College Costs Out of Control | 07.19.13
Today, 20% of adults owe money on student loans, and 57% are worried about repaying these loans. Many have expressed concern about the recent legislation which increased the interest rate of subsidized loans to 6.8%, but the problem is not the cost of student loans. As stated by Mark Kantrowitz in a recent article published by MarketWatch, this will not double loan payments, but rather, will lead to about a 17% increase in monthly payments.
The real problem is the rising cost of college, and decline in government grants. A recent study by Gallup indicates that only 15% of Americans think that it would be reasonable for colleges to charge students more than $20,000 per year. Yet, many schools, such as MIT, Cornell, and Harvard, charge over $50,000 per year, after tuition and living expenses are taken into account.
While schools such as these are some of the best in the country, you don’t have to go to a prestigious university to get a great job after college – you don’t have to choose between an affordable school and a great career. The following article from Time reveals that the majority of Fortune 50 CEOs didn’t attend an Ivy League college. Many of these individuals attended state universities, and then went on to be some of the most successful people in the world.
Most experts suggest that you take out student loans for which your monthly payments will be no more than 10% of your expected monthly income after graduating, so don’t be afraid of student loans, but at the same time, don’t overwhelm yourself with debt either. Consider a private student loan if it enables you to go to your dream school, but don’t overburden yourself with debt. After all, Harvard isn’t the only school that hands out great degrees, just ask Warren Buffet.
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