The Occupation Wall Street crowd has taken up the mantle of burdensome student loan debt and is using it as one of its many grievance issues. Some people are wearing signs around their necks proclaiming the amount of money they owe and are asking, no demanding, that their loans be forgiven. They’re reasoning that since the federal government bailed out the big banks, then their debt should be forgiven too.
Well, not so fast.
First, these students did not attend college with a gun held to their heads. Each student, with input from their parents, decided to purse a particular course of study and finished their education. Sure, college is expensive, but each student decided where he or she wanted to go and assumed responsibility for paying their expenses. If it took a loan to keep them on track, then that is a contract they made with their lender.
Second, college students make more money than a person that did not go to college. While a high school graduate might average $32,552 according to the U.S. Bureau of Labor Statistics, a college graduate should average $53,300 per year. That difference is nearly $1 million over 40 years, an amount that pales to student debt totaling $50,000 or more. It may take longer for you to find your first “real” job, but eventually you will.
Third, student loans can be modified through consolidation. Through June 30, 2012, the U.S. Department of Education is offering short term consolidation for certain stunts. These Special Direct Consolidation Loans are different from Direct Consolidation Loans and can save students more money. Visit the Special Direct Consolidation Loans page for more information. Apart from this option, everyone else can seek consolidation if they have federal Stafford loans, PLUS loans and Perkins loans. Be careful here: if you default on your loans, then consolidation won’t be possible.
Both Democrats and Republicans are working to hold down the interest rate on student loans too, with the final details still to be hammered out. That move will save borrowers a bundle in interest costs, keeping debt manageable and making it easier to pay off their loans faster.
The OWS crowd would certainly like student loans to be erased, a step the federal government isn’t likely to take and one you should not count on. Instead, look at the long-term picture and realize that the burden you have now will ease over time as you find the job that will allow you to tackle your debt and move on with your life.
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