Graduation, I remember the day like it was yesterday. I was so glad to be done I could hardly stand myself. It is no secret that I hated (yes that is a strong word) high school. I was there to socialize and that is what I did the best. (Funny how there is not a class for “communication”.) My parents heard about it at every parent-teacher conference they had and I think they just stopped going because they knew nothing new was going to be said nor were they going to shut me up.
Back on topic, there were only two concerns during my senior year. One, what was I going to college for and two, how was that going to be paid for. The first one was not so easy, Ms. Social was not really sure but I did have some good ideas. Two was pretty simple, mom and dad had the loan papers fill out by the accountant since they didn’t know because I was the first to go to college. I don’t remember being a part of any of it, but I qualified.
Now I go to pay for my tuition and they handed me a $1,500 check, viola I got money. This college thing is awesome! So I take the check, deposit it in savings and use it for “stuff.”. Didn’t bother to ask anyone about it, who could give me money I didn’t need?
The Bank that is who!
Fast forward two years – yes only two- I decided to take a break from college as I had no idea what I was going for. Six months later I get a bill in the mail for a student loan payment. What! What is that and why? I have to pay back the money I didn’t need and with interest. What is interest? No one told me about that.
It can be deferred? What is that? Hmmm, options….
Thank goodness I had done some prior digging into the matter after visiting with others who are stressed about their major monthly student loan payments. Keep in mind these people I visited with prior have all graduated or are seniors in college with no idea how their student loans work. They are four hours or more into the loans! Even I did not pay attention prior to this and figured the college was and would guide students through the process. Well, I am here to say I am NOT alone and this very same story is happening today as it did twenty years ago. Our family has experienced it firsthand. My step-daughter is in college, filled out all the paperwork, got a grant and a loan. The extra grant money came back to her as did ALL the loan money! WHAT?! Why on earth would they not visit with her about what she was getting for money on either account? Nope, nothing (to my knowledge) was discussed with her, they just send money in the mail. She has no idea she even qualified for a loan much less knew what the interest rate is since the paperwork we got did not show it. She has no idea how this whole loan thing works and no one at the college or in high school bothered to talk to her about it.
Kids are pushed and pushed to go to college and find the perfect major yet NOTHING is said about how it will be paid for. No education is put into the financial side of it. It is just accepted that you will have loans to pay back with no expectation of how much it will be.
Interest rates are around 7% right now for student loans. Yet, kids are pushed to go and “just take generals.” Why? So they can find themselves and think about a major while racking up 7% interest on loan money they didn’t even need. Let them wait until they are ready, what is the rush?
If kids are going to be pushed into college those doing the pushing need to educate or be educated themselves on how college tuition works, how loans work and what is expected of them upon graduation. Numbers need to be figured out BEFORE they enter college. Show them what will be happening with the loans while in school and six months after graduation.
According to FinAid.com, “on average, tuition tends to increase about 8% per year. An 8% college inflation rate means
A standard has been set that one must go to college in order to get a job. A standard has been set that you just borrow money to pay for college and worry about the payback later. The system has you and your kids right where they want you, ignorant about finance. If you truly want better for your kids, educate yourself and your kids about the loan process. Sit down and punch some numbers. I guarantee you, you will be surprised when you see those numbers, I was! Remember, I was unaware as well. that the cost of college doubles every nine years.” Add higher than normal interest loan rates onto that and no financial education and you have a recipe for disaster.
It really does just makes me furious, ask my step-daughter. She has experienced my “lectures” first hand. Someday she will realize it was not meant to be a lecture but a teaching moment.
This is not a single entity to blame for this lack of knowledge. Even in my digging, most websites do not address the finance part of loans, only the process to get loans. It is what it is. You can decide to change you and your kids future or you can decide to follow the rest of the sheep. If we follow the lead sheep and him/she runs off the cliff, we are all going to fall. Prepare yourself to be the black sheep watching from the side.
Today’s blog was more of awareness to what is happening as a whole. In the coming blogs, I want to tackle some of those student loan fears and questions. I want YOUR HELP, what are your biggest student loan fears and questions? If you know anyone that works with student loans, I would be happy to visit with them. PLEASE let me know.
What I commonly see are things such as the best way to save for college, how interest is calculated, what deferring means and does, and what to do when you graduate and can’t afford the payment. I may not be an expert, ok I am NOT an expert, but I am a mother of a child who is getting stuck in the pack and I refuse to let it continue. Enough is enough, helping banks get rich is not the purpose of college.
Till, next week…
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