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Should You Take Out Loans for College?

A question I often get is should a student take out loans for their college degree, and how much is too much? And, honestly, I would have to say that it's almost NEVER a good idea to take out loans for your college degree. For a few reasons:

1. Students loans NEVER go away- even if you end up filing for bankruptcy

2. Student loan interest rates can fluctuate and be pretty high- the annual percentage rate could change from year to year and a 2% difference can mean thousands of dollars more over the lifetime of the loan

3. If you owe student loans it may hold you back on your dreams and goals in life- studies have shown that graduates are taking longer to move out of their parents' homes, they don't have the money for down payments on houses, they are putting off major milestones like getting married and having children, they are unable to save for retirement, and delaying adulthood in general. This is also having a major impact on the nation's economy according to studies.

4. You can't count on student loan forgiveness programs- they are very limited with a lot of restrictions, with few exceptions

5. Most don't understand how the loans work and end up with major regret later on- research from the American Institute of Certified Professional Accountants indicates “that less than 40% of all borrowers had a firm understanding of how hard student loans would be to pay back,” and “60% of borrowers said they have some regret over their student loan decisions,” per Bankrate.

6. Student loans put undo stress upon a graduate- "According to a new report by the progressive think tank Demos, 'student debt is particularly damaging for individuals who struggle to repay their loans. Delinquent borrowers are saddled with fees, penalties and rapidly accumulating interest; borrowers who default on their loans face ruined credit and a debt often several times their original loan balance.' Robert Hiltonsmith, who authored the Demos report, noted: 'The majority of people struggling to pay back their college loans have relatively small amounts of debt; half owe less than $16,400. This belies the common media portrayal of struggling borrowers as carrying excessive amounts of debt beyond the average, and brings into question whether a higher education system financed primarily by debt is putting undue risk on students trying to build skills and climb the economic ladder. Relatively small debts can cause big problems,' he found. 'There is no ‘safe’ amount of student debt: Borrowers with small balances struggle to repay them at the same rate as borrowers with higher balances.'"

However, I would have to say that there is maybe one instance where taking out a loan would be worthwhile for you. If your student gets accepted into a Tier 1 college (a TOP college- here's a link: AND you only would have to borrow a MINIMUM amount of money/year (somewhere around the tune of $8,000-$10,000/year) then PERHAPS it would be advantageous for you to do so. I say perhaps, because just because you have been accepted into a top college does not mean you should necessarily go to that college. I know many students who have gone on to prestigious schools who thought they could excel but ended up failing, dropping out, or who became fearful and stressed to the point of exhaustion (and which led to, in one case, suicide). It may be wiser for your child to enroll in a less rigorous institution in which they can excel and flourish than one that may crush their spirits. Malcolm Gladwell says, "choosing to attend the very top school to which you are accepted makes it much more likely that you will be an average performer in that school – or worse. Better to be a big fish in a little pond than to have your confidence crushed in a hyper-competitive talent pool to which you were the last invited to the party." He also found that "if you attend the second or third most selective and rigorous choice on your list, you are more likely to outperform your peers. This, he contends, is the most critical factor. Why? Because if you graduate in the top percentage of your class, the research indicates that you are much more likely to succeed during your career – no matter how highly ranked your school is. Conversely, if you graduate in the middle or bottom half of your class, no matter how prestigious the school, you are less likely to be successful." (Interesting, huh??)

Just because it is a "prestigious university" may not mean it is the educational experience you want for your child. Maybe a smaller, Christian school would be a better fit. Many of the "selective" schools also tend to focus on affluence, credentials, or prestige as being more important than developing character. It has also been shown that the quality of instruction at "brand-name" colleges is likely to be worse than at "no-name institutions" and that there has been no relationship shown between the cost of a college and the amount of learning a student receives. Many classes are held in huge auditoriums by teacher's aides and not the professors themselves because many of them are all about research and publishing their works. A study reported in the American Economic Review concluded that even in terms of earnings, "What matters most is not which college you attend, but what you did while you were there. (That means choosing a strong major, choosing professors carefully, getting involved in leadership activities, getting to know professors)...Measured college effects are small, explaining just one to two percent of the variance in earnings."

But, for the rest of us, it would never be a good idea to take out loans for college, in my opinion. Especially when there are ways you can get your college degree for practically nothing! Work/study programs, tuition discounts, scholarships and grants, college comparison shopping and negotiating, and part-time jobs are all ways you can keep your costs down. But, as you all know- my favorite way is the College Out of the Box way! You can get your degree in less time, for less money, and with NO student debt-no matter your age by earning your college credits in a variety of very inexpensive ways and transferring those in to the college of your choice (or go all the way through with the Big Three colleges!) There are just too many options available now for students who want to get their degrees WITHOUT having to graduate with student loan debt, that it makes NO SENSE to take out loans when you don't have to. Do you really want your child to graduate and start off life thousands of dollars in debt? Do you want them to have to put off their lifelong dreams or goals because they owe someone money? Or wouldn't it be better to graduate with your degree and not owe anyone ANYTHING??!! That would definitely be my choice!

If you want to find out how you really CAN get college for free check out my blog on

If you ever feel the need to fill out student loan papers for your student PLEASE watch a few student loan horror stories on You Tube. Here are a few to start you off with:

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