Student Loans – Decades of Debt

Student Loan Repayment
Average $27,000 student loan @ 3.9% repayment plan with average $52,000 per year US household income.

Student loans are a very common way to help pay for college. Most students will apply for grants and scholarships, but even if they get them, they’ll have to supplement the rest of tuition with student loans.  They’ll be getting a loan that will help with getting their college degree, which will land them a great job, then they can repay their loan and begin their great independent life.  Sadly this is not what normally happens.

As tuition costs increase, student loan amounts also increase so you can always afford college. As great as that may sound it is actually a horrible problem. When colleges and universities see loan amounts increase, they take advantage by increasing tuition costs. Educational institutions will give various reasons like higher operating costs, expanding facilities, etc.

The result is having tons of recently graduated students with monthly payments equal to a car payment, or sometimes a mortgage. This forces the new graduates to live with family members since the majority of their paycheck goes to loan repayment. There are grace periods where interest and payments are waived, but that’s usually only when you’re enrolled in college or a few months to a year after you graduate.

The image above depicts a loan repayment plan for an average graduate with an average income. If you end up with a higher payment and a lower-income job, you’re not going to make the 10 year plan it has configured for you.

Why aren’t public colleges funded like public schools? This would allow the benefit of college to everyone who wants to further their education. Private institutions can still have their tuition and costs set to whatever they please, but public ones will always be available to those that want to learn.

Some people argue that if everyone can get an Associates or Bachelors degree, that it will then lower their value or worth. Instead it should be viewed as people wanting to further themselves and become productive and beneficial to a society.

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