Jim Martin of the Erie Times-News tweeted an interesting story about college debt this morning that appeared in the Washington Post. Read it here.
Written by Melissa M. Horton, a deep-in-debt college grad, it is a frightening reality of what a lot of kids face. She is $100,000 in debt. She laments choices her parents made, choices she made and discusses Rep. Hansen Clarke (D-Mich.) proposed Student Loan Forgiveness Act of 2012.
She says “Clarke’s bill proposes forgiving as much as $45,520 of eligible student-loan debt after new borrowers have made 120 payments — equivalent to 10 percent of their discretionary income for 10 years — or would forgive any outstanding debt for those whose loans predate enactment if the borrower has already made 120 payments in the past 10 years. Even better, the forgiven amount will not count as income, so debtors need not fear paying higher income taxes for 2012.”
I don’t agree with a lot of the writer’s opinions, but she makes some excellent points. The bottom line is debt is excessive for many college graduates. The interest rates that kids are paying on personal college loans is much higher than any mortgage loan. If you have kids headed to college or in college, don’t let your babies grow up to be so deep in debt. What we’ve learned with six adult kids:
- All of our kids are in debt, but three out of four graduates spent at least a year or two living at home to save room and board money — that’s thousands. Yes that means they can’t go across the country to pursue a dream. I’m not knocking the dream, but only two kids really were focused enough to know what they wanted to do for life. Indecision is costly in college.
- All kids worked through college. It’s critical for spending money. Don’t borrow basic living expenses.
- Get advice from a professional who can help you figure out what to do financially before your start the loan process. Pay a financial adviser who specializes in college financing. Not just finances — college finances.
- Don’t bank on a brainiac or athletic scholarship. We have athletes and we have brainiacs. Regardless of how smart or athletic your child is, college is not free.
- Not every kid needs a college education. Some career schools offer one- to two-year programs that result in very specific jobs. Employers are begging for some positions, particularly in health care.
Stay positive. Support your teen’s dream but have a plan B and C. Two of our graduates changed majors more than once. Not everyone knows what they really want at age 18. Be prepared and be supportive, but be realistic.