Education is an investment, but with the high college costs of today you have to weigh how good an investment any one college degree is. According to figures provided in a recent Associated Press article by Leslie Wines graduate education costs are up 150% since 1994 to an average of $37,600 in 2004, and undergraduate education has edged up 108% to an average of $19,200. Because there are fewer government-backed student loans, students are turning to other sources of financial help in the private bank sector.
Unfortunately, private bank loans have many drawbacks. First, they can not be disposed of in bankruptcy. Second, they have variable rates that can go as high as 20 percent. Third, they are almost too easy to procure, especially now with direct-to-consumer internet applications and cable television advertisement. Fourth, full disclosure of the rate is not required until the loan is consummated, that is, until the note is signed, so a borrower may not even know what the interest rate is until s/he has signed the promissory note.
When students resort to using a credit card for supplemental monies, the game becomes very serious. Some students calculate they can not be debt free before they are 40, which adversely affects their standard of living throughout their adult lives.
Some colleges are beginning to counsel students about debt. They attempt to have students think about what they may earn in their projected careers and then explore the type of house they want to live in and its long-term cost to judge how a monthly education loan debt will affect their lives. But, many colleges want to avoid financial counseling as such counsel may put them right out of business. Look at our article Is Your College Education Worth Huge Financial Debt? for more pointers and considerations when choosing a college as a good investment.
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