a reasonable consideration, check out this article: The College Scam.
Comments