Student loans are a topic that comes up often, both in national media and on this site. After reading this week’s reader question, you’ll understand why. Here it is:
We need help. My daughter’s fiancé just disclosed that he thinks he owes over 100K in student loans. He received a notice, and now he is in a panic, has no idea how he borrowed that much. Attended school five years, but four were at a state college; only the first year was a private school. I told him to find all of his papers (not sure if that is possible) and to go Direct Loan and print out all they show he owes. We can then go back to the colleges and compare.
But what if the loan amount is correct? They plan on getting married soon, and I do not want my daughter brought down by his borrowing. I want my daughter and him to find a financial adviser who can help them on this. But we live in a small town in upstate New York. Who can they turn to for help? Thank you. — Worried Mom
I wish Worried’s future son-in-law’s problem was unique, but he’s definitely got company. Some statistics from American Student Assistance:
Student loans were created to be an engine for social mobility, but they are, in fact, limiting young people’s ability to achieve financial success:
- 27 percent of respondents to ASA’s survey said that they found it difficult to buy daily necessities because of their student loans;
- 63 percent said their debt affected their ability to make larger purchases such as a car;
- 73 percent said they have put off saving for retirement or other investments; and
- The vast majority — 75 percent — indicated that student loan debt affected their decision or ability to purchase a home.
College should improve your life, not ruin it
Before we start on Worried’s question, a little editorializing: While we’re all responsible for the consequences of our actions, I believe part of the blame for so much debt rests with America’s higher education system. Fact is, college shouldn’t cost so much, and more should be done to educate students and families about avoiding this sort of massive borrowing.
For example, thanks to technology, it’s relatively easy to shave tens of thousands from the cost of college. Online learning is one. From a 2010 story called “College for $1,000 a Year?“:
Straighterline is a company that provides college classes online for a tiny fraction of typical college costs – for example, you can take courses for either $99 a month plus $39 per course, or a flat rate of $999 for 10 courses – essentially your entire freshman year. You don’t have to ace Algebra 101 to see the savings: That’s up to 92 percent off what you’d pay on average for a year of college at a public or private institution, and done at your own pace.
Straighterline isn’t an experiment. It’s one of several for-profit companies that have found a way to profitably exploit a bloated, radically overpriced higher education system still clinging to the status quo. Our nation’s universities incubate much of the technology and innovation that’s changing our world. They should harness some of it to make college more affordable.
Got more money questions? Browse lots more Ask Stacy answers here.