Student Loan Debt: The Ugliest Kind
In today's recession, attending college may be a valuable asset. But perhaps not as valuable as NOT going. Considering rising tuition prices, a lot ...
In today’s recession, attending college may be a valuable asset. But perhaps not as valuable as NOT going. Considering rising tuition prices, a lot of people are borrowing massive amounts to pay their bills. In reality however, student loans are one of the most harmful debts that require extreme caution and taking one out may just teach you a lesson that you can’t take in school: the lesson of responsibility.
Student loans can be particularly tricky to wriggle out of, unlike most debt. Homeowners can get out of their mortgage payments by handing over the keys to their house. Even gambling debts can be discharged with bankruptcy. But abandoning a student loan is pretty much impossible, especially when collection agencies are involved. Lenders may decrease payments, but having principals or fees waived almost never happens.
Experts estimate that seven hundred and thirty billion dollars is owed in outstanding federal and private student loan debt, and only forty percent of that debt is currently being repaid. The rest of this money is in default or in deferment. This means that payments and interest are halted, which means payments are halted while interest accumulates.
According to lenders, interest rates and loan terms are shown multiple times and in multiple ways. Account information and repayment tools can also be accessed online as well, they say. But anecdotal evidence shows us that even after filing for bankruptcy, you can’t get a student loan lender to adjust the terms on your student loan.
While you go to school loans can rack up interest with variable rates that range from three to eleven percent. And if you default, they can slam you with “collection costs” adding up to over fifty thousand dollars. By the time you are done paying off a loan, the amount of money you spend can add up to three, four times the amount of what you receive. So before you go off to school, be sure that you can foot the bill.
Mallory Megan works for a company. Also she composes articles on business, finance, consumer spending and .
