I asked Debbie, my daughter to write something on College Loans. So here it is:) Thank you Debbie:)
Recently something very, very scary entered my life…the prospect of Federal Student Loans in the USA. I have an 18 year old daughter who got into a college in Illinois. She’s my first child so I didn’t know what to do or how it worked. My daughter is a good student (A’s and B’s), but she did not receive any $ from her University for her ACT score, and she did not receive any scholarships. My family was born and raised in USA, we are not super star athletes, geniuses, or community servants, we have no debt, make a decent living(so our FASFA was the typical $5500 loans that most people are offered), are not poor or criminals (many of these people receive lots of money or FREE college with a monthly allowance) so again we received no money for college save the opportunity to take on Federal Student Loans. When I looked into these loans I was never so scared in my life. Currently Federal Student Loans have an interest rate of 3.86%(when I was looking into it earlier it was at 6.4%) for undergrad and and 5.41% for grad school. Last year the rate was 6.8% for both!! That might not be so bad, however, with Federal Student Loans, you can NEVER, I repeat, NEVER default on them(unless you die they are yours FOREVER). I know someone who works for the Federal Student Loan Collections and they will hunt you down if you are not paying on your loans(and they continue to grow if you put your loans into deferment or default on them) when they find you, you will have to provide your tax returns and they will tell you how much you must pay, they will garnish your wages and even you social security check. This collection agency makes big bucks and BIG bonuses to hunt you down and make you pay. If it is a Parent Plus Federal Student Loan, then I believe you both are responsible (i.e. if parent dies it’s the kids loan to pay). SCARY, SCARY! My two goals in life are to live with NO REGRETS and to be able to sleep at night. Upon learning about Federal Student Loans I could no longer sleep, I struggled to figure out how to send my daughter to college without either of us going into debt, and there was no answer. So I tossed and turned and felt sick day and night for months, I talked to my friends, to my patients and learned everyone was in deep deep debt…FOREVER!!! My friend told me she did the same thing and when she asked around everyone said “take the debt” so she did. She said she is so far debt that she will be until the day she dies, her house is falling apart, and she is constantly stressed! She has 3 kids and only two are done with college. Her son told her that he would never do that to his children, that he would have saved money for college. He is a music major hoping to “make it big” good luck. My other friends took the equity out of their homes to pay for their children’s college. Most of us are 49-55 yrs old. I don’t want my children to have to take care of me because I gave them money that I needed for retirement. I have friends who told their children to take the debt, I don’t believe kids truly understand what a 120K debt or more is and I think that explaining it and community college is essential! They are 17-18 years old, it may take them half their life to pay off these loans, jeopardize their relationships (do you want to marry someone with 120K+ in student loans if you have none?). Also, the American economy is such that it takes an average of a year and a half for people to find a job. I have met person after person reporting their children have graduated and are unable to find jobs, many then return to school, incurring MORE DEBT in hopes of finding a job. And did I mention that even in bankruptcy you can NEVER get rid of your student loans? I freaked out more, panicked more and lost more sleep. Then I told my daughter she had to go to community college(which both my mother and I did) where the costs were $5000/yr vs $30000/yr. She was upset but did understand, eventually. Why was she upset? Because of the PRESSURE to go away, to have a “college experience” (unsupervised drinking, drugs, sex?) to act like you have more money than you do, to impress other people you don’t even care about? Where we live it is unacceptable to go to community college, you are considered a loser, poor etc. Great set up to condition people to incur MASSIVE DEBT. The list of kids my daughter and I know who have come home or been kicked out of college for partying too much is huge and growing. We are taking bets on which ones in this new group aren’t going to make it. I have many friends with girls who come home saying that they just didn’t like it. I question rape in many of these cases, as rape on college campuses is rampant and largely underreported and rarely punished in any way at all! Why do colleges allow massive underage drinking/partying/illegal drug/ use on college campuses? In high school kids are patted down, watched by 100 cameras all day long, have dogs sniffing their cars and then college…NOTHING…total free for all? Hey if they let your child mess up they can stay a year or too more and you can incur even more debt, or they can mess them up and they will at least be out of the job market! Some kids told my daughter that they wished they could stay home too (but the pressure is too great to “go away”), my friends daughter asked her if “she would be embarrassed if she stayed home and went to a community college” first, other kids are telling my daughter she is smart and that she will not be in debt the rest of her life like they will be. On mother’s day my daughter wrote me a long and sweet letter. In the letter she thanked me for doing this hard thing and not letting her or our family go into debt. My advice, start thinking about this stuff now. If you choose to have your kids go to a community college tell them early. I have already told my 15 y/o son, so there will be no drama when he graduates from high school, he knows he is going to community college for two years. How do I know it’s the right decision for me and for my family? I can sleep at night:) and for me that’s my cue that things are as well as they can be in this world.
The Federal Parent Plus loan interest rate is currently 6.41% for undergrads.