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Wednesday, February 17, 2010

The $550,000 student debt

WSJ article - the $550,000 student loan. Yes it can happen and this woman at least became a medical doctor in the process.

But what is even worse is when a college student goes into debt of $100,000 and ends up with a degree in Ethnomusicology trying to pay the loan off while working at Taco Bell.

It all starts with the college admin departments calling their service “Financial Aid”. This is akin to the loan shark calling his loans “aid” or the bank calling your car loan “car aid”. Granted college students do receive some scholarships and grants that are not debt but much of the “aid” is debt that will radically reduce the options of the borrowers and their families when it is time to pay the piper.

College loans are the closest thing we have in America to debtors prison. These loans can serve a purpose if they are small relative to the future earnings but when the education is wasted and the amount borrowed is far out of proportion to the future earnings, they are big trouble. And this article indicates that almost $300 billion of these federally insured debts are non-performing so yet another federal guarantee that US taxpayers will be paying for.

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