PAYING FOR COLLEGE CAN BE DANGEROUS!

My overriding passion is to get people to take debt seriously and have a long term perspective on the negative impact of debt. One area that is almost a scam and, is almost as bad as the situation in the banking system, is student loans.

Some people do not qualify for government backed loans that typically run 6%-8% and are going to private lenders and this is not only frightening but almost highway robbery. These institutions can charge as much as 18% variable rates and more with upfront fees that can be as large as 10%.

The figures that are coming out are awful. In the 2007-2008 academic year private lenders accounted for 20 billion dollars in loans. Students are graduating with student loans upwards of $100,000 easily.

If you know anything about compound interest, if you are paying 18% interest on a loan and just pay the minimum payment, you will NEVER pay off your loan. The average graduate takes at least 10 years to pay off college loans. Imagine starting out you’re working life with $100,000 in debt from one source not counting car loans or credit card debt! Not a pretty picture.

Both of my children worked while going to high school. They were also involved in band and sports and they graduated with good sized bank accounts. They did the same while going to college and university and both graduated with no debt.

At first they wanted to follow their friends, take out loans, and not have to work. We did not give them a choice. We helped out, of course, but they HAD to work.
When they graduated and saw how much debt their friends had and the monthly payments they had to make, they were glad they had listened to mom and dad.

Be very prudent in this area. It could cost you years of grief!

Jacques
CreatingWealthThatLasts