College grad owes nearly $200,000 in loans

My debt from late-life enrollment rounded out to about thirty-five k, and with regular payments made whenever I was in position to do so now with interest about double that.

It’s the new sub-prime.

I have to disagree with part of this Bob. In “blaming the banks” for allowing a students loan debt to get so high, tell me, what is the alternative? Maybe setting limits on personal student loans beyond a certain cap? That would only prevent the student from continuing in their degree, effectively forcing them to drop out. If a college graduate with a degree can’t pay back a $200K loan, how would you expect a college drop out to pay a $50K or $100K loan? And at what point would you draw that line? What is it based on?

When I went to college (almost two decades ago), I went to a private institution that cost about $20k/year (it’s now up to about $35k/year). The first couple years I had scholarships and grants, with a few minor (<$2k/year) loans. The last year or so many of those funds went away, and I wound up having to take larger loans to cover the difference. When I graduated I had close to $58K in student loans, but I also had a highly sought after degree in a booming field. I was able to pay my loans off in about six years, just in time to miss writing off the interest when Clinton signed that exemption into law. If the bank had turned me down for that last $8K because I hit some arbitrary cap, I would have probably had a rough time finding a job that paid well enough to pay back the loans. Yet alone to do so while trying to pay for night classes to finish my degree.

I'm not disagreeing that students should be given clear education on loans, debt management, and the like. And yes, banksters (and schools) were clearly not educating students on the differences between loans, because it was a disadvantage to them to do so. (And that boarders on criminal conspiracy, IMHO.) Had this person known how loans actually work I'm betting she may have chosen other options. Like going to a local school for two years get an associates, taking summer courses at such schools, and/or not studying abroad. In the end though, it's up to the consumer to educate themselves about products they purchase or use. These aren't dumb people we're talking about here, these are college bound students. Simple compounding interest computation and annual financial reviews should be part of their skill set.

Bottom line: Do your homework before getting any loan, or investing in any savings device. Blindly signing paperwork to borrow because you want to go to school is about the dumbest thing you can do. But limiting access to loans simply based on an arbitrary cap seems just as dumb, and in many ways counterproductive.