Student Loans

Personally, I think student debt should be viewed as a last resort - a necessary evil if you will. Tuition costs are rising at record rates and scholarships, grants, and financial aid might not be enough to cover everything from room & board to books, computers or laptops, and transportation.

The student loan industry has been a topic of interest to the Congress in the recent session, and legislative changes as well as the sub-prime loan disaster are having an effect on the cost and availability of loans. I worked as an analyst briefly evaluating the business climate following the legislative changes, but the company I was with ultimately decided its business model had been made obsolete by law. So they shut down and sold the loans - and perhaps just in time, as last year student loan securities dropped to an all-time low. No analysis could show a profitable model without seriously raising rates on students - sometimes into the double-digits.

If there was ever a bad time to get loans, this is probably it. Unfortunately, its also the time they might be most needed. Investors want a premium on risky loans & bonds, and students are some of the riskiest involved. Many factors are contributing to the cost of education, but at the end of the day the fact remains that prices are going up rapidly.

Credit cards should also be avoided but they can also have their place. On the one hand, they can be used to cover unexpected expenses, to build up credit history, or if paid off immediately, used to get free stuff through rewards programs or frequent flight miles.

In this section, I'll give you plenty of reasons to stay away from student loans, and a little advice on how to find the right ones or if you qualify for various programs like Stafford, PLUS, etc...

Introduction Student loans have become a ubiquitous aspect of higher education, with over 44 million Americans carrying some form of student debt, amounting to a staggering $1.7 trillion in total. This growing burden has placed considerable financial strain on students and graduates, impacting their future prospects and the overall economy. As such, the future of […]

Obama’s education administration has announced a plan to help some students manage their school debt burdens, but it does very little to address the growing problem of college debt.

John on September 13th, 2010

Deflation in Wall Street finance hasn’t found its way to the college campus yet – and it probably won’t any time soon, for better or worse. Learn why student loans don’t deflate like other financed products such as cars and mortgages.

John on September 3rd, 2009

The number of students borrowing money for college is up over recent years, but the good news in this is that more students are receiving these funds from cheaper government loans.

Is higher education a bubble sector? Probably not, education itself is more valuable than ever. The way we pay for college, however, may indeed add to its costs with providing extra value.

A major news outlet actually suggests that college is worse than prison – and this is incredibly wrong on sooooo many levels.

John on April 29th, 2009

This week, Obama held a press conference to announce his intention toward reforming the public subsidy of student loans. Carrying on momentum begun in 2006 and in the midst of credit market disruptions, Obama’s plan would virtually eliminate the middle-man of private banking from the publicly backed part of the student loan market.

College students relying on private student loans should probably take inventory of income expectations and try to calculate a plan to stay enrolled if those loans suddenly vanish.

Sorry about the delay between posts, loyal readers!  I am not immune to the weak economy and I’ve been working double-time on my more commercially driven websites. Colleges, students, and even student loan companies haven’t been quite able to escape the consequences of a lockup in global financial and credit markets.  In fact, 180 students […]

The credit crunch strikes higher education funding yet again as the Massachusetts Educational Financing Authority (MEFA) is forced to suspend student loans

As credit risks continue to compound, student loan companies have found yet another way to minimize risks. In some cases, individual students might suffer the consequences simply for attending the wrong school.

Forget the last post, the Federal Reserve has stepped in and settled the debate that was brewing between the White House & Congress. I referred to this in the last article – basically, the student loan companies need someone to buy some loans so they can have enough reserve cash to offer more loans in […]

John on April 29th, 2008

“Credit Crunch” is one common way to describe America’s current economic situation.  This basically means that the financial sector of our economy is struggling from a lack of funds from which they can offer credit to consumers, students, and businesses.  The problem appears to be spiraling, as a lack of business credit is leading to […]

John on March 28th, 2008

More and more student loan companies are opting out of private and public financing of college debt. Looking forward, times could be tough for younger Americans.

John on March 6th, 2008

Should recent graduates invest or pay back student loans? A lot of personal variables have to be considered: Here they are.

The College Opportunity and Affordability Act, now in Congress, proposes to increase federal subsidized loan caps and increase grant aid for students.

John on February 13th, 2008

As more banks cut off the supply of loans due to insufficient reserves and defaulted sub-prime mortgage accounts, the price of student loans has been rising even though the official interest rates are down.

John on January 22nd, 2008

Various scandals in the student loan industry, as well as other forms of government financial aid, have contributed to the inflation in runaway tuition costs.

John on January 19th, 2008

Advantages and disadvantages of student credit cards and loans – debt should be avoided if possible, but when needed it should be used responsibly.

John on January 2nd, 2008

Reduce your student loan debt with small and measured payments – don’t avoid paying down principle just because you can’t afford to pay it off all at once