“Why the big emphasis on avoiding student debt?” some parents and school administrators wonder. “Everyone gets student loans, don’t they? That’s what my guidance counselor told me when I was in high school. Isn’t that just the way it is?”
Is that just the way it is?
“Our son needs a good education to get a good job,” some parents think. “So we’ll do everything we can to help him get into a ‘good school’ and then we’ll apply for financial aid and co-sign on lots of loans. I need to just accept that. Why make such a big deal out of avoiding student loans?”
The problem is that this kind of thinking is sorely out of date.
Think about your hopes for your children’s futures. Is it your goal that your child will one day:
- Live independently from you?
- Have the financial flexibility to be able to work at what he or she really wants to do and loves to do?
- Feel happy, fulfilled, confident, and highly motivated to work hard?
- Have a marriage relatively free of money-related stress and anxiety?
- Have the financial flexibility to manage the inevitable setbacks of life — without fear?
- Have the financial flexibility to be able to go on to graduate school, seminary, or medical school, if that is their call?
- Look at the possibility of a new baby as a happy, joyous blessing — rather than as a devastating addition to an already impossible financial burden?
- Have enough financial margin to be able to give generously to others?
I ask these questions because student loan debt can very quickly undermine every one of these goals.
I’m not the only one taking this position. Claudia Dreifus and Andrew Hacker (authors of the book Higher Education? How Colleges Are Wasting Our Money and Failing Our Kids — And What We Can Do About It) argue that “A college senior might graduate with ‘only’ $24,000 in student loan and credit card debt, but with interest, collection charges, and penalties for postponed payments, the totals can eventually exceed $100,000.” You can check out their blog at highereducationquestionmark.com.
Dreifus and Hacker tell us: “Student loan debt is (almost never) dischargeable in bankruptcy court, and students who default on student loans will be hounded for life. Lenders can garnish their wages, intercept their tax refunds, have their professional licenses revoked, and prevent them from working for the government or collecting their social security.”
This is a nightmare scenario, but consider this one that’s not only worse, it’s more likely: if student loan and credit card debt end up destroying your child’s credit, he or she may not be able to get a job at all after college, since — increasingly — employers are scrutinizing credit reports as a part of the hiring process.
Nationally recognized financial aid expert Mark Kantrowitz, author of three books on student aid, puts it this way: “A student loan default on your credit history will make it more difficult to get credit cards, auto loans, home mortgages. It can even affect your ability to get a job or rent an apartment. Student loans are almost impossible to discharge in bankruptcy. A successful discharge requires demonstrating undue hardship in an adversary proceeding, a very harsh standard. Of roughly 72,000 borrowers in bankruptcy in 2008, only 29 had all or part of their federal student loans discharged. That’s 0.04%. You are more likely to get cancer or die in a car crash than to have your student loans discharged in bankruptcy.”
If you haven’t yet seen Adam Carroll’s powerful, entertaining TEDx video on student loan debt, please see it now.
If you would like free, clear, step-by-step help getting your kids through college debt free, do this:
Subscribe to my weekly email newsletter using the form on this site, and then open it every single time it lands in your email inbox. For up-to-the-minute help for your individual situation, click on your child’s age in the “WHAT TO DO WHEN” section on this website.
Question: When you left college, did you have any student loan debt? How did that level of student loan debt affect your life? Comment below, or LIKE Jeannie Burlowski Author on Facebook and let’s talk about it there.
If you have friends who are just taking it for granted that student loans are an unavoidable part of student life, SHARE this post on Facebook, Twitter, and Linkedin right now.
Who is Jeannie Burlowski?
Jeannie Burlowski is a full-time consultant, author, and conference speaker. She helps parents set their kids up to graduate college debt free and move directly into careers they excel at and love. Her book LAUNCH: How to Get Your Kids Through College Debt Free and Into Jobs They Love Afterward is due out within months. You can find Jeannie’s free, clear, step-by-step help for parents in the “WHAT TO DO WHEN” section on this website. Follow her on Twitter @JBurlowski.
“We only got around to doing a fraction of what Jeannie tells people to do in the free help on her website, and we saved well over $50,000 on college costs. Our daughter earned a four year degree from an excellent private university at age 20, and she’s now in California happily working her dream job at Disney. Get to one of Jeannie’s live classes if you can. Buy a plane ticket if you have to!” — Liz and Tim Weatherhead, parents, Bloomington, MN