Paying for College

Student Loan Debt = >$1 Trillion

How much is a trillion dollars? If you want to be staggered by a visual representation of a trillion dollars, check this out. As far as student loan debt goes, we're talking here about ONE trillion dollars. If you want your head to really spin off your shoulders, consider the current U.S. national debt of over 14 trillion dollars. The mind boggles. But that's a rant for another forum.

If you are currently in college, or you are the parent of a college student, chances are that you know something about student loan debt. You probably own some student loan debt. The College Confidential discussion forum has numerous posts from college students and parents who are in an amazing amount of loan debt. Some owe more than $100,000, if you can believe that.


The media have spent a lot of time trying to get us to understand the extent of this issue. Just for fun, I went to Google and asked, "How long to pay off $50,000 in students loans?" One link led me to this amazing answer: "If you pay $150.00 a month on principle it will take you 334 months to pay it off...that's if you pay the principle and the interest a month.. If you don't pay that much or don't pay the interest of course, it will take longer but at that rate it will take 134 months (28 years). They usually let you extend it 30 years." Pity those poor souls who owe $100,000. Let's see what one media source has to say about all this.

Dennis Cauchon, writing in USAToday, notes that Student loans outstanding will exceed $1 trillion this year. Here are some quotes from his interesting article:

Students and workers seeking retraining are borrowing extraordinary amounts of money through federal loan programs, potentially putting a huge burden on the backs of young people looking for jobs and trying to start careers.

The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.

Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what's owed on home loans and credit cards ...

... The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.

"Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children," says Mark Kantrowitz, publisher of FinAid.org.

"It's going to create a generation of wage slavery," says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.

Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports ...

So, what's a non-wealthy college student to do? Well, Google once again leads us to tons of links for the issue of "avoiding student loan debt." One particularly interesting article come from Kiplinger: 7 Strategies to Avoid the Student-Debt Trap, which includes this sobering testimonial comment: "Is it worth it to pay $200,000 for a liberal-arts education, especially if it means taking out loans? One of my twentysomething Kiplinger colleagues answers bluntly: 'If I had realized how much debt I was getting into, I would have gone to my state school instead of an expensive private college.'"

I would be curious to know your situation. How much college loan debt have you incurred? How do you intend to pay it off? Is the cost of your degree worth it? State your case in the comments section below.

And good luck to all of you!

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