Don't tell me where your priorities are.

Show me where you spend your money and I'll tell you what they are.


-James W. Frick





Plan YOUR work! Work YOUR Plan!

Wednesday, June 5, 2013

Student Loans - On Everyone's Mind


The only thing in the news I seem to pay attention to these days is STUDENT LOANS...dun dun dun! Right, that's how I feel too. Those intense feelings of regret for making such a huge life decision without knowing what I was signing up for and dread at having that decision be the reason I am going to struggle for the rest of my life...unless I win the lottery or marry some old rich person who leaves me their fortune when they pass. I am grateful for the experiences of going to college and the knowledge you gained (academic and life) but sad at the life experiences I am going to lose because of the lack of financial opportunities due to looming loan payments.  

So, it seems that I am not the only one in major debt because of something I was told my whole young life that I had to do because it was the socially acceptable thing to do and would help me in my life. No, it wasn't like that for all of us...for some it was different in a good way, and some in a bad way. But for a lot of us this was how it was. We were always told we were able to do anything we dreamed of, but we were never told how we were actually supposed to get there.

We kind of did what we were told because it was easier than figuring it out for ourselves (we are the "lazy" generation after all). When it came time to go to college we signed all these papers and had no idea what we had signed. College was great, or it sucked...but we did it, or some part of it. (Real general, huh?) Point is, we went to college and now we have to pay for it. Problem is...college cost a lot of money and the job marked (and economy) is slightly underwhelming, to say the least. We owe all this money and can't pay it back. College cost so much money many of us could have bought a house for what we borrowed to pay for our education, but that is free or much cheaper in many other countries across the world...and paid off the house faster.

For the 2011-2012 academic year, the maximum Pell grant was $5,500. At public and private four-year schools nationwide, average annual tuition, room and board for full-time undergraduate students was $23,066 last year, according to the U.S. Department of Education. That's up 32 percent from 10 years earlier. What are we suppose to do about this?

It also seems that colleges and universities continually raised the price of getting an education and a couple other things happened...right as we needed all this money lenders stared lending it to us. It didn't matter if we or our families could afford to ever pay back the loan...and the interest on that loan.  We weren't told exactly how all this was being done, but it happened. We weren't told what would happen when the time came to pay the money back or that the economy and job markets were going to go bad right as we would be thrust into them. Yeah, we are kind of screwed. Worst of all...the lenders love that we can't afford to pay these loans back because they make more money when we can’t pay them back.

The government is sort of trying to help, depending on what your definition of help is. President Obama recently laid out a plan stating "rates for subsidized federal student loans would be set every year based on the market plus 0.93 percent, but remain fixed for the life of the loan. His plan, for instance, would lock in rates for next year's borrowers at 2.9 percent for the life of the loan."  But this is for future borrowers. 

From the same article, Republicans have a plan too..."The Republican plan, passed by the House last week, requires rates for subsidized and unsubsidized loans, known as Stafford loans, to be recalculated every year and pegged to 10-year Treasury notes, plus 2.5 percentage points. The plan caps interest rates for the loans at 8.5 percent. Under that plan, a student who borrows the maximum amount of subsidized and unsubsidized Stafford loans over five years would pay $14,430 in interest, according to the non-partisan Congressional Research Service. If rates double on July 1, a student would pay $12,598, compared with $7,965 at current rates."

As of July 1, if an agreement can't be reached student loans rates will double from 3.4% to 6.8% for future borrowers. That's not going to help...

President Obama introduced a new Pay As You Earn (PAYE) loan repayment program to help these new graduate. "The PAYE option allows loan recipients to pay back their loan in monthly amounts based on their income and family size.  The PAYE amount is to be paid over 20 years and is capped at 10% of monthly income." There's a lot more to it, so check out the article for more details.

Everyone seems to be talking about the problem and giving statistics on how we aren't paying our loans back because of this and that. About how our student loan debt is now larger than credit card and auto loan debt (Student loan debt stands at $870 billion nationally, surpassing the nation’s outstanding balance on auto loans ($730 billion) and credit cards ($693 billion)). How student loan debt is the next bubble to burst.  How we are spoiled and feel entitled and aren't as hard working as previous generations. Talking about the problem is great and all, but what about coming up with some real solutions?

• Student loan debt is rising at a time when other debt is flat or even declining. From the second to the third quarter of 2011, the nation’s loan balance grew 2.1 percent, from $852 billion to $870 billion.
• Fifteen percent of all Americans with enough of an economic pulse to have credit reports have outstanding student-loan debt. Two-fifths of people under 30 have loan debt, and 25 percent of those between 30 and 39.
• $85 billion in student loan debt is “past due,” and of that total, three-quarters is owed by people over 30. More than five million borrowers have past-due student loans.

We accumulated this debt at the same time the other bubbles were growing. Each of those bubbles burst and there were bailouts and new legislation and regulation so the problem wouldn't happen again. Some of the bailout went to the people and most went to the industry that caused the problem. Wouldn't it be great if this time more of whatever bailout is coming for student loans went to the people? The people who have their lives financially ruined before their lives actually started.

Weird, Different, and Strange Ways to Pay for College

- Karly Bealcher accepts donations on the internet using YouCaring.com, along with working 2-3 jobs and applying for scholarships. An eighth grader from Santa Rosa sells homemade toffee candy bars called "College Bound Bar" to help pay for her future college costs. Students finding creative ways to pay for college

- The Huffinton Post posted a list of the Craziest ways to pay for your tuition:
               - In Cash - "Nic Ramos may have taken this advice a bit too literally when he paid a semester's worth of tuition -- $14,300 -- in $1 bills." hahahaha Take that!
               - Ask Someone Else To Do It - "The bolder ones, like Kelli Space and Max Stephenson, are soliciting strangers to help them repay loans. But even meeker students can cash in on the kindness of strangers through websites like SponsorChange.org, CharityforDebt.org and Greennote.com."
               - Strum It Away - "If you don't feel comfortable straight-up asking for cash, you might want to follow Justin Cox's lead -- for one year, he plans to play in public for tips, which he will use to start repaying loans."
              - Live For Free - "Back in 2004, an NYU student made headlines by living in the school library for seven months because he couldn't afford to pay for housing."
              -  Barter - "In 2002, Lindenwood University introduced a "tuition for pork" program, which allowed students from agricultural families who demonstrated need to trade livestock for a college education."
              - Start A Business -  "Two University of Colorado grads turned their college woes into a clever start-up idea -- their business, "Hangover Helpers," offers to clean up your post-party dorm and bring you a hangover cure (Gatorade and breakfast burrito) to boot."
              - Freeganize - "Although dumpster diving may not be the most glamorous way to get food, some students say they can live off found food for weeks at a time."
              - Steal - (Yeah, not a good idea) "...in 2009, a Colorado pastor was accused of stealing $392 grand from his church to pay his childrens' tuitions."

- StudentBank.com lists 101 Ways to Pay for College

- Get a free education - MoneyTalksNews offers 5 Ways to Get a Free Education. Take courses for free...
            - Coursera
            - Open Culture
            - edX
            - Stanford
            - Your local library

So, yeah, student loans are a hot issues right now - for those looking to attend college and those who are buried under a mountain of student loan debt. The best thing to do, if you feel college is for you is to find a way, or ways, to pay for college without accumulating debt that is nearly impossible to pay back. We will do our best to let you know of ways to beat the student loan trap as we find them.


If you have a student loan story, tips, knowledge of grants and scholarships, or anything else that others might find useful share in the comment section.
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