Saturday, February 11, 2012
College debt has been treated with very little regard for the day of reckoning by students and parents of college students. Today the debt balloon stands at over $1 Trillion dollars and climbing on a daily basis. FAFSA and college is for the most part a gigantic loan program that has to be paid back.
College "aid" is not a freebie but more like a big fat line of credit that will have to be paid back upon graduation. Interest rates run from 3.5% to 8.5% depending on where the loan came from and who the underwriter is. Another nasty part of college debt is it can't be discharged in bankruptcy. It will follow you to the grave unless paid off sooner.
Parents and students have bought into the nonsense that it make a huge difference where you get your degree. The reality is it takes and education as well as someone who knows what to do with their education, good people skills and a host of other things. The biggest factor is the course of study and will there be a demand for your degree upon graduation. Liberal Arts may have opened a door 20 or more years ago but today it will qualify you to flip hamburgers.
The critical reality of education is High Schools are College Prep places for the most part. Colleges have dumbed down college to accommodate and encourage all manner degree programs that have no reasonable odds of employment upon graduation. Additionally, there are abundant for profit colleges we see on TV who accept anyone willing to sign on the dotted line for the expense of their "college".
A lot of students would be far better off to go to a trade school or community college offering a course of study with a real job waiting upon graduation. It makes no sense to attend a well known college and come out of the experience with nothing but a huge debt and no prospect of a job to pay back the costs of attending. Two-thirds of college grads come away with a debt of $25k or more. Many end up moving back in with mom and dad and no job.
Caveat-emptor when it comes to taking on college debt. There are lots of colleges out there with the intent of doing little more that fleecing parents and students of their money. $1 Trillion in college debt is the latest bubble out there about to burst.
One-third of college grads end up taking jobs that do not require a college degree.
Here's a link to PBS NEED TO KNOW and a very excellent segment on college debt: http://www.pbs.org/wnet/need-to-know/ young lady in the Need to Know piece ended up with $65K in college debt and the interest meter is ticking.
Posted by Paul Alldredge at 1:53 PM