Experts are concerned by the growing level of student loan debt, and its potential impact on our future economy. Especially concerning are the “private loans” students use for college, which can have variable interest rates as high as 20%. These differ from traditional “student loans” which are backed by the federal government and have controlled interest rates. In 2001, private loans in the U.S. totaled $4 billion, while in2006, they totaled $17 billion.

The increase in loans is due, in part, to the significant increase in the cost of college tuition over the last decade. And for those in careers that aren’t typically lucrative, the student loan burden can feel even heavier. It is reported that over the last 10 years, consumer prices rose 29%, while college tuition and fees rose 65% to 79%.

The main concern is that young adults coming out of college will be so burdened with student loans that they will have to delay purchasing homes and do without some luxuries in favor of paying off the student loans.

While the concerns about student loan debt are real, and the financial burden is undeniable, this issue must be kept in perspective. College is a choice, and students may need to plan their finances more carefully to avoid a huge loan burden. More students may have to work while going to college or look for alternatives to help control the costs.

6 Comments

  1. Rachel 10/02/2007 at 1:49 pm - Reply

    Too bad the cost of going to college goes way beyond what a person can earn with unskilled labor.

  2. Tracy 10/02/2007 at 2:40 pm - Reply

    I disagree. There are very cost effective programs and lots of scholarships and financial aid programs. I do acknowledge that students may have to make sacrifices and may not be able to be full-time students. But I think for those who really want to get a college education, there is a way to do it. I did it.

  3. Sarah 10/10/2007 at 2:57 pm - Reply

    The entire system is still geared towards expecting kids to live on campus for a few years, to get the whole thing done in about four years, to do unpaid internships for two or three summers, to get good grades, to get some meaningful extracurriculars in (preferably with leadership experience) and to do the whole thing at the best possible college they can get into, and to get good grades while doing it. And most of the loans are still coming out with a projected 10 year repayment schedule, even though wages haven’t kept up with tuition at all.

    Especially when you examine the relationship between government subsidies (including loans) and the spectacular rise in tuition and fees, the whole thing really does look more than a little unhealthy.

    Full disclosure: I have about $40k in debt, which is as low as it is because I worked during the school year and got several scholarships, including a co-op dorm scholarship that saved me about $6k in my first two years. I just love questions like “what do you want to be doing in five years” and “why do you want this job” during job interviews, because the honest answers would be “I’d love to go to grad school, which is what I’d been hoping to do until I realized what kind of repayment schedule I would be facing after four to six more years of tuition at even a state school” and “would you like to see my repayment schedule?,” respectively. If I went to law school, for instance, fear would keep me at the lowest-ranked schools possible, because there’s no guarantee that $70k in debts could ever be repaid, and the lower tier schools would let me go for free thanks to my GPA and LSAT score.

  4. outback71 10/11/2007 at 6:12 am - Reply

    The upside to an increasing debt load is that students and their families will start to look for cost-effective alternatives. That may put downward pressure on tuition.

  5. Joel Kellum 08/07/2015 at 3:35 am - Reply

    The lending services are borrowing the money at .75 percent interest rates from the Federal Government…. so lending our money… and then charging exorbitant fees and interest for that money.

    at 6 to 12 percent interest rates they are 600% over to 1,200 percent over what they are getting the money for in cost!

    Then they can capitalize the interest into the principal… something not allowed in any other financial services industry.

    Does Albert Lords really need to earn 35 million dollars in pay as CEO for this organization?

    This is as Unfair a Business Practice as they come… and it is time to say enough is enough.

    Doesn’t this violate lending laws in most states these Usary percentages?

    Where are the State Attorney Generals? Step up and lets put an end to this nightmare before everyone is scared to go to college and educate themselves.

  6. BOB 08/12/2015 at 12:49 am - Reply

    I’ll start on a seemingly unrelated (but related in a way) point, you can literally spend WEEKS on end watching videos from 30 sec log to several hours, where often times very rational sounding men/women will lay out for you all sorts of great reasons why the entire US economy is VERY SOON collapsing and mean totally, like run for hills time collapsing and many more who’ll tell you the entire world economy is in the same spot. Some of them just were posted today while others were posted in 2010 and apparently must’ve been a bit off on their timing! I for one have not yet packed my “go bag” and am not standing ready to run for the hills.

