Most people assume the worst financial struggles are related to job loss, medical bills, and various other occurrences in life that are somewhat out of our control. You can save in a rainy day fund to help with these occurrences, but you can never predict when they might occur and exactly what might happen.
These are common reasons for financial crises and bankruptcy, but there is another factor that often drives a person over the edge financially – student loan debt.
The loans people acquire at 18, 19, or 20 years of age – well before they have fully launched into adulthood – are causing financial problems 10 and 20 years into the future. People are having a difficult time making ends meet in their 30s and 40s because of the debt they took on when they were just beginning their adult lives.
Some financial experts believe the problem is so severe they describe the growth of student loan debt as a ticking time bomb. It is not only affecting people on an individual level, it is threatening to crush the nation’s economy. MarketWatch’s new student loan debt clock shows the nation’ student loan debt growing by more than $3000 per second, adding to the more than $1.2 trillion load already in place at a frightening rate of speed.
In addition to the general burden of debt, student loans are preventing young adults from buying homes and making other big ticket investments, stunting economic growth more than ever before. There is also evidence that fewer than 40% of borrowers are actually paying down their debt.
Is It Worth It?
For many, taking out a huge chunk of debt before their quarter century mark pays offs. Their earnings over the first decade or so of their working life is more than enough to pay off their debt, so what they borrowed is just a fraction of their life-long earning potential.
Unfortunately, this is often not the case. And somewhat surprisingly, it is those with less student loan debt that struggle to make their payments. Perhaps this is because they borrowed and only attended a few years of college or because they borrowed to pay for only a two-year school. In some cases, the biggest student loan debts are owned by those with the greatest earning potential – people who borrowed to attend law or medical school – and those with less debt are in fields that pay far less.
What Can You Do?
As a parent or a student, one of the most important questions you can ask before borrowing to pay for college is whether or not the investment is worth it. In general, people value education and are willing to borrow money to pay for it, but families need to consider their specific circumstances.
If a student borrows tens of thousands of dollars to pay for a career that will only earn him or her $25,000 or $30,000 per year, a rethinking of education and career strategy is in order. There are options, but too often young adults rush into borrowing to pay for their degree and in the long run it hurts them financially.
Are you drowning in student loan debt? Did you borrow a great deal of money to pay for college and now you are struggling to meet your repayment obligations? You are not alone. Contact Law Offices of Robert M. Geller at 813.254.5696 to discuss your options.