Fighting the Demon of Student Loan Debt
I met with a student this morning who is trying to figure out how to pay his tuition bill for the upcoming Fall 2012 semester. He already has taken out roughly $50,000 in Stafford Loan, and does not have willing parents, or sufficient credit, to take out a PLUS loan or a private student loan. This means that he only has $7,500 left to take out in Stafford loans before he reaches his lifetime maximum. Funny thing is, he does not seem worried.
I also asked this student how his job prospects looked. His reply? “Oh well, I suppose I will go to Grad School. I still don’t know what I want to do!”
This sounds incredibly stereotypical, but it was a real conversation I had with a student today. This is the same line of thinking that leads so many people to take out payday loans without thinking about the financial ramifications down the road.
So, how do we combat the student loan debt demon and avoid a generation of college graduates who cannot repay their student loan debt?
It starts in childhood.
I firmly believe that the student loan problem is a result of mismanaged expectations on the part of college students. All of their lives they have been told to pursue their dreams. Get a college degree. Conquer the world. Well, without trying to be cynical, it’s pretty difficult to conquer the world when you can’t find a job or pay your bills.
Being realistic and brutally honest about what it takes to become wealthy is a good start to avoiding taking out student loan debt. Having a clear plan to reach this goal will ensure that the education decisions a student makes aligns with their life goals.
One more thing to consider is that being wealthy is not the goal of every student, nor should it be. In fact, most of the happiest people (ok ALL of the happiest people) I know are not wealthy by the world’s standards. They live simple lives, yet are more fulfilled, and genuinely happier than their financially rich counterparts.
Just something on my mind on a rainy friday afternoon in the southeast…