College is increasingly a bad buy
Last month the news media was filled with a story that ought to send a chill up the spine of anyone thinking of taking out a student loan to attend college. The U.S. Education Department admitted that it had miscalculated the repayment rates of student loans. The average three-year repayment rate – i.e., the percentage of students who haven’t defaulted and have repaid at least one dollar of their loan principal – was only 46% rather than 66% as previously reported.
It hardly matters whether it was a mistake blamed on a computer coding error, as claimed by the Education Department, or an intentional misleading by the outgoing Obama Administration as some people charge. The fact remains that the revised data shows that less than half of borrowers are repaying their loans. (The data includes debt incurred for trade schools as well as college, but most trade school tuition is a small fraction of what it costs to go to college.)
This is a massive problem for the country, and for some 44 million student loan borrowers. Some of you may be thinking, hey, this means you don’t have to repay your loans. Wrong. Student loan debt stays with you for a lifetime. In fact, another story that hit the news media recently was about baby boomers (your parents or grandparents) having their social security payments garnished to cover unpaid student loans. This is a severe hardship to many senior citizens who depend on social security checks to cover basic needs in retirement.
Even before you become a senior citizen, the money you have to pay to service a student loan can mean you’ll never be able to afford a home, or even your own apartment. It’s why so many young people are forced to live with their parents long after they’d prefer to set out on their own.
If you follow the news, you’ll likely come to the conclusion that a college education is not nearly as good a buy as it used to be. Choose your career wisely.