Debt. That one concept has put America into precarious territory. That's the Big Picture. The Small Picture is you and me. How's our debt profile?
When it comes to paying for higher education, things can get a bit hairy, especially these days. There is a real concern for those who need financing, as this news item reveals [excerpts]:
For-profit colleges' increased lending prompts concerns
The schools still make money because the practice boosts their enrollment and brings in tuition dollars subsidized by the government. But some of these students could end up saddled with high interest rates and loan payments they can't handle, a burden that could damage their credit for years to come.
. . . Many students at these schools get thousands of dollars in tuition grants under various government programs, and take out loans to cover the rest of their costs.
But because the economic meltdown has made it harder for students to get bank loans, several of these schools are increasingly stepping in, financing degrees in the same way a furniture store or used-car dealer might extend credit to customers.
These schools call the practice a lifeline for students who couldn't otherwise afford an education. And in some cases, students may find better terms than they used to get from lenders like Sallie Mae Corp., which have recently cut way back on student loans to high-risk borrowers.
But some experts worry students will get pushed into loans they shouldn't take . . .
"It's very alarming," said Deanne Loonin, director of the National Consumer Law Center's student loan borrower assistance project. The colleges "can structure the products in all kinds of ways — things like revolving credit lines, unsecured loans, even secured loans. It's this new thing and we're worried about it." . . .
What's the lesson here? As always, get some advice from someone who has experience in these areas, such as a debt counselor or even a friend or relative who is familiar with the real cost of debt. Also, do a cost analysis that will give you a general idea of the cost-effectiveness of long-term debt versus the income potential of certain fields of employment, that is, whatever field for which you're borrowing to study.
In your eagerness to get started learning, don't throw caution to the wind and sign up for loans that can lead to buyer's remorse. Debt has a corrosive effect. One might even use the term "toxic." If ever there was a situation that calls for calm, objective, dispassionate decisions, it's how to pay for higher education.
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