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Are Student Loans a Good or Bad Idea?

Did you know that, for the first time in history, Americans now own more on their student loans than credit cards? That’s what one of the financial pieces I’m going to talk about mentioned, though I’m going to have to verify that before I confirm it’s right.

The No-Credit-Needed blog is stopping down for something different today. I’ve been writing some pretty dry information articles recently about “No Credit Check” this or “No Credit Card” that. Since this is the “No Credit Needed Blog“, that’s obviously what I should be talking about.

I don’t want to fall into a rut or become so robotic in spitting out debt statistics or economic data that blogging becomes a drag, so I wanted to try to get a discussion going today on the state of college debt.

Should Student Loans Be Forgiven?

Personal Loans for College Students

Student Loans Are One of the Biggest Obstacles Most College Scholars Face.

Wanting to keep my finger on the pulse of the day’s financial news, I occasionally navigate through Youtube to see what the puffed-up financial experts on tv are saying about the economic or personal finance.

Because of a certain amount of video drift, I ended up coming across several discussions of student loans and how to avoid crushing after-college debt.

Is College Worth the Money Spent?

Just in the last week or two, I’ve written about student loans like the Stafford and Perkins and why university is worth the trouble. So maybe the fact I get a body of evidence from reasonably well-spoken people claiming postsecondary studies aren’t worth the trouble and student loans are a scam is why this caught my attention. So I want to present two videos and discuss those, then provide discuss the wider issues of student financing by looking at samples of similar vids. Then I want to discuss if there’s a middle ground here.

Dave Ramsey on College Student Loans

The first video I’ll highlight is from a financial expert named Dave Ramsey on CBN. He suggests that people’s lifestyles, not the student loan system itself, is what’s to blame for college students running up huge debts.

Mr. Ramsey says that students average $27,900 in college debt on graduation, but he calls the debt “lifestyle dollars“. Dave Ramsey states that’s about the amount of money people spend on living off campus and they would be better served living on a university campus for 4 years or living in a one-bedroom apartment. He portrays college students who live off campus as spending too much on housing, cars, food, clothing, and other lifestyle expenses. I get the idea bar dwelling and club hopping expenses are implied, too.

While these statements are challenged heavily by comment makers, Ramsey suggests that the low interest rate and small payment structure of financiers is partly to blame for these so-called debt traps. He also suggests getting a second job to pay for the college debt. The words “trapped” and “hope” also come up a lot, often juxtaposed. I would say his theme is living within your means and sacrificing while in college to serve your interests better once you’re out.

Perhaps the most profound thing Dave Ramsey says is, “A borrower is a slave to lender…you lose choices.”

That’s something I’ve talked about before: living debt free is living free. Money isn’t the answer to all your problems, but money is freedom. It’s the liberty to do what you want and not make compromises. When you live with debt, you live with a hard master. You might have choices, but they are a selection of preferences, usually which you prefer of several bad options.

Getting free of your creditors will give you a new life…and a new lifestyle.

TV Depictions of Student Loans and Debt

The next video I watch watched an interview between the (sometimes) controversial Pat Robertson and a young college graduate named Zac Bissonnette. Zac Bissonnette is the author of a book called “Debt-Free U“, which is about getting through college without student loans, scholarships, or “mooching off your parents”.

In the video, Zac describes student lending as a “Class con game” and warns against people trusting financial aid officers who give them college funding advice. Bissonnette suggests that no one really cares about your future financial well-being except you, so you have to watch out for yourself. He portrays many college graduates as getting the degree they wanted, only to find themselves with mounds of debt and ending up right back where they started: often living with their parents to pay off bills.

He also describes student loans as one of the worst kind of debt you can have. Bankruptcy doesn’t get rid of the financial liability and disability almost never defers payments. In the end, it’s better to pay-as-you-go than it is to incur debts through student loans.

Working Your Way through College

Zac Bissonnette mentions that the average college education costs about $15,000 a year, with about $2,000 of that a tax write-off. He mentions that $13,000 is a “do-able” amount for a loan college student to pay, if you work a job. When Pat Robertson points out that working a job and attending college is a burden, he replies that data shows people who work and go to college have higher GPAs than people who don’t work while attending university.

He attributes this to two factors. One, a person with a job has a routine, while a college student with no job is more aimless and less disciplined. Two, a person who is washing dishes 6 hours a day to pay for college is less likely to skip class or homework.

When asked about attending elite colleges like Harvard and Yale, he mentions that these schools often having grants and scholarships that help out and suggests the real trouble is those colleges considered one step below Harvard. He mentions, if you’re smart enough to get into Harvard or one of these schools, you’re probably just as well off paying less money for a solid education at a more affordable school and not having debts when you graduate. (Given his earlier comment, I’m assuming he excludes Harvard and maybe some other top-tier schools from that advice.) Whatever the case, I found Zac Bissonnette impressive and want to read his book, though I assume it has little bearing on my situation.

Youtube Videos on Student Loans

Perhaps the starkest thing I found on You Tube was all the suggested videos besides the ones I embedded–the ones from average college graduates. The litany of titles is enough to give you the gist of what’s being discussed. The job market is still lagging, so I guess it’s no surprise all the bitterness, despair, and anger over recent graduates’ own personal college experiences. Below are some of the video titles I saw.

  • College Debt Story
  • How I Paid off $70,000 in Debt and Quit My Job
  • Why College is the Biggest Scam in America Today
  • College Is an Evil Debt Trap
  • Proof: College Is a Fraud
  • College Is a Scam
  • Robyn Got Screwed in College – Debt
  • College Is a Death Camp
  • Is College Worth It?

This is a small sampling. I’m sure if I input “Why College is Great” or “How Student Loans Helped Me Get an Education”, I’d receive completely different reports. But if more money is owed on student loans than credit card debts these days, I can see why people are so upset.

Living Debt Free

This is part of a larger picture. People who find a way to live debt free are going to be happier, healthier, more psychologically whole, and more socially active. That might sound bold, but studies show that people without debt are more likely to marry, more likely to have kids, and less likely to contemplate suicide. Take out loans to get through the financial crisis in your life, but be smart about it. As soon as possible, find a way to pay your way out of your debt situation. Life is better when you own no one.

Student Loans on Cable Television

No one should read much into the fact the two cable television pieces involve Dave Ramsey and Pat Robertson and both involve student loans. I Googled the first of these guys and realized Ramsey sometimes talks about his beliefs, along with economics. I want to talk money on here, not politics or religion. As I mentioned earlier, video drift got me to these clips, nothing else.

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