It used to be a College Education was a sound investment for improving your life-long earning potential.
These days that sound investment, often turns into an oversized anchor, weighting down the hopes and dreams of those starting out in life.
Student Loan Debt: Top 1 Percent Of Borrowers Owe More Than $150,000 In Loans
by Bonnie Kavoussi, The Huffington Post -- 03/26/2012
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The average person who has student loan debt owes $12,800. But 1 percent of those with outstanding loans owe a staggering $150,000+ in debt, according to data from the Federal Reserve Bank of New York released in early March. (H/t The Atlantic).
To pay off that much debt, you have to earn at least six figures. It would take a salary of at least $207,000 per year in order to pay off $150,000 in 10 years; $137,000 per year to pay off the loan in 20 years; $117,000 per year to pay off the loan in 30 years; or $109,000 per year to pay off the loan in 40 years, according to the FinAid calculator.
For comparison, the average starting salary for college graduates is $41,701 per year, according to the National Association of Colleges and Employers.
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Investing in "Debt" is always as "tricky investment" ... these days more so than ever. Sometimes in this 'field of dreams' arena, you don't always get what you've bargained for.
Some "people-powered" companies however are stepping up, ready to help students (future customers), make that Student Loan "anchor" a bit less of a drag.
A new way to shrink private student debt
by Lynn O'Shaughnessy, CBSNews -- March 23, 2012
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But that reality has changed now that credit unions have moved into the market. They are now offering borrowers a way to consolidate their private loans at rates as low as 4.75 percent. With the average age of credit union members at 50, one powerful motivator of the non-profit credit unions is to attract younger customers, according to Ken O'Connor, the director of student advocacy at cuStudentLoans.org.
Credit unions are offering private college consolidation loans at variable rates of 4.75 percent, 5.75 percent and 7.25 percent. The interest rate you obtain will depend on the underwriting process, which looks at such things as your college grades, where you attended school, whether you graduated, your current job and your credit history.
Some borrowers will be able to shave hundreds of dollars off their monthly obligations by merging their loans.
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I did such a consolidation way back in the day -- it helped. Still it took many years of steady payments, before I was "free and clear" of all that 'book-learning' debt I owed.
Student Debt is becoming a hot topic. Congress will have to tackle the issue sooner or later. Here is an educator with some sound advice in that regard.
5 Reasons Why Educational Debt Deserves Congressional Action
Student Debt Crisis Is a National Priority
by Julie Margetta Morgan, Center for American Progress -- March 20, 2012
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1. The usual statistics don't tell the whole story on who has debt -- and who’s struggling to pay it ...
2. Debt holds graduates back -- and that holds the economy back, too ...
3. Massive student loan default could spell disaster ...
4. Debt is getting more expensive for students ...
5. Once in debt, students have few options for getting out ...
[...] Rather than get rid of loans, Congress must take action to ensure that student loans are a tool to help students make it into the middle class, rather than an anchor that drags them further into poverty. Here are some steps Congress can take now to improve the student loan system:
* Ensure that the lowest-income students have access to grant aid by maintaining investment in the Pell Grant, a program that provides grants of up to $5,550 to qualified students.
* Maintain low-cost student loans by extending the Perkins loan program and stopping the scheduled increase in the Stafford loan interest rate.
* Provide sensible debt relief that fits the needs of young college graduates by improving the application process and terms of the income-based repayment program and allowing borrowers to discharge private student loans in bankruptcy.
* Provide better quality and value for students by cutting off poor-performing colleges’ access to student loan programs.
There are some existing laws that do protect Students from over-zealous Debt-collectors. But the rules don't go far enough. And the Collectors often ignore the them anyways ...
Congress seems be tackling this important "consumer issue" this week, according to Bloomberg -- although it is kind of hard to figure out which side they are rooting for ... hey it's Bloomberg ...
Obama Relies on Debt Collectors Profiting From Student Loan Woe
by John Hechinger, Bloomberg.com - Mar 25, 2012
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'Reasonable and Affordable'
Federal-aid law requires collectors to offer “reasonable and affordable” payments, so debtors can “rehabilitate” their loans, repairing their credit and making good on what they owe taxpayers.
The law mandates no minimum payment for a borrower to enter a rehabilitation program, and collection companies may take borrowers’ finances into account. The fair debt act forbids collectors from making “any false, deceptive or misleading representation.”
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New Rules?
The Education Department this week will hold meetings with industry, government and consumer representatives to consider requiring that debt collectors automatically offer payments based on income to defaulted borrowers who qualify. If approved, the rules could take effect in July 2013.
“We want to make sure we are striking the right balance between helping borrowers who have hit hard times and honoring our responsibility to be good stewards of taxpayer dollars,” Justin Hamilton, an Education Department spokesman, said in a phone interview.
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I used to call my College Education "
the obstacle course" I had to get through, to even get
the opportunity at one of those "good jobs."
And the debt I acquired to fund that College Education was "the price of admission" to get me "out of poverty." ... Lucky for me, it worked out -- after a lot of hard work, and parlaying those degrees.
All that's still true I think, to some degree or another. It's just that the price for those "upwardly mobile tickets" just got a lot, lot higher in the meanwhile.
While the pay-off for landing one of those rare career-type jobs, has hardly kept pace with inflation, let alone the ever-increasing exorbitant cost of financing that must-have ticket to a "better future" -- out there, somewhere.
It used to be a College Education was a sound investment ...