It's Time to Rethink College Debt

By Rudy Armstrong

With the struggling economy, recent college grads find themselves in the predicament of finding a well-paying job that will offset the loans they took out for their education. Even though the average starting salary is about $65,000, many recent graduates find themselves availing positions only reaching the $30,000 benchmark.

As a result of this circumstance, college students are realizing how school loans are no longer "good debt". With federal and private loans plaguing their credit score, increasing numbers of students are finding it much more difficult than they originally anticipated to pay back the borrowed money.

Two thirds of college student have a debt of nearly $21,ooo, while ten percent of graduates leaving a four-year private institution have incurred an average of $40,000 in debt. Consequently, 54 percent of graduates polled in 2004 said they would have borrowed less had they the opportunity to do it all over again.

Paying off student loans is a daunting task, and although considered "in the range of affordability", a $40,000 school debt, paid over 25 years, would result in monthly payments averaging $278 to $392.

Laurence Kotlikoff, an economist professing at Boston University, explained how certain vocations, based on the promises of salary, can result in the accumulation of more debt, "The College Board promises you certain median earnings -- which should allow you to pay [loans] over time. But half the people will earn less, because that's the definition of median,"

To offset these financial burdens, it is essential to make strong considerations for your future aspirations. It is important not to borrow more than you anticipate to pay back with your potential first job. Additionally, consider the financial benefit of attending a state school that would likely offer you more financial aid.

It is of utmost importance not to be jaded by the vast opportunities of college, but rather to think realistically about how those plans will pan out in the future. Don't spend more than you can pay back, and always think about whether the end justifies the means.

Source: http://finance.yahoo.com/expert/article/moneyhappy/100520