What’s the Problem With Student Loans?
- Jason Cabler Celebrating Financial Freedom
- 2013 3 Jul
Student loans have become a huge problem in the U.S., and they are eating our lunch financially.
Total student loan debt now exceeds $1 Trillion, with the average college debt per person rising to $26,600 in the last year.
Student Loans Have Future Consequences
Over the last couple of decades, borrowing for college has gotten to be the default way that students pay for their higher education. But most students don’t think about the future consequences of taking out those loans. They’ve been told that they will be able to pay them back once they start their post college career.
But the fact is, starting out life and a career in a financial hole is not good for anyone, (except maybe the banks).
What many, if not most, of these students don’t realize until they try to start paying off these loans, is that they end up taking a serious toll on their future happiness, well being, and freedom.
Because large amounts of debt gets in the way of living the life you want. It diverts money that could be used for other things.
According to a survey done by the American Institute of CPA’s, of people with student loan debt:
- 41% reported that they have delayed saving for retirement
- 40% have delayed buying a car
- 29% have put off buying a home
- 15 % even said they delayed getting married because they were so deep in student loan debt.
Most of the people surveyed said they had no idea it would be so hard to pay off their college debt when they signed up for it. In fact, 60% said they actually regretted taking out student loans.
College Debt is Hurting the Economy
SEE ALSO: Rethinking College Loans
Not only is this huge level of college debt affecting the personal economy of millions of people, it’s also affecting the economy as a whole.
Let’s face it, when the average Joe is bogged down with student debt, there are fewer new cars being bought, fewer houses being purchased, fewer businesses being started, and the overall economy suffers because of it.
The sad thing is, this could have been avoided.
Plan for College With a Different Mindset
SEE ALSO: Financial Q&A: Investing for College
Students and parents have to learn to start thinking differently when it comes to financing a college education.
You CAN get a good solid education at a cheaper college.
You CAN do it without student loans (read about this guy).
You CAN work and go to college at the same time.
SEE ALSO: How to Help Your Kid Prepare for College
We have to stop listening to the college admissions staffers who push these loans because they are easy, guaranteed money for the school.
We have to realize that any time the government gets involved in helping people finance anything on a large scale it fundamentally changes the market. The result being that the easy money becomes a bonanza for the colleges, and a ball and chain of educational debt around the ankle of the average American.
It’s Never Too Soon to Make a Plan
So if paying for college is in the future for you and your child, remember, it’s never too soon to make a plan.
In my next post I’ll share with you a few ways that students and parents can think outside the box when it comes to avoiding student loans. You’ll learn all about how you can pay cash for college and keep from being another college debt statistic.
Until then, I’d like you to answer a couple of questions.
Did you take out student loans to pay for college?
Has paying them back hampered your life in any way?
Leave a comment and tell me about it.
Article originally published on Celebrating Financial Freedom. Used with permission.
Dr. Jason Cabler is a Christian personal finance blogger, author, and speaker. He teaches how to get out of debt and live a debt free lifestyle through his Celebrating Financial Freedom blog and self study course. His book How to Budget: The Quick and Easy Guide to Making a Budget That Works is now available (more info here). He can be reached for interviews or speaking engagements by email, and can be found on Twitter, Facebook, and Google +.
Publication date: July 3, 2013