Debt
Borrowing to finance your education is one of the easiest ways around to get money. The Federal government both issues the debt and guarantees it (to itself). Your credit score does not come into consideration when qualifying for this money.
Private lending is not like that. It is not the only thing that is different between borrowing to finance a car purchase and a government loan to pay for tuition.
Source: Education Week. Students are taking on more college debt in this struggling economy, often without the knowledge to make wise choices.
If you have not borrowed money from the government to pay for your education there are two important things you need to know. Even if you have borrowed for college before these are things I want to remind you of.
The good news about borrowing money to pay for your college education is that how much you are eligible to borrow depends on your class standing (freshman, sophomore, junior or senior) not how much money you need for tuition. The bad news is that how much you are eligible to borrow depends on your class standing (freshman, sophomore, junior or senior) not how much money you need for tuition.
About this time you are saying to yourself: “OK wise guy, what’s up with this?” The answer is that it is extremely tempting to take out college loans to pay for tuition and to use the easily accessible cash for other financial needs in your life. People take out student loans to buy flat screen televisions.
All I can say is, “don’t do it!” The reason I say this is the really bad part about debt assumed under Stafford loans. Unlike almost every other form of debt in America today, you cannot discharge (wipe out your obligation to repay) under bankruptcy. For all intensive purposes, it stays with you forever, or until you pay off all of the principle as well as the interest. That is really bad news, especially if you do not have a job.
The point is, make sure if you are going to take on government debt, make sure you have completely examined the prospects for employment in the career field your degree is designed to serve. Otherwise, you will have perpetual debt that is actually growing rather than shrinking.
There is more information to help you manage your student loans at: www.futureiscalling.com.
