A bunch of recent articles (such as http://www.washingtonpost.com/wp-dyn/content/article/2008/04/09/AR2008040904278.html) have raised alarm bells among families about student indebtedness and loan availability. In my ongoing service to diminish hysteria, here’s a little reality for you.
Public education is still a tremendous bargain, and debt loads are still pretty darn low. The vast majority of students in higher education conclude their four years with less debt for college than they owe on their cars, and the interest rates on the higher education loans are FAR better than their credit cards and car loans!
Despite that fact, I hear from students all the time who are scared by all the hype to take out college loans. I find it especially troubling when the same student is mounting credit card debt, or car debt, etc. Student loans are likely to still be a FAR better deal!
Of course, stories like the one above would also lead you to believe that money for student loans is harder to come by this year, but read the story carefully. Buried in the middle of all the fear you find the reality, that the change is likely to only be felt by students with bad credit histories at for-profit colleges with a bad history of students repaying their debts. In other words, if you go to a reasonably priced public institution and take out loans, even with a bad personal credit history, you’re unlikely to feel any difference in loan availability.
My advice: before you give up on your dream school, or drop out, or take on a crushing off campus work load unrelated to your chosen career, explore the loan options more fully. Your financial aid office will be glad to help, and I think you’ll be pleasantly surprised. Great details can be found at http://www.finaid.org/. Be seeing you.