Weekly Roundup: Student Loan Debt Edition

I believe student loan debt is a cancer attacking the financial futures of young people. While I do believe in the value of a college eduction, I wonder if taking on such exorbitant debt before earning an income is a smart thing.

I had a small student loan when I first entered college, and then racked up credit card debt when I returned to school several years later to finish. I joke that it took me 10 years to finish my degree and nearly as long to pay for it!

If you are already in college, and accumulating debt, consider other ways to pay for the remainder of school. If you are still a few years from college, or the parent of someone a few years from college, I hope the following graph will serve as a wake-up call of sorts. College is not getting any cheaper, and fewer of us are able to pay for it without going deep into debt.

Budget Planner from Mint.com

Frugal Roundup

How Living a Frugal Lifestyle Has Changed My Thought Process. I’ve noticed that my thought process has changed just like in the article. Things that we used to frequently spend money on are not even close to making the cut today. (@Being Frugal)

So You Want My Job: Magician. This isn’t really personal finance related but I still thought it was interesting. I think all of us wanted to be a magician at some point in our childhood. (@The Art of Manliness)

How To Replace Six Vital Documents. If you’ve ever lost an important document, you know how stressful it can make you life. Use this list to relieve some of that tension. (@Get Rich Slowly)

How Personal Finance Changes As You Begin to See Success. Trent shares some more insight into how things change once you begin to alter your financial life for the good. (@The Simple Dollar)

Best of the Rest

Comments

  1. Thanks for sharing this information! I’d add another way to minimize your student loan debt is to seek out grants and scholarships. They still exist, but require some work to get them.

  2. It took me seven years to pay off my student loan debt, partially because I put a portion of grad school on a credit card. Dumb, I know, but I was young and naive back then.

    My oldest son will be starting college in 2 years and I am trying to figure out the right balance for financing his education. I don’t want him to work himself to death so he doesn’t have time to study. But I want him also to have some personal financial investment in his education so he feels more accountable. I guess I have 2 years to figure out the right answer, if there is one.

    • It’s tough to find the right balance. Generally, the more you work, the harder it is to keep grades up. I worked part time my first year and a half and managed to do fairly well (A’s, B’s and the occasional C).

      When I returned to school, I worked full time, but made better grades. I attribute it to being “out in the world” for several years and learning how to study/filter out the BS properly.

      I think it is perfectly fine for college students to work, either a few hours while in school, or full-time over the summers, to fund a portion of their college experience. For instance, if parents cover tuition and books, students can cover meals and entertainment expenses.

  3. It would be interesting to see a comparison of student debt to cost of public schools by state. I also think cost of living has something to do with the about of debt a student has. It’s way cheaper to live in Utah than it is to live in DC.

  4. I sometimes hear people say: “There oughtta be a stupid tax.” But in my home state of New Mexico, there really is a tax on people who can’t do math. It’s called the lottery system. Every scratch ticket, PowerBall ticket, and MegaMillions ticket sale generates money that is used solely to fund education.
    If you graduate from a New Mexico high school with a grade point average good enough to get into any of the state colleges or universities, you can get four years’ worth of free tuition. You do have to pay for your first term (it’s refunded if your grades are good enough) and you do have to maintain a certain GPA. You don’t have to pay the scholarship back if you have to drop out, but I think you do have to be a full-time student.
    The people who aren’t eligible for lottery scholarships tend to be the people who have to support themselves or their families while working their way through school. If you drop out of high school because you’ve got to work to help keep the family home (this happened to one of my best friends), and finish by earning a GED, you’re ineligible. Same goes for if you have to work for a year to earn your first term’s tuition money.
    For a student willing to live at home while going to school, and willing to work through the summer for money for the books and other expenses, it’s very easy to graduate debt free. There are some quality programs at the undergraduate level especially in engineering, nursing, and pre-medicine.
    Unfortunately, fewer than half the students enrolled in the lottery program graduate within five years, and most students who do finish end up with debt because they refuse to work during the summer or on a part-time basis. Most insist on living “independently” in dorms or apartments provided it is at other people’s expense. The fashionable thing for parents to do to do is to send the children out of state for their post-high-school babysitting, and to saddle everyone in range with gigantic tuition payments and large amounts of debt.

  5. On-campus jobs are awesome during college. Other than scholarships, my parents covered my first year, but then I moved out and used my savings and 2 part-time jobs on-campus and 1 off campus to fund the last 3 years. I ended up “only” needing to borrow $8,000 from my parents that I was going to repay at 5% interest until they forgave the loan after I graduated.

    $8000 for a solid degree seemed like a good deal for me even if it was almost debt. Working the whole time also kept me focused and on task so I actually made better grades when I worked 3 jobs at once for 60 hours a week than I did when I only worked 1 job at 15-20 hours a week.

    But I had no life those last couple of years (except for occasional date nights with my hubby-to-be), which I do regret (not hubby, just the lack of other friends). My first year was way more fun but I made worse grades…

  6. Your opening line “student debt is a cancer that is attacking the futures of young people” is a very strong statement and depicts how you feel about student debt. There are students out there who really depend on student loans to pay for tuition and books. Should they be denied a college education because they do not have the funds? Student debt is manageable if you take it seriously.

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