Borrower Beware - Student Loans

High school seniors and their parents will soon be sifting through college applications. Michele Singletary’s September 20th Washington Post column included some important cautionary figures. The percentage of student loans in default is now 6.7% – up from a record low of 4.5% in 2003. Though I firmly believe that individuals should pay what they owe, I’ve been saddened to see first hand student loan obligations that will reduce the borrower’s living standards for several decades after they graduated. A cautionary quote in the article from Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, “If you borrow more than twice your expected starting salary, you will be at a high risk of default.” Starting salary expectations should be set conservatively. Until recently, it’s been very easy to get large student loans. Debt is dangerous – even when it’s used for something as important as a college education. As you work through this process, set a limit on what you will borrow – you’ll be glad you did.