Is It True That Student Loans Are Good Debts?
There is no such thing as good debt; a lot of people are even re-thinking mortgages in light of what happened a few years back. When people refer to “good debt” or “smart debt’, they are kidding themselves or trying to justify doing something that is mostly stupid. When choosing an educational institution, consider the amount debt it will take to get through the school. This should then be included as part of the decision of where to go.
Unfortunately, not too many parents don’t sit down with their kid and get them to look at the big picture!
Here’s yet another example; a young woman who consulted with us went to law school. She was told that in three years she would graduate and make a tremendous salary. In reality, only the top 10 in her class made all of that money. Everyone else made a reasonable amount for a first-year attorney, but not enough to service her $100,000 in debt.
She came to us and said, “First, I don’t even know who I owe the money to because they bought and sold the debt many times”. It turns out that she was negotiating with two different people on the same loan at the same time. She didn’t know which end was up, so we put it all together on a chart and found that she owed about $100,000! The best that we could come up with was to let them garnish her wages at 15 percent for the rest of her life but that garnishment may not ever be enough to pay the loan plus interest.
That’s a terrible solution, but it was the best available at that time. This was about 15 years ago. Hopefully, she’s making a lot more money now and has been able to explore paying them off or going after an administrative remedy that I have talked about in other posts.
Are Schools Playing a Part In Helping Students With Student Loan Debts?
Schools should have this conversation with their students more often, but not all of the schools are this responsible. Bear in mind they need students and tuition to operate and stay open. Hopefully, they’ll have this conversation more Heck, there are people out there saying that an education at a four-year college may not even be worth the money. If you’re a really good computer programmer, left with the choice of incurring four years of school debt or going right to work, maybe working now isn’t such a bad idea. If you’re going to work making cabinets or as a plumber, do you need a four-year degree? Maybe not.
So much has evolved over time; when I was in school, from 1974 to 1978, I had $1-2000 in student loans every year. When I graduated, they had exit interviews, reminding me that I actually had to pay the loans back. Apparently, a lot of students thought, back then, that these loans were really just an additional form of scholarship. It took me a long time to pay them back because I deferred them when I was in law school, an additional 3 years. It was not that much, but it was difficult, especially being so new in my chosen field of law.
Parents, friends and advisors ought to have that conversation with their students because it may affect what school they choose and lessen the level of debt they graduate with.
For more information on Student Loans and Good Debts, a initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (818) 992-1940 today.
