Student Loans: Borrower Beware!

Michelle Singletary, the personal finance (and nationally syndicated) columnist for The Washington Post, issued some dire warnings in her September 20, 2009 column, After College, Student-Loan Sinkhole Awaits. According to Singletary, the current financial crisis in mortgages, business lending and credit cards also extends to student loans, as follows:

The percentage of those loans in default grew to 6.7, up from 5.2 percent in 2006. The figures represent borrowers whose first loan repayments came due from Oct