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The Dark Side of Student Loans

Remember your college loan? Mine was under $100 a month, pretty affordable even on my paltry salary in 1982. College costs have skyrocketed since 1980, and yet the financial aid formula expects parents to live on $27,000 a year, giving the rest of their income; and just about all their savings, to the college of their child's choice. Of course, the colleges cheerfully suggest loans, and hand out Stafford loans which are currently at 6.80%.

We did some calculations.

If a student takes out a principal amount of $5,000 a year in loans with a 10-year payment period, his monthly repayment will be $292.59 a month.

If he takes out $20,000 a year (which is a necessity at many private colleges which may cost $47,000 a year) his monthy repayment would be $1,170.38. Even in the best case scenario where a student graduates with a degree that's in demand and is making $40,000 a year, his take-home pay would be $2,145. Take away the $1170.38 he's paying for his student loan, and he's trying to live on $974.61 a month. Try paying for rent, food, transportation, and other essentials, boys and girls.

To really make your blood pressure rise, listen to this NPR segment, and read the comments.
The Dark Side of Student Loans http://www.onpointradio.org/shows/2009/02/student-loans/

Comments (6)

Scary stuff. It is even worse given that so many parents had their kids education funds invested in the stock market. ARGH It makes the $ 87.65 a month I paid seem like a trifle.

Amy,
It is so scary to think about all that. I am still paying for my student loans, although I do feel lucky as I had half a scholarship and worked to pay for most of my tuition, but going to the University of Michigan was not cheap, I still had to take a loan of 14000 for my four years. Luckily I was able to consolidate and lock at 2.2%. I make okay money, but it is still a good bit paying for these loans. If I had to do it all over again, I would take my scholarship money to some college where it covers tuition.
I do feel for everyone who is trying to get a student loan in these hard times.

I think I paid about $300 something a month but nothing near $1,170.38! That is ridiculous! What are these colleges thinking? It must be very frustrating and upsetting.

Marcia:

You have my extreme synmpathies. Mine, like yours and others, were so much more manageable. I am just grateful that our children chose to attend various campuses of the University of California and thus our salaries supported their expenses. I consider the fact that they are college debt-free to be a large part of their inheritance. Good luck.

Terry (teaberry):

I can commisserate, Amy, and I only had to put ONE kid through college. It's really obscene. My son came out with $30K debt, and it's not easy for him, believe me.

GAH. I paid 75 bucks a month for the ten years after college. Facing a huge wall of debt after university seems to make a person want to think twice about going at all. Everything is just so expensive -- education, health care, a car payment and insurance, rent....how will young people be able to afford to live unless they either stay with their family or move into group housing? It was rough in 81 when I graduated during the recession. But I do not envy what young people face today.

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