My old friend, Jesse, sent me a series of instant messages the other day – referencing an old thread on student loans:
I was just reading your post from a few weeks ago about student loan debt. I wanted to share my view on this with you. You may recall, over the past year I have been serving as the student trustee on my university’s board of trustees: http://www.siu.edu/bot/
I would like to see a few things happen. First… Differential tuition. Charge students the cost of their individualized education. I am in the engineering school, which is one of the most expensive pieces of my institution. My professors cost almost 2x as much as some other departments do… and my lab equipment is really expensive as well. I should be pay proportionaly more than someone that it is english or education or social work (which are at the other end of the cost spectrum). Basically, this balances itself out because people that cost more to educate will generally make more when they graduate.
Then… Do away with the grant system and take all the money from it and fully subsidize loans for all students. If you’re going to college and you need money… You get a loan interest free. I have a philosophical problem with grants as they are currently implemented. Your education is about you… Not your parents… So i have a problem with telling one kid that his parents made too much money for him or her to get any help and another that since his parents are poor he gets to go to college for free.
Now… The argument for the current method is because poorer communities don’t have as much money in their public schools so the education is not as good. But i’d rather not just cover up the problem… Instead let’s fix it by detaching property taxes from school revenue. Anyway… I’ve done a lot of research and ran numbers and planned… This is my idea of what would make the system fairer and equitable for all. The other major flaw with the grant system is that with the divorce rate as high as it is… The numbers don’t calculate right with who is poor and who isn’t…
I started my student loan discussion by asking virtual friends about their opinions, which quickly spun out into a separate student loan debt entry. The more I started to think about it, the angrier I started to get.
I remember applying for student loans and being nervous about getting turned down. Sorry, but I grew up in the middle class – neither poor nor rich enough to afford a higher education that might keep me from being poorer and potentially help me find financial success. But the idea of student Financial Aid always pissed me off. I was bitter, depressed, and most importantly: offended.
It’s not right that we charge our citizens (of any age) to become a productive member of our society. It’s just… not… right. I’m not saying that education doesn’t cost money, but it’s no wonder why kids today see no hope for their own future – knowing FULL WELL that to get to the future, they’ll need to do the very thing they’ve been told by their elders not to do: climb into debt.
…what the hell kind of lesson is that? Oh, I’ll tell you what kind of lesson it is. It’s student loan corruption, at the highest levels:
America isn’t going to find salvation in charging its people to make America better – period, end of f’ing story. This isn’t about being conservative or liberal, Democrat or Republican… it’s about abandoning the institutions which have already abandoned their constituents. Rather, the institutions which have already begun to serve a completely different kind of constituent.
Student loans? Hell, this country should’ve paid *ME* to go to college.
Every May, a new group of students graduate from college and begin jobs. For many of them, large student loans put a damper on cashing-in that first paycheck. I was one such student – fortunate enough to have been given student loans, and unfortunate enough to be saddled with them. I asked my experienced contacts at Linkedin to give some advice to anyone struggling with student loan debt. For me, it was landing my first book deal. The advice they give, however, could also likely apply to consumer debt (which is a WHOLE separate issue).
shop around for the lowest interest rates and ease of use
lock in a fixed interest rate rather than a variable one
(if you can afford to) pay higher monthly payments to pay off your loan faster (with less interest paid)
make payments on time every time and if possible choose to have payments automatically deducted from your account – you’ll typically get a discounted interest rate, which over the years saves you thousands of $
You’ll need to provide more specifics about what you would like to know.
Are you asking about your own student loan debt or loan debt in general? Are you trying to pay it off? Are you wondering if you should pay off your student loan vs credit card debt?
I have a fair amount of experience with student loan debt (my own), and I would be happy to help you if I can.
I would suggest staying away from, or seriously reviewing the consolidation programs ‘fine print’. Most of the time, consolidating affords you a lower payment, but is actually just a longer time period, so the end results in a much larger payment. Much like if you bought a car and chose the 5 year plan versus the 3 year plan.
I would also suggest finding someone you trust with your finances (family, friend or professional) to help review your budget and figure out a workable game plan (without consolidating – unless you have to because your debt is larger than you can handle).
For me to get out of debt I needed to recognize that I could either keep accruing debt and always live a restricted lifestyle or just go hard at paying it off in 2 years and then live exactly how I wanted. I chose the latter and even though it was hard to do, I’m so glad I did.
Look at the Department of Education. I *THINK* you can consolidate your loans directly from the government. The bonus there is that you can change your repayment plans to lower your monthly payment if you need to.
Chris – I don’t have expertise in this area. But a suggestion to you would be that CPAs generally have a vast network of people they can refer you to. I would contact your CPA or a local CPA and see if they can answer your specific questions and/or refer you to someone. The other answer is to connect with your reference desk librarian, they have tons of answers and resources.