Good Luck Getting Rid of The Albatross
In the Rime of Ancient Mariner, Samuel Taylor Coleridge writes of the protagonist's struggle to get rid of an Albatross that literally, hung around his neck. Coleridge might as well have been talking about government backed student loans.
Saving the discussion of whether getting more money into the hands of buyers makes College less expensive, we have created a system where nineteen year-olds are permitted to borrow hundreds of thousands of dollars (in effect the cost of a median home in most markets) without any sort of credit, collateral, or demonstration of an ability to repay. The lenders don't care, because the Federal Government has guaranteed the loans eliminating any sort consideration about the wisdom of making the loan.
According to the Wall Street Journal (citing the Progressive Policy Institute) the average debt load of all new graduates rose 24% from 2000 to 2010 even after adjusting for inflation. Graduate students are leaving school - sometimes without finishing - with $150,000 and $200,000 in debt. They call it a "noose around my neck" and "enslaving." 27% of borrowers who have begun re-payment are classified as delinquent. It is the new fiscal time bomb of our own making over the past thirty years. It is so massive that the Consumer Financial Protection Bureau pegs the total outstanding student loan debt in the United States at $1 Trillion dollars.
Guaranteed Student Loans are not dischargeable in bankruptcy (because then the Federal Government - that is federal income taxpayers like 53% of us - pays the loan) there is no way - other than death - to get rid of them other than to pay them off. Other than Credit Card Debt, the single most common problematic debt callers of the Dave Ramsey Show face is Sallie Mae and student loans. Ramsey strongly - if not categorically - recommends and rails against taking on student loan debt - encouraging students and parents to explore other options.
It is a crazy senseless situation, and unfortunately the politicians will likely be unable to craft sustainable economic solutions because it seems heartless and hostile toward students. Student Loans are like crack cocaine - too easy to get and get hooked on - and a whole lot of work needed to get off them. Doing the hard work now, saving for College, making cost-conscious decisions about school, and working while in school is the smartest decision. Go to Community College for your first two years of Core Education Requirements, go to a state school, work like a banshee for three years in your chosen industry and save money for College - all of it can be yours if you are willing to wait.
No comments:
Post a Comment