Student Loans: Get Ready to Double Down

Like most young adults with a college degree, I have student loan debt.  Since I am back in school going for a terminal degree, I am again faced with adding to that debt each semester.

Millions of Americans are paying off some form of student loans, 2011 graduates having on average $27,500, 2013 reaching closer $35,000.  Looking across our nation, over $1 trillion dollars in student loan debt exists.

Loan bills are becoming so crippling for some that purchasing a home, getting married and/or having children are being put off till later.  And yet, universities continue to raise tuition, grants and scholarship funding is decreasing and now without action from congress the interest rates on some student loans will double.

The reason I write this post today is due to the fact that unless congress acts, student loan interest rates will double.  The deadline was today, July 1st to reach a deal.  The Washington Post reported that Subsidized Stafford loans will go from 3.4% to 6.8%.  This possible new rate would only affect new loans taken on or after July 1st, 2013.  But still this would be over 7 million students, I one of them.

In this same article, a student was interviewed and stated she would probably end up working more.  On-campus student employment has shown to be a great source of engagement for students, however pushed too far and negative effects in the classroom, overall college experience and completion rates will suffer.

More students are working while going to school to make ends meet.  Over and over research from college student development theory has proved that students who work more than 30 hours per week are more likely to drop out.  In a students attempt to afford college, with or without loans, ending up catching up with them anyhow.  PBS showcased an article and calculator that explores if working during college to pay off school is even possible.

Are you one of the many swallowing a student loan payment each month?  If the bill is becoming unbearable, there are options of you, including loan consolidation, income-based repayment (IBR) and Pay as You Earn Repayment.  There are also options for forbearance and financial hardships.  Know you have options, I will admit I have taken them, especially the first few years after graduating college.

Those in my boat, with existing student debt behind me and more to come, stay tuned to this issue.  It could add-on around $2,600 to your ending total.  There are a few proposals, such as from the House of Republicans and President Obama of which would align student loan interest to the current market (sound like the housing market to you?!).  In Obama’s proposal, the interest rates would remain in effect for the life of the loan, as compared to the House of Republicans which would vary year to year.

My doctoral program has empowered me to challenge, ask questions, and even stir up a bit of controversy.

So I ask:

Will we ever reach the equivalent of the housing marketing crash within higher education?  Will the cost of education outweigh the value of the degree?  Or, are we already there?  

Many industries require more than a high school diploma, so are we giving students no other choice than to take on student debt?  Let’s not forget about their parents, who may choose to take out a second mortgage or a Parent Plus Loan.  Has college degree attainment turned our country into a system of an educational ball and chain, a necessary evil?

To this I say, choose wisely in your degree.  Especially if you are taking out student loans, to ensure you will be earning an income enough to cover your basic needs, hopeful savings, as well as your student loan payment.

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