In the past, we all looked to college education as our way towards a better life. We all aspire to get that higher academic learning because it gave us better options when it comes to our careers. It allowed us to get an edge when applying to high paying jobs.
However, recent events seem to have all of that crashing around us. In the news, you will read about graduates who are resigned into thinking that they will take decades to pay off their debt. A lot of their parents are also burdened with this type of financial trouble.
Although President Obama recently signed a law that aims to regulate the interest rate of student loans, the war on this debt is far from over. In fact, if you look at USDebtClock.org (at least when we last looked at it on August 29), both the mortgage and credit card debt are going down. The student loans, on the other hand continues to pile up and grow thousands by the second. If it continues at this rate, it might even overtake mortgage debt as the number one financial problem in the country.
The problem with student debt
Despite the efforts of the federal government to solve it, the student loan crisis still remains to be a serious adversary of the average American. The sad part is, it gives recent graduates so much financial troubles even before they have the means to afford paying it back. The high cost of tuition and school related fees continue to drive the rising student loans. The interest rate is also keeping the new workforce for truly enjoying the fruits of their paycheck as most of it goes to paying back the money they spent while getting their education.
When you think about it, student loans pose a problem that goes beyond the interest rate. Here are some of the things that we figured could be affected by this debt.
It affects the younger generations’ view of college education.
When you ask some high school student, they are apprehensive of going to college because they fear the debt that they have to go through. With most of their parents dealing with their respective debts, a lot of these kids are forced to take on the burden of their student loans alone. Some of them think that it is something that is not worth it anymore. Instead of seeking high education, they end up taking blue collar jobs early in their life or pursuing simple business ideas that they can manage. In our tech-developed world, a high school education may not be enough to allow them to catch up with the advancements happening in society.
It keeps their priorities in the back seat.
Debt in general keeps most of our priorities in the backseat. Reports are being made by health institutions that Americans are foregoing medical and dental care simply because they have credit obligations to pay off first. Their fear of debt and its repercussions lead them to put aside healthcare – which is actually a very bad idea if you look at the long term effects.
It compromises the benefits that the seniors will receive.
The workforce today, with the taxes that they pay the government, indirectly supports their seniors. With the younger generations in danger of skipping college education, they are compromising the benefits that baby boomers will be receiving as they retire. This is something that we all fail to realize at first. We need to earn more, pay more taxes and support the welfare of the elderly. If the government funds are depleted, who do you think will suffer the most for it?
Here is a video clip from the NBC Nightly News about how two generations in one family is currently struggling to pay for student debt. It is turning out to be a triple burden for the parents of college students because they need to worry about their own student debt, their children’s loans and their upcoming retirement.
How to keep college education from being a financial burden
While we wait for the government to do something about the financial burden in student loans, there are a couple of things that you can do to help alleviate this situation. It is simple yet it requires discipline and a certain level of sacrifice for all parties involved. Here are our suggestions to the three groups that are affected by student debt.
For parents of college or incoming college students. Make sure you teach your children the right fundamentals of financial management. Teach them how to budget their money so you can both live only on the necessities. When you introduce credit cards to your college student, make sure that they understand how to use it properly. If they cannot escape student debt, they can prevent credit card debt from adding to the problem. While it is tempting to live an extravagant life in college, inform them of the repercussions that it will have on their future.
For college students. Live within your budget. Listen to your parents when they talk to you about proper financial management. It is frustrating to keep yourself from buying all the trendy clothes that your friends are wearing or hanging out with them. However, the sacrifices you make today will help you enjoy life when you get out of college and start working. Don’t burden yourself with too much debt. Also, try to save money to prepare for the debt that you will start paying 6 months after you graduate. If you can manage to take on a part time job, then that will help you finance your entertainment expenses.
- For incoming college students. Save your money to prepare for college. The earlier you save, the more you will have on campus. Preparation is the key to prosperity. Help make your college life far from restricting without putting yourself in debt for it. Get the help of your parent in saving up for your college tuition. Even if it is not enough to pay for your whole tuition, it will keep your debt low nevertheless.