I read this article on USA Today about the pressures of paying off students loans. I can certainly relate to this pressure as I have spent the majority of my extra income from the last 4 years paying off over $50,000 in student loans years earlier than I am required. I may have made a choice to pay down those loans early, but I’d rather get rid of debt as quickly as possible.
I found a few things interesting about in this article. First, how hard student loans are to discharge through bankruptcy. The article seemed to indicate it was easier to discharge gambling debt through bankruptcy than student loans. This doesn’t seem right to me.
The second thing I found interesting was regarding the cost of private loans. Private lenders claimed that once the law disallowed the discharge of private student loans that these loans would become cheaper. According to the article, the interest rates on private student loans have not become cheaper. I don’t know enough about the current private student loan environment, but from my own experience, as the interest rates have dropped, so to have the rates on my remaining private loans. This is probably because the interest rate on my loans are variable and tied to the market rate.
I certainly think that the government needs to take some action to give students relief from their loans especially in the current tough economic times. The banks that gave these loans out have certainly been granted billions of dollars in relief. I see no reason why students can not be granted some relief as well. The article makes an excellent point that many students can not afford to search for a job in a career related to their major because they are taking lower paying jobs to keep up with student loan payments.
The final point I’d like to make is that student loans can be both a blessing and a curse. They can help students pursue their dreams but sometimes at a fairly steep price. Looking back, I wish I had paid out of pocket for more of my college costs. Starting out with a negative net worth and mountain of debt is no fun as recent graduates are quickly coming to realize.