A recent USA Today article shares a growing concern for student loan debt and goes as far to say it could be the next bubble after housing. Imagine that! Student loan debt having widespread economic impacts. I’m not surprised. This level of debt is something to pay attention to if you have children who will one day attend college.
Millions of Americans now owe more for student loans than credit cards. The loans can top $100,000 — even $200,000 — and often translate into payments of more than $1,000 a month.
The article stated that the “average student debt load now tops $25,000.” Many colleges are reporting debts on average of more than $35,000. Can you imagine your child graduating from college having to spend 50% of their salary on paying back their school loans?
Certainly, some of the debt is attributed to the rising costs of tuition. Interest rates could also have an impact. There is a bill under review in Congress that would extend the the 3.4% rate on subsidized Stafford loans for another year. The rates will double if Congress doesn’t take action!
I want my kids to go to college and receive a good education. I also want them to experience college and so much that is learned about self discipline and growing as an adult. While we’ll do the best we can to get this important financial goal started by using a 529 savings plan, I’m not sure we’ll be able to send them to school debt free.
So, what should we take away from this article? Personally, it’s more motivation for me to start saving now. As parents, it’s important for us to avoid debt so that we can have freedom in our budgets to help contribute towards such important future goals.
Howard Dayton from Compass – Finances God’s Ways says this: “take out as little school debt as you can and pay it back quickly.”
What do you think about the growing concern for student loan debt?