Why Do Student Loans Cause Stress?
There are more 44 million people who owe $1.5 trillion to the government in student loan debt. This is the second largest amount of debt after mortgages and is hundreds of billions more than the total credit card debt for all Americans.
The average student loan is $34,000 per individual; however, there are over 2 million individuals who owe more than $100,000. I can only assume that those people either went to law school, medical school or for additional advanced degrees, however, I do not want my son to belong to any of those groups.
The students repay the loans six months after they graduate from college. They assume it that within six months of graduation people will find a job and start the repayment process. The approximate payment is between $250 and $300 monthly and could take anywhere from ten to twenty-five years to pay back.
They say student loans are more than worth it because they help graduates get better jobs and get their careers on track, but I disagree. Yes, by having a college diploma, doors will be open to you, but it does not guarantee a job.
Just imagine that six months after you or your child graduates, he or she has not found a job and is getting bills for $250 or more every month. I can only imagine that if it were to happen and I had no job, it would stress me out. I’m certain that many graduates feel the same way.
- Student Loan is $1.5 trillion.
- Second largest debt after mortgages
A little over 7% of the population owes the government for their student loan, and 11% of that 7% are over 90 days delinquent. There are many people who never even completed their studies and got a degree and they still have a loan they have to pay back. Add to that the fact that a student loan will not be erased by claiming bankruptcy.
Student loan debt has been on the rise and there does not seem to be a slowdown soon. I cannot imagine my son starting out in life with such a financial burden on him.
Many graduates can’t find the job they are looking for and are back to living with their parents, and this lifestyle is on the increase among millennials. Home ownership is on the decline, people are getting married later and having fewer children because of their student loan.
The ones that are enjoying this are the colleges and universities. The government allows students to take out the loans, and the colleges know this. So what do colleges do to reward the students? They raise the tuition. Sounds like a racket.
If you look on a campus near where you live, you will see new buildings, expansion and growth; add to that a high six figure income for college presidents, which the student loans pay for. In the meantime students are broke and in debt after they graduate.
This is not a well thought out system; at least not one in the best interest of the students.
I consider student loans bad debt because you can’t write it off in your taxes, it can affect your credit report, and it might hold a person back from getting a loan for something important that they need.
Now we know that not having any student loans is a good thing, we need to figure out how to avoid having one. Getting a scholarship or a grant can be one solution.
From my perspective I see our economy, workplace and careers changing in the next five years and will continue to change from there. I see fewer employees and more independent contractors. These changes will reduce full time employment and will make it more difficult to find a good paying job.
The days of working for one company and getting a pension is long gone. Employers don’t want to pay benefits to their employees so they hire part-time employees.
As our society is changing including careers and the workplace, there are opportunities out there; you just have to find them. If you can’t find any, then the best solution is to create one.
Many young people start an online business while in high school and end up as millionaires by the time they graduate college. I don’t want to make it sound too easy, but it is easier than you think.
This blog is the start of my family’s adventure into generating income to finance my son’s higher education, and continue working our plan to not take out any student loans.
I have discussed this with my son and he and a close friend are working on creating a YouTube Channel. I’ll keep you informed on their progress as things develop.
Before I end, I want to mention that not only are student loans bad debt, so are credit cards. Americans have a tendency to spend more than what they earn and they get in over their heads with high interest rate debt that takes a long time to get free from.
We live in the richest country in the world and half the population is broke and/or on government help. Something is wrong and I don’t want my son going down that path and neither should you.
I’ll get into more detain about this topic in future posts.
Have a great day!
Goulash