Newspaper article The Florida Times Union

College Loans; Drawing Lines Saves on Debt

Newspaper article The Florida Times Union

College Loans; Drawing Lines Saves on Debt

Article excerpt

It's been called the next great bubble, an avalanche of college loans that are difficult, if not impossible, to pay off.

In fact, student debt now is greater than credit card debt in the United States.

Dawn Lockhart, president and CEO of Family Foundations, a nonprofit that provides credit counseling, says that almost half of the college students in Florida graduate with $18,621 in debt. They also carry about $3,000 in credit card debt.

The average student loan requires a monthly payment of $234 for 10 years with a total payout of over $28,000. If you defer the loan, the burden is increased further.

In addition, Family Foundations sees many families with student loan burdens ranging from $50,000 to $100,000. Student loans may follow a graduate for a lifetime.

A combination of factors has led to this sorry state:

- Students know that a college education is a virtual requirement for success. Loans are an investment that will produce dividends over a lifetime.

- Students and their families don't know where to draw the line on debt.

- College admissions departments may not provide enough guidance.

Much attention has been given by the federal government to for-profit colleges, leading to proposed new "gainful employment" regulations.

The U.S. Department of Education cited "rapid growth of enrollment, debt load and default rates at for-profit institutions in recent years," which spurred an 18-month negotiation with the higher education community over the new rules.

The rules are meant to protect students from "aggressive or misleading recruiting practices," provide students with better information about career colleges and ensure that only eligible students receive aid.

The U.S. Department of Education noted that the debt load taken by students at for-profit colleges is almost double the load at nonprofit institutions. It also was noted that only 55 percent of borrowers at for-profit colleges were able to pay more than interest on their loans. …

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