How a College Degree and Student Loan Will Keep You Poor

Face it. A college degree today is a gamble, a rolling of the dice. Despite all the studies, many grads out there are kicking themselves in the head about the amount of time and money spent obtaining a degree in something that, well, is like a ball and chain around their neck. Granted, if you have selected the major properly, got 4.0 GPA, even with a student loan, you are feeling good and your entry salary. Unless you came from a rich mom and dad, where your subsistence was paid by them and college tuition, you probably have student loans that are causing you nightmares.

The student loan debt in the US is about $1 trillion dollars-that is an incredible figure that is owed by students and since many loans are defaulting, another catastrophe is in the making. Student loans are defaulting faster than when the recession began and have doubled. The reason is lack of jobs and lack of decent wages and other issues. Some students have debts hitting 75,000 upon graduating that translates into a monthly payment of $900, and when you only make $2000 a month working "not exactly in your degree field" it is depressing. Some grads who are pursuing a Masters have loans that consume 40% of their monthly income at some low level pay job like in a restaurant. Once students max out their better governmental loans, the only option is private loans and this is where things go whack! Whack because they have variable rates. A student loan can haunt you for life because these usually are not discharged in bankruptcy and there is no Statute of Limitations for collections. Deferring loan payments also are costly. One student funded their last two years of a private college with $80K in government and private loans to become an interior design. This loan rose to $100K by the time she graduated. Now, five years have passed, and she still owes $98K because of interest and she works as a low paid administration assistant. Some 25 years from now, when she is middle aged, she will have paid of the loan with $211K in interest and principle payments.

Hopefully, by then, she will be working in her field!

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Comments 13 comments

Blawger profile image

Blawger 4 years ago from California

Thank you for writing about this. Student loan debt is a major problem in this country. I pay over $2000 month in student loans every month. I made the mistake of going to a private university for both undergrad and law school and I took out loans for all of it. In total, I borrowed about $200,000. To make matters worse, I am on the extended plan so I will be paying $2000 a month till the year 2038. That's $2000 a month that I would have spent buying goods and services which would help the economy.


Dbro profile image

Dbro 4 years ago from Texas, USA

Interesting hub! My sons are facing this problem (they are about to graduate from law school). They are hoping to find jobs (hopefully government jobs that will allow some or all of their loans to be forgiven). I'm not sure what the chances of this are - causes some sleepless nights for all of us!


perrya profile image

perrya 4 years ago Author

@blawger-were you able to work as an attorney right out of law school? what percentage is your student loan payment of your net income? wow, 200,000!


debbiepinkston profile image

debbiepinkston 4 years ago from Pereira, Colombia and NW Arkansas

Thank you for speaking up about this tragedy for our young people. I'm wondering: Who says that kids HAVE to get a degree in 4 years and consequently either but their parents into bankrupcy, or graduate with $30-40-50,000 in student loans? My son-in-law graduated with about $60,000 in loans and won't have them paid off for years.

What about the option of working full time and going to school part time, pay-as-you-go? My son is doing this, and yes it may take him a few more years to graduate, but he won't be in debt.


perrya profile image

perrya 4 years ago Author

I am sure many are doing that.


BLACKANDGOLDJACK profile image

BLACKANDGOLDJACK 4 years ago from Blitzburgh area

Well, isn't this depressing.

I'm going through all this now with my daughter who is a senior in high school.

I want her to join the military and get her college paid for like I did. I keep telling her she would make a great soldier, but she's not buying it.


Healthy Pursuits profile image

Healthy Pursuits 4 years ago from Oregon

I've just gone through this, by returning to school in my 50's. There are a lot of loan predators out there, and no real regulations to hold them back from giving bad advice and catching students in huge, crippling loans.


perrya profile image

perrya 4 years ago Author

Student beware!


Blawger profile image

Blawger 4 years ago from California

Perrya- $2000 is about 25-30% of my monthly income. That doesn't leave me much for my bills. It took me one full year after graduating from law school before I found a job in the legal field. I had to pass the bar before I could get a job as an attorney. Luckily, my loans had a grace period during that time so I didn't start paying until I got a decent-paying job. I am lucky to have found a job but many of my friends didn't so they were forced to default on their student loans. To make matters worse, student loans cannot be discharged during bankruptcy so any student loan default is permanent. My only hope is the HR 4170 (The Student Loan Forgiveness Act of 2012) passes in Congress. I encourage everyone to sign the numerous petitions circulating in the blogosphere so we pass this important bill.

Petitions:

http://www.forgivestudentloandebt.com/nd/forgive/H...

http://www.forgivestudentloandebt.com/


perrya profile image

perrya 4 years ago Author

I guess it would depend if you went to renowned law school or a smaller one where tuition is only $8K a year. Of course, there are a few Internet law schools. They teach the same courses, use the same books.


Zinjenzo profile image

Zinjenzo 4 years ago from Boston, MA

When people sit down to consider college, they should always consider cost as part of the equation. Choosing a community college for two years, working full time while going to school part-time, completing college in 4 years (yes, it can be done) are all strategies. I would also say that students should apply to colleges even if they are expensive as they may get a great financial aid package from those schools. Then when they see the package, they can put their plan in motion with all the information.

There are certainly predatory loan practices and predatory for-profit colleges, that make students lives very difficult after they graduate, IF they graduate. High schools need to do more to educate students on what to consider when attending colleges, where to apply for scholarships, and how financial aid works in general.


jorge 4 years ago

just be a welder and a part time student


perrya profile image

perrya 4 years ago Author

Welders and trades make decent money with no college just a trade school- I agree.

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