Must Read: Article on Student Loan Debt

Paying for College
1

<p>From the SF Chron,<br>
<a href="http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/10/25/BIGLOANS.TMP%5B/url%5D"&gt;http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/10/25/BIGLOANS.TMP&lt;/a>

[quote]
Ethan Winsby considers himself in financial ruin at age 27 -- but not because he lost at gambling or risked everything on a startup that went bust.</p>

<p>Like a growing number of young adults, he had to take out private loans to attend college.</p>

<p>He graduated from the California Culinary Academy in San Francisco in 2005, but he said his subsequent low-paying job as a cook has made it nearly impossible for him to repay the $35,000 he borrowed.</p>

<p>As the 18 percent interest rate compounded, his debt has soared to $50,000. The monthly payments, if he made them, would be two-thirds of his $1,200 monthly after-tax salary....

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<p>I think any student considering private loans on top of subsidized loans to finance their college education should read this article. I know this issue of borrowing comes up every spring, when students get into their desired colleges but are gapped on financial aid.</p>

2

<p>18%????</p>

<p>What on earth type of loan did that guy take out? I thought my 6.9% was bad. Yeesh.</p>

3

<p>It was a private loan with a variable interest rate. Though the article didn't say so, it's also possible that the loan allowed rate increases if payments were made on time -- this is common with credit cards.</p>

4

<p>Ugh. This makes me glad that I read the fine print before signing. Very glad.</p>

5

<p>Thanks calmom! This article should be a must read for all high school seniors.</p>

6

<p>And for their parents. Many of them figure that 18 year olds are now adults so they can take out loans and pay for that college. It should be taken into account that most 18 year olds are not going to be that wise about financial matters. Even the most mature often end up getting into some financial trouble with overspending and credit cards. Add a huge college debt with unfavorable terms into the mix, and you are looking at financial ruin before the kid is even on the roll.</p>