College tuition should come with a warning label, “Payback not guaranteed.”
College students are led to believe that they have a prosperous future ahead of them. This is a fallacy. A diploma is no guarantee of prosperity.
Today the cost of an education is outrageous and success is elusive. Even worse, there are few ways to afford college without using student loans. Student loan debt is so high it has surpassed all other forms of debts, except mortgages.
Many college students will have a delayed future ahead. Milestones like owning a car, moving out of a parents’ house and starting a family will be financially difficult. College graduates are trying to pay off their student loans while looking for a job when the unemployment rate is still high. Student loans have become a dark, haunting shadow lingering behind student’s lives. They do not go away even if a person declares bankruptcy. Southwestern College is certainly a bargain financially, but most Associates degrees are only valuable if you use them to transfer and earn a Bachelors.
SDSU’s basic mandatory undergraduate tuition fees are about $6,700. This does not include housing, food, transportation, school supplies and other fees that total about $15,000 to $25,000 for California residents.
Students receiving financial aid will most likely be able to pay for their first year at SDSU, but with a gradually higher price tag each year it is becoming increasingly difficult to graduate in four years. Student loans make a difference.
Current fixed interest rates for subsidized and unsubsidized student loans are 3.86 percent for undergraduates and 5.41 percent for graduates, which is a significant decrease from the previous fixed interest rates of 6.8 percent. But let the buyer beware. These low interest rates are adjustable and can increase over the next 10 years to 8.25 percent and 9.5 percent, respectively.
Such a radical increase is enough to terrify many students. This kind of interest structure could discourage future generations from attending college.
Instead of pursuing a major they are passionate about, students may choose whichever major they think has the best chance of paying off student loans in the least amount of time. Innovative thinking and creative characteristics essential to America’s future could be lost as students conform to “safe” careers.
Students should try to avoid a debt-laden future by applying for grants and scholarships whenever possible. Student loans should be the last resort.
Be cautious about loans from banks because of the variable interest rates that fuel further debt. Federal student loans are safer because they are more likely to be subsidized and have a lower fixed interest rate.
Runaway student debt is a scourge that will require teamwork and commitment from government, industry and students. Debt-ridden graduates cannot buy homes or cars and cannot contribute to the economy. The American dream is on deferral, often for decades.