    This whole “student loan debt crisis” reminds me of those “sky is about to fall” videos in a way, but it makes me far more nervous for the future of our nation and world. Since I’m 41, I’m a little older than most of the people raising hell over their loan debt, although some “non-tradtional” students my age and above are in it as well.

    My first question is, why in the world are you angry with the finance companies to no end, like in Joel’s post above ripping the CEO of whatever making $35M. (I’ll agree, that’s a lot but that’s up to whoever owns that company, publicly or privately held)

    Why aren’t you raising 10 times, 100 times, heck why not 1000 times the hell for the admin of the college or university you attended and paid through the nose for, before you spend even one second complaining about what at most is a gray area or the law and I’d be willing to bet is not in violation of any laws? The finance company loaned you that money, just like you can borrow for a home, a car, a boat or many other assets, but the administrations of so many universities and university systems have been the people FULLY IN CHARGE of this disgustingly exponential explosion of tuition costs over the last few decades-WHY IS SO LITTLE OR NO ANGER AT ALL DIRECTED AT THE PEOPLE WHO CAUSED THIS ENTIRE PROBLEM??!!!

    I’ll tread lightly on this part, don’t want to end up in any ridiculous merry go rounds of left vs right, Dems vs GOP crap here, that will go on for months and everyone will lose out in that discussion, mainly in wasted time and being from WI, I know that walking into a bar and saying “I love Johnnie Walker Black” just might lead to some guy running up and saying “Did you say you love Scott Walker??!!” right before he blindsides you with a hard punch in the face, so I DO NOT want to get into any endless arguments about that stuff, but seeing the current students at my alma mater, UW-Milwaukee on the news doing some sort of walkout over the proposed cuts to the ridiculously wasteful UW System (all totally organized and ginned up by guess who? Yep, the UWM administration!) and of course they’re all yelling and screaming about Walker, YET WALKER IS THE ONE WHO PUT THE IMMEDIATE FREEZE ON THE TUITION YOUR “FRIENDS” IN THE ADMIN, ALONG WITH THOSE PROFS WHO, ONCE TENURED GET PAID A GREAT SALARY FOR WHAT FOR MANY IS A COMPLETE JOKE OF A JOB, WHY THE HECK ARE YOU YELLING AT WALKER AND NOT STORMING EVERY LAST ADMIN OFFICE???

    Now, I’m not nearly as far to the right as Walker is and don’t fall lock step into place behind whatever he wants, not even close, but this student loan crying movement scares me about the future here far more than a week straight of you tube “economic doomsday” videos! I graduated from UWM in 1998 with an accounting degree, although I had basically zero interest in going into accounting or ANY office job, I wanted to have my own small biz and now I do and I can tell you, if I could just spend the time I spend complying with yet another inane regulation’s paperwork instead on my biz work, I’d be a LOT farther along. I had some OK profs, some awful ones and some great ones, one of which I still email at least monthly (he’s not retired) but he freely admits that the whole tenure system when combined with the other craziness profs are even encouraged to pull (like how about seeing something online about say, Finland and thinking it looks cool, so just let the school know that soon you’ll be doing a “sabbatical” or maybe some “research” and you’ll soon be moving to Finland and you’ll see them in a year. Oh yeah, please make sure my FULL PAYCHECKS get sent to this address in Finland too!

    Time to get mad as hell at the people who are REALLY screwing you (and since I saw my tuition skyrocket during the 90’s, I can be mad too!) and the people who are REALLY ripping you off are these colleges admins!!!! ITS THE PEOPLE RUNNING THE SCHOOL WHO ARE RIPPING OFF, OR ARE RIPPING YOU FAR, FAR MORE THAN SCOTT WALKER, ANY FINANCE COMPANY, ANY OTHER GOV’T POLICY, ETC!!!!!!!!! Yet, just like a herd of sheep, after getting lied too by their profs, etc they all walk out on cue as organized by the admin, yelling and screaming and wanting the debt to just magically go away. Great, can I make a homemade drum and get my mortgage gone? How about a car loan? A boat?

    That’s what’s so damn scary, YOU made these decisions, YOU are an adult and not only do you want some magic wand to appear and wipe off your massive debt, just like when mommy used to clean your messy room, but you’re so easily manipulated by the REAL THIEVES!!!

    PS-For anyone who CHOSE AS AN ADULT to attend an expensive private school and then CHOSE to get some BS degree that we all know damn well leads to no jobs, I don’t feel sorry for you at all!!!!

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