As the college ranks swell, student loan debt grows. Students borrowing money for college have racked up a higher amount of debt than those people who have financed any number of things in life with credit cards. In fact, the amount of money individuals while students have borrowed to finance education and its relevant accessories is about to blow by $1 trillion and gain momentum into the future. The debate about “good debt” versus “bad debt” has intensified when it comes to student loans because of the outsize dollar amounts owed and the arduous future of loan repayments that lie ahead for most graduates.
Tuition increases mean an increase in student loan debt
Student loan debt was something less than half of the students graduating with a bachelor’s degree had in 1993. By 2008, the number of students graduating in debt had risen to two-thirds. The average debt students left with in 2009 were $24,000. The total amount of student loan debt is supposed to get to at least $1 trillion in 2011. It is expected to continue to grow rapidly. The Pell grants are ones the Republican Congress members want to cut. This is a financial aid lower-income students can get. The current generation of college students may have to deal with these changes as there have been tuition increases while universities and colleges are getting funding taken from them by the states. There has been more than just a rise in student loan debt. Student loan default has also increased. Credit damage, also as burdensome student loan payments for those who do not default will limit the range of possibilities when it comes to buying a home or having children.! Anyone who has kids may have to choose between paying off their student loan debt and saving for their children’s college education.
There is some good debt
When it comes to debt, student loans have always been considered “good debt,” as opposed to “bad debt” such as credit cards, auto loans or payday loans. It is considered bad to take out any debt though, now the recession is done. As long as the degree and salary from that degree are able to very easily pay back the debt, school loans are considered good debt even though the College Board explained a four year education is over $37,000 a year now. Most financial advisers suggest that individuals don’t borrow more than they could make the year after they graduate. The risk of student loan debt is there with that though. Finding a job that pays off the average cost of college with a degree in sociology or history is unlikely. There is less of a risk in degrees for instance medicine or engineering. More debt has to be taken out with them though.
Bottom line: debt is risky
When it comes to good debt versus bad debt, the bottom line these days is simple: all debt is bad if you can’t pay it off. Right now there is a huge default rate. In just for-profit schools, the rate is almost to 50 percent. Bankruptcy doesn’t get rid of student loans. For federally guaranteed student loans, the government can garnish wages, withhold tax refunds or dock Social Security payments. Anyone who pays the 15 percent of income for 25 years, or 10 years in a public service position, can have that debt forgiven which the Obama administration has done to help those in low paying jobs.
Information from
New York Times
nytimes.com/2011/04/12/education/12college.html?_r=1&emc=eta1
Creditcards.com
creditcards.com/credit-card-news/does-good-debt-still-exist-1264.php
care 2
care2.com/causes/education/blog/student-debt-for-college-likely-to-exceed-a-trillion-dollars/
No comments:
Post a Comment