Recently I wrote posts that cautioned parents and students not to take on too much college debt.
Why am I being a nag? College loan debt can be toxic. My Exhibit A is a family practitioner in Columbus, OH, Michelle Bisutte, who finished medical school with $250,000 in debt in 2003. Today her college loan levels have swelled to $555,000.
One of the craziest charges was a $53,870 fee when the lender turned the loan over to a collection agency. According to an article in The Wall Street Journal she could pay off her federal loans when she is 70 years old.
The physician’s plight is obviously an extreme case and she acknowledge that her mess is maybe “half” her fault. College loan borrowers, however, can get into nightmarish trouble far easier than you might think.
Before borrowing for college, understand what you are getting into before you sign the loan papers.
Lynn O’Shaughnessy is the author of The College Solution and she also writes a college blog for CBSMoneyWatch. Follow her on Twitter.
There is a brand new website called http://www.LilysList.com which helps students pay down their student loans through a gift giving network. Won’t solve the huge student loan problem completely but it can help.
I, like many suckers took out loans to pay for college. It seemed like a good investment til the financial industry fell apart. Now, on my second career and much older and wiser, I am going to a community collge for Nursing and will graduate in 18 months. All of my math, science, and humanities credits transferred so instead of 70 credits, I’m looking at less than 40. At $100 per credit I’m looking at under 4 grand for a new career and with the Hope and Lifetime Learning Tax credits, I get to write off every penny on my taxes. With the economy being what it is, you will probably have to switch careers more than once in your lifetime. With that in mind, community colleges are a great way to get a great education, for a small price, and graduate with very little if any debt. 4 year universities are great if you can afford them but you don’t have to drown in debt for a good paying job. My advisor, informed me that her gards are starting at $50K locally with a $5K sign on bonus. If I graduate in 2 years and start working, I’ve already made $105K+ while someone with a 4 year degree is just walking across the stage in their cap and gown. Oh, I forgot to mention that I will debt free as well. You do the math!
I read this article and was astonished…and very scared. I work in the Financial Aid office at a publish Florida university and I see first hand how many loans student take out. Some students are only school for the loan money. It is a sad situation.