Student loan debt has escalated over the last 20 years as college and university students have seen student grants replaced by student loans. In addition fees have escalated out of all proportion.
Students and their families are expected to pay these inflated fees, and loans commensurate with these costs, have been made available to students to enable them to receive an education at college or university level.
The rationale behind the concept of student loan debt is that once the student has received a higher level education, they will be in a position financially to pay off their loan, as it is expected that they will end up in well paid jobs with the prospect of higher salaries as they progress.
The Reality of Student Loan Debt
Although this may seem acceptable on the surface, the reality is the young people who have access to these loans do not have the financial acumen to deal sensibly and effectively with them. The fees are generally paid directly to the institution, but the maintenance loans are the responsibility of the students. Many students regard the money as theirs to do what they want with, rather than seeing it is a loan that one day will have to be repaid. Some students spend the money having a “good time” with a “live now pay later” attitude.
It is vital that schools and parents educate their young people to spend wisely and to only spend what is absolutely necessary. All students go university to have a good time as well as to study, but in the present financial climate they need to understand the how to budget so that they can enjoy the best of both worlds, It may be worth suggesting they use a student loan calculator, to help with their budgeting. With a little care and forethought student loan debt can be managed from day one.
In the US a student who attends college for 4 years in-state will pay an average of $7,605. An out–of–state student will pay an average of $11,990. Taking into consideration other living costs a student can expect to leave a 4 year college course with a debt of at least $30,000 +
Is Student Loan Debt Worth it?
Although many will argue that student loan debt is a small price to pay for a college education and excellent employment prospects, there are other matters to consider. These young people are starting their working life in debt. They will grow up with the mindset that debt is ok. Many of these students will get excellent jobs but there will also be many who will not. This is a complex business and the present younger generation need to be educated on how to deal with their impending financial situation.
Given the above information it is unsurprising that, according to the US Department of Education, almost 9% of students have defaulted on their student loan repayments. This figure increases steadily each year. One of the main reasons for this is that many students have little understanding of the process. Many of them take out additional private loans to fund their education without fully understanding the implications and the repayment process
The whole area of funding is one that needs very careful handling both by the student and those who care for and educate them. Do your research and make sure you are not a victim of student loan debt.