Saturday, August 18, 2012

Even More on Student Loans

Feds shouldscrap/reduceinterest onstudent loans - Columns - The Guardian

I really think America should, along with Canada, take a serious look at forgiveness in regard to student loan interest. The article makes some great points. The main one would be insuring for the future. People forgiven of loan interest, or at least people with highly reduced interest, have one less thing to worry about. Spirits are pretty low because of a slow healing economy and job market. These are a heavy load to bare, adding student loans to that load doesn't help to lift spirits at all. These spirits are the spirits of people investing in their futures and subsequently the future of our country. Relieving borrowers--relieving us--of the mounting interests takes the heft out of a heavy load and brightens borrowers toward the future. It makes what's ahead feel a little bit more manageable. So I agree hardily with Wayne Young, but in regards to America as well.

Wednesday, August 15, 2012

More On Student Loans

Dollar by jayofboy

The rising problem of student loan debt has been in the news a bit lately. Not enough I believe, but that's more owing to the number of problems (and trivialities) being addressed in the news and the fact that the problem isn't at a DEFCON1 threat level yet. It's also a catch-22 situation, before the bubble pops (student debt bubble, housing bubble, what have you...) everything that's spoken, no matter how sure we are of the potential looming disaster, is speculation. That's why we can easily fall back on pondering on what needs to be done rather than taking action.

I realize there are people in congress trying to get bills passed* based on this issue and that it's hard to come up with a viable solution that we all can agree on, but all this doesn't defeat the fact that many people, like myself, need some kind of help now. 

* Like Richard Durbin, who seems to highlight my point well with the many things he's fumbling on his plate. (Contrast here, here and here.)

"Knowing then what I know now,[...]"

When reading about the student debt crisis I see that we have at least four culprits being mentioned regularly. 

  • The first is colleges. This is due to the rising tuition costs and a mediocre offering of financial counseling. 
  • The second is the lenders themselves, especially private lenders. Lenders are said to have a similar failures in financial counseling as colleges and universities. They're too quick to lend money to less than knowledgeable applicants and hard on providing flexible repayment options. Not only that but private student loans can't be discharged in bankruptcy since 2005, says the Huffpo article linked above.
  • The third offender is congress. Based on the same Huffpo article congress passed the 2005 reform bill that disabled the student borrower's ability to discharge student loans in bankruptcy. 
  • The last, and you probably guessed this from the article quote headlining this section, is the borrowers ourselves. Knowledge is power and without it, it is easy to end up looking helpless. Plus sometimes you can't count on the institutions, like the ones mentioned above, to do what you thought they were suppose to do. You are your own back up plan, just in case they do fail you.  

So I urge those college bound students, parents of college bound students, and people going back to school to better themselves to research thoroughly all aspects of higher education before making any one decision on anything. Understand, not just the college you plan to attend, but loans if you're getting them, and/or financial aid in general. Everything. Try to have as few blind-spots as possible.

 If I knew back then what I know now, that's one of the things I would have done better.