College funding, particularly college loans, is out of control. Universities will allow families to borrow into oblivion. The average student graduates with $70,000 in debt. I can rattle off horror stories of “A” students encumbering $150,000 in debt because they weren’t properly prepared, packaged, and positioned for the money. Here’s a real case study of a student receiving a “scholarship” from a high profile private university and what it really means in strong dollar figures.
Here is the package offered to this student:
Attendance Cost – $42,898
Scholarship – $11,000
Stafford Loan – $5,500
College Access Loan – $26,398
In four years, this is what the numbers look like:
Cost of Attendance – $171,542
Scholarship – $44,000
Stafford Loan – $22,000
College Access Loan – $105,592
Now, in real dollar terms, this is what starting to pay off the loans looks like:
Year – Monthly Payments
1 – $300
2 – $609
3 – $927
4 – $1,254
5 – $1,496
6 – $1,496
7 – $1,496
8 – $1,496
9 – $1,496
10 – $1,496
11 – $1,196
12 – $887
13 – $569
14 – $242
Note: These are MONTHLY payments… Imagine graduating from college with a payment of $1,496 each month. Better put that diploma in a shrine!
Notice: the student will pay for this for 14 years! This while trying to start a career, start a family, buy a house.
Note: payments begin in year ONE, not when the student graduates. The University Access Loan is taken by the parents and begins in the first year.
Here’s how the payments add up each year:
Year – Annual Payments
1 – $3,600
2 – $7,308
3 – $11,124
4 – $15,048
5 – $17,952
6 – $17,952
7 – $17,952
8 – $17,952
9 – $17,952
10 – $17,952
11 – $14,352
12 – $10,644
13 – $6,828
14 – $2,904
$179,520 total! Any return on investment?!?!
The student will pay the government an additional $74,000 for the privilege of paying more for college than they had to. And, yes, pay the government, which took over the student loan program, a little thing tucked into the health care bill.
They make it so easy to borrow money.
There are alternatives, there are choices, there are options. Of course, the people who lend you the money (the government) are not going to tell you and the people who receive the money (the university) are not going to tell you because everyone wants the money.
In my opinion, there is no university in the United States that is worth that much debt. I challenge anyone to show me statistically that the student will recoup this expense and that the overall investment will pay off better than attending a lower cost college.
There’s another way.