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Student Loans - The Cover Story
October 2013
 
 
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Tue, May. 2nd, 2006 09:47 am
Student Loans

I was just recently reading an article at CNNMoney, discussing the economic impact of student loans these days. I got off relatively easy thanks to the good people at Checkboard, who let me horribly abuse overtime so I could make my tuition payments, but I know several students who either graduated or are going to graduate at or beyond the $100,000 federal loan cap. Its really amazing how badly you're screwed financially by starting out your professional life tens of thousands of dollars in debt. $40,000 works out to around $3,300 a month, or about $2,310 take-home. Now, if you're in the $20,000 band of student loans, you end up paying $200-$350/month depending on the terms of your loan, but people up in the $60,000-$100,000 band are paying $690 to $1,150 a month to pay back these loans in their 10-year terms, and God help you if you took the longer terms, your $100,000 loan turns into nearly a quarter million by the time you pay it off in 2033. Given that rates are currently at 6.8% and not looking to get significantly better any time soon, its really tempting and, if you're not risk-adverse, financially smart to throw all of your 2.2-5.7% savings at the loan to pay it down, meaning that actually having a significant savings account will be a thing of the past.

Curiously enough, the practical upshot of this massive debt is that it actually cuts off avenues of career advance. If you have a college degree and are carrying around the student loans to prove it, you not only can get a higher-paying white-collar job, you have to. Entry-level positions in the industry of your choice, especially outside of engineering or hard sciences positions, may simply not pay enough to meet student loan payments, especially if the position requires other major expenses, such as a car and a place to live. Even more discouragingly, bankruptcy won't save you, thanks to recent revisions to federal bankruptcy law.

I'm starting to wonder where the line is that its simply not worth it to go to college.

Current Location: Skillman, NJ
Current Mood: melancholy melancholy

2CommentReplyShare

rgfgompei
rgfgompei
Rachael
Tue, May. 2nd, 2006 06:07 pm (UTC)

State school or scholarships. I would never have gone to a private school if I'd had to take out loans. I was lucky.


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verrucaria
verrucaria
E. Z.
Tue, May. 2nd, 2006 10:24 pm (UTC)

Yeah, I chose Clark because the aid they gave me rendered them the cheapest of all the schools I applied to (including UMass Amherst). (Of course most schools decrease your aid a bit from year to year, as you have more and more to lose by transfering, but even so, Clark was decent).

If you can make yourself look pitiful enough, it may pay for you to apply to decent (but not the best) private schools. Private schools, while more expensive than public ones, have a lot more aid to give...

Of course if your scholarship is grade-dependent and you slip up, you'll be more screwed at a private school than at a public one.


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