“If college is not affordable, then by definition it’s not the right college fit!”
I was listening to WNPR recently, the topic was “Who makes the money off of student-loans?”
They reported some commonly known facts, that there are 42 million Federal Student Loans (Stafford Loan) totaling 1.4 trillion dollars, averaging just over $30,000, and a default rate of 25%. They added that the Federal Government makes several billion dollars a year in interest.
Student loans taken out with 3rd party bankers amount to much more than that, but the numbers are not tracked. However, it is known that several 3rd party lenders can make a few hundred million dollars a year in interest from their student loans, all of which are loaned through the parents. Ok, this is life in America in the 21st century, so what’s the problem?
WNPR’s commentator and guest argued the unfairness of the Government to make money on student loans (the Stafford Loan). They argued how wrong it is for private bankers to “live a great life while millions of students are struggling to pay their debt.” They further argued how unfair it is that these debts are not relieved by bankruptcy.
Is that the real problem? I don’t think so.
I did not hear mention that taking on the debt is a personal decision made by student-families who have chosen to take the loans to pay for college. This is a clear choice of the family and they know their responsibility for repayment.
I did not hear mention of the favorable rates and terms provided to student-loan borrowers, such as deferring the payments until six months after college. I am not aware of any other loans, mortgages or auto loans for example, with these terms.
While I am not opposed to the Government nor private bankers from making a profit on loans, a risky proposition at that, I am vehemently opposed to families taking out excessive loans to pay for college.
On average, parents student loan debt is three times that of their child’s debt. Therein lies the problem! If you have to borrow the money for college, then it might not be affordable. Just because a loan is provided doesn’t make it affordable. It’s time for parents to take responsibility in regard to student loans up front, rather than ask for forgiveness after the fact.
CollegeLogic works with families to reduce costs ahead of time and create affordable options along the way. This is how we help you get college right. It is not something to leave to chance later.
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