College Loans are Keeping Students In Debt

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Here’s a sad reality: a college education has become synonymous with debt.

Have you noticed the stunning number of twenty-something’s who are saddled with out-sized debt burdens? Most are college graduates.

This shouldn’t come as a surprise. According to the Project on Student Debt, the average debt from student loans carried by college graduates in 2010 was $25,250. Given the relentless rise in college costs, we can expect the number to be higher for those who have graduated since.

And the number above is just an average. It’s all too common to hear of students in debt to the tune of $50,000, and even $100,000 or more.

Students In Debt

Student loans versus other debt

After decades of being told that student loans are “good debt,” many are finding that – good debt or not – it’s still debt. Even with deferrals, low interest rates and low monthly payments, the loans must be repaid. And that means a drag on future income and personal options, usually for a very long time.

But student loans have some other features that make them more restrictive than other forms of debt. Since they’re unsecured, you don’t have an underlying asset like a house or a car to sell if you want to pay off the debt. In that regard they’re more like fixed credit cards. And if your financial situation gets really bad, you can’t discharge them in bankruptcy.

Remember, no matter how bad your financial condition, there’s no way out of a student loan.

Matt’s note: there are student loan relief programs applicable for specific circumstances.

What if you don’t finish college?

If you finish college and get your degree, though buried in student loan debt at least you’ll have earned the sought-after credential that will provide you with an opportunity to earn an income that will enable you to payoff your debt. But what if you don’t finish?

Nearly half the students who start college don’t finish.

There are all kinds of reasons why: family or personal issues, burning out on school, or even being spooked by the rising level of debt they’re getting into. If they took out student loans during their time in school they will still have to pay them back even though they didn’t graduate. In many cases, they won’t have the earning power, not having a degree.

Since there are no limits on how much a student can borrow, a non-grad can easily accumulate a five figure debt load in just a couple of years in school.

Debt begets more debt

One of the darker aspects of education debt is the way it can set the student up for a lifetime of indebtedness. Students in debt usually become adults in debt – the pattern is established early.

Loans are taken to pay for education, but along the way credit cards are often used to cover what student loans won’t. At graduation, new cars are usually purchased to commute to the new job, bringing another loan. At 21 or 22, a new grad enters the work force armed with a college degree, credit card debts, an auto loan, and copious amounts of student loan debt.

This isn’t to say that you can’t get out of debt from this position, only you’ll have to overcome a mountain and an entrenched habit to do it; and habits are not easily broken, especially when new debt is often needed to cover new expenses because new income is committed to pay for old debts.

You have to break the debt habit!

The debt-free way to a college education

Given the debt hole that many college students get into, and the uncertainty of the job market, it’s worth exploring less expensive ways to earn a degree. You may be able to get a college education without going into debt to do it, or at least keeping debt to a minimum.

Community colleges. Most areas of the county are served by local community colleges that you can attend for your first two years. Not only are they far less expensive than traditional four year colleges, but they typically award an associate’s degree that’s a solid advantage if you decide that you’re done with college after two years. If not, you can go on to a four year school.

“Commuter colleges.” Living on campus raises the overall cost of a college education substantially – and the debt that’s used to pay for it. If you attend a college in your local area you can commute to it, eliminating the need for room and board costs.

Work-study. For what ever reason this form of getting an education has fallen into disfavor. But with the cost of college rising to levels that are beyond middle class pocketbooks, it’s time to rediscover and embrace this once beloved route. Work-study, where you work at a paying job in a related field while you’re in school, will reduce the need to borrow money to pay expenses in college. It can work especially well for community or commuter-college students, combining income earning with lower education costs.


College costs continue to rise, keeping students in debt at ever-increasing levels. Once you have those debts the only way to eliminate or reduce them is to pay them off. And the larger the debt, the more difficult the repayment. Minimizing or avoiding them upfront is the best course of action.

Do you have a student loan story to share?

Matt’s note: Betsy and I still owe over $50,000 of student loans; and it’s the only debt we have. They take a long time to repay, and neither of us are working in our field of study any longer.


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1 Suzette @ jambalaya

Wow! What a great article.
I’m a total minority. I graduated college with no debt and finished in four years!! It was totally a sacrifice to graduate debt free. I lived with my parents, as they agreed to pay what TOPS (LA college education scholarship program) didn’t cover so long as I was living at home and “pulling my share of the load” of dishes, laundry, cleaning, etc. If I moved out, I was “on my own.” Because of this sacrifice I was able to marry my now incredible husband the summer between junior and senior year of college. He was in college with me that last year, but we paid his tuition up front. We lived small and simple, but were and still are all the more happy for it.

2 Kevin Mercadante

HI Suzette–That means you were able to get on with your life right after graduation. A lot of people want the college experience of living on campus and having the full college life, and while there may be some merit to it, it isn’t worth paying for years after the fact. Because of the sacrifices you made during your college years, you were able to close the book on college when it was over with no excess baggage. Good for you!

3 Suzette @ jambalaya

Thanks Kevin – you’re right! And now we can afford for me to stay home with our two wonderful children = priceless.

4 Kevin Mercadante

You thought beyond college, which is crucial. A lot of students see college as a pinacle, which it is, but they lose sight of the fact that there will be a life after college, that will be a lot longer and where the stakes will be higher.

5 Joseph Lalonde

I don’t have any student debt, thank God! But I know of many people who do.

It causes quite a struggle in their life. Finances become strained, it carries over to their marriages, and it’s a weight around their neck.

Watching my friends and family deal with this is quite sad. What’s sadder still are the colleges and institutions who are pushing these young people to start their adult years off in debt. They’ve started the vicious cycle and hardly anyone sees it.

6 Kevin Mercadante

Hi Joseph–For all the reasons you list, student loans are best held to a minimum or not used at all. I’ve seen people come in looking to get a mortgage on their first home where student loans became an issue. Many were able to get additional deferrals that enabled them to qualify for the mortgage, but a year later the student loan payment would begin again only now there was a mortgage to pay as well. It really is a situation that can feed on itself.

7 Joseph Lalonde

Yeah, sounds like it’s even more vicious than I thought Kevin! Thanks for that bit of clarification.

8 Olivia

I’m all for working first, saving it up and going to college later. With non- traditional students becoming more common than ever, this is a good option. I did it that way (and worked all through school), graduating debt free. Our eldest son finished community college that way as well. Our younger son is anticipating a major requiring graduate studies. We’re encouraging him in the same direction.

9 Kevin Mercadante

Hi Olivia–That’s how I did it too, and I strongly recommend it, even if it’s not as exciting as doing the full college thing, living on camplus and living the typical college life.

Once I was out, I was done–no debt hangover, just me and my degree. The economy and job market were both lousy then too, but I was able to weather it pretty easily because not only did I not have any debt, but I had work experience from the various jobs I worked at while I was in school.

10 jim

Ok guys/gals who have been there, done that. Please help. I’m an old guy – think of your dad. We got all our kids thru college debt-free, but the youngest one just gradutated, moved back home, is delivering pizzas and saving his $. He wants to go to law school next Fall. Spouse and I are trying to pay off our mortgage and fully fund our retirement so we can’t pay for law school. Any ideas how he can get thru law school without a gazillion $ in debt? Think outside or inside the box. Either way, we’re open to any and all suggestions. Thanks much.

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