Excessive College debt will be the next financial crisis, and not just for families.

College Perception

Many people will think I am freaking crazy for this article, but I have very strong convictions on this subject of serious debt before income, as I believe most of you share a similar opinion.

There is an interesting post with an awesome InfoGraphic at ProCon.org, it is well worth a look.  I looked at the chart and thought the number would be way out of line but they are still very scary for the cost of attending college today. The one thing I had to consider is the chart did not take into consideration room and board for college students which can be as much as the tuition itself. Everyone understands, a great number of collegiate students strive to have that independent “College Experience”, opting out of attending a school allowing them to reside with the parents thus saving a great deal. It seems it may be cheaper to purchase a used car for your child to attend a not too distant college than having that “College Experience”.

http://college-education.procon.org/view.resource.php?resourceID=005532

I am baffled as to the reasoning for debt before income is the normal and accepted in the system of American higher education as opposed to…..Austria where higher education is free.  Here in the United States a standard State public four-year college program and many other colleges have buried many people in unforgivable, unsecured debt before providing the chance for economic generation. Now I don’t want to put all the blame on the schools, they are getting what they can, which is the standard Capitalistic money hustle game at its best. I got what you want so you are going to pay. I will have to put a good deal of the blame on the American government, allowing these institutions to charge these fees to their customer. The reason I blame the government is because the government is the underwriter of many of these loans.

Let me ask you this simple question, If the Government stated, for 2017 we will only fund up to 63% of the total funds based on the median tuition loan amount given in 2015? Do you think Tuition for public and private colleges across the country, including the price for room and board on college campus’ would drop across America overnight? HELLS YES!

I am seriously amazed at college financing. Based on the information presented by news reports, media outlets, Reddit.com, forums, and friends concerning student loans and the amounts they and the public owed to Sallie Mae and Fafsa (Free Application for Federal Student Aid). The sum of freakish sums of money individuals and families borrowing for sending their children to college or university over several years is scary.

The Illusion of a sure thing

In my opinion, the student load epidemic makes the housing bubble look like we were 30 days overdue on a credit card payment. Student loan debt is out there lurking in our society and it is definitely a burden on the families and individuals who have participated in the fiasco of being in the college financial system. When I think about the situation student loans are basically unsecured debt ranging from $10,000.00 to excess of $300,000.00. Heaven forbid if a family has several children attending a major public or private university. I just don’t understand the logic. I do understand the need for an applicable education, most of which helps you to have a healthy conversation, because a student does is not place directly into a curriculum to achieve their educational goal.

I can remember prior to 2008 young college attendees were obtaining personal credit at an alarming rate, major credit card companies were getting into the act big time, basically giving lines of credit to people who had a pulse and appeared on a university campus at the credit card company’s booth. Believe me, the student loans and personal credit cards were flowing like wine at a wedding and they have not stopped, just switched gears. Now private companies have gotten into the act of providing student loans and financing. These private companies I hear are relentless 6 ~ 12 months after a student’s graduate or has not been enrolled in a college or university program.

My youngest daughter felt the aftermath of the 2008 credit bubble crash.  She could no longer personally apply for loans after 2008 and obtaining grants was like pulling teeth with the Hubble telescope for some reason, most likely our household income. We were not well off in 2008, our house suffered for almost 2 years with decreased income during this period. We found she became lumped into the age cap placed on lending to minors. Effectively the measuring bar to qualify for student loans raised. WHICH MEANS, parents assume responsibility for their children’s education as primary borrowers with the child being possibly included to participate a secondary signer on the financial debt. WHAT!

Here is the funny little thing about parents providing for their children’s college education. If a family’s net income is let’s say, annual net $110,00.00 dollars . Many state institutions can exceed $22000 ~ $40,000.00 dollar a year, not including any other amenities the child will need to survive, the college experience may exceed 20%~36% of a family income. The number I am using was the college my daughter was attending. (I lost the battle in the family for her to go to a different school), and we did not make that much money so the percentage was higher, much higher. Therefore if you have a household income of less than $50k~$70K annually, oh boy look out.

Here is a good link from CollegeData.org with the 411 listing the State resident and Non State resident of a few schools. CollegeData411. Feel free to use this site CollegeData.org and check the data for yourself concerning tuition, $30K-$40 is not uncommon.

Default: the Student Loan Documentary (Broadcast Version)

Please, Please, Please watch the documentary, Default: The student loan documentary, the entire documentary may be found on Netflix, or Hulu. This is a very sobering film.

How can anyone repay these student loan amounts prior to securing a SAFE method of providing for their own family’s basic living requirement?

There is an answer. Don’t attend schools of higher education requiring a contract with the devil in hopes for a better life at some point in the future. If you cannot afford to attend college and leave the program without payable debt, look at different long-term strategies for education. The financing of our higher education system has placed a serious catch 22 upon the American public seeking that American Dream, who are bringing home less than $200K or greater annually.

The big kicker concerning college and universities for the middle class, only half graduate with a degree who enter college, but that debt remains even if the attendee does not complete the education.

You may be asking, what are the alternatives?

I’ll tell you, go to a 2yr college, community college or attend a trade school then figure out exactly the direction to pursue educationally. Start a small business, at least if you fail with a small business there is some usable experience.

If I am ranting, it is not just for my own sake, well maybe a little but  I am passionate about families, individuals, the country and world to live as free and fully as possible. I truly understand the stress financial obligations many people experience, and desire for American’s to experience as little financial stress as possible. My major reason, stress of any sort particularly financial, detracts from all areas of your life.

Going forward for anyone looking to further their education, take into consideration so serious planning is required to educate yourself or your family, and I hope before you venture forward with caution and a low financial impact strategy.

Be Free, Be loved, Be Fulfilled

and go Live The Billionaire Lifestyle

Emmitt Muckles

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