My MoneyLife™ with Chuck Bentley
Friday, April 20, 2012
Student Loans 101
Transcript of Today's Program:
A recent article from Bloomberg News tells me that we’re in desperate need of a new college course—“Understanding Student Loans 101.” Bloomberg reported on a survey of over 13,000 student loan borrowers that revealed almost two-thirds of them don’t understand their loans and are often surprised when they learn about the terms the hard way.
One out of five students surveyed said the amount of their monthly payments was greater than they expected. Not surprising, since their average student loan debt topped $75,000. That’s scary all by itself. The survey indicated that more and more students are borrowing greater amounts for college and graduate school. That’s not surprising either, since tuition costs are climbing much faster than inflation.
The study also revealed that more than two-thirds of students with private loans failed to understand the differences between those and federal student loans. For example, private loans often have fluctuating interest rates. As a result, new grads are often caught off guard by how much their loan payments eat into their income when they begin their working careers. Only one out of four students surveyed believe they’ll be able to pay off their college loans.
Folks, this is serious business. The cost of higher education is no joking matter. It’s getting to the point where you have to question whether it’s even worth it—especially if you have to take out student loans. If you’re in school now, or getting ready to attend college, I urge you to consider your major very carefully. You have to make sure that it will provide you with marketable skills—that enable you to pay off any student loans you’ve taken out—as soon as possible after graduation.The alternative could be a lifetime of slavery to debt.