By Jonathan Tse
Due to the current recession that the American economy is experiencing, there has been a great increase in the borrowing of money by students to pay for their college tuition. The total amount borrowed by students has increased by about 25% from the last year. This, in effect, has led to the increase of young people who are in debt by the time they graduate from college. In 2006 there was a survey taken of young people under age 35 and around 39% state that it will take them more than 10 years to repay their college loans. The good news is that the rapid increase in college graduates with large debts is expect to start to slow down between the 2009 and 2010 academic year due to predictions of a recovering economy.
The key to prevent being “eaten” by college debts is to borrow wisely. One should always try to borrow from the government rather than private loaners and banks. The interest rate is always much lower with federal loans and the government pays the interest while the student borrowing the loan is in college. Around 25% of students borrow from private loaners who end up being loan sharks charging high interest rates and cause them to become deeper in debt. Also, don’t bite more than you can chew. Students should compare the amount of the loan to the approximate amount that they expect to make in their field once they graduate from college. Even though one only borrows from the government, the buildup of too much loans and interest can still be difficult to repay, so one should not try to borrow the federal government maximum. Students should only borrow as much as they can repay and apply to schools within their budget. Borrowing wisely will prevent the risk of long-term debts from college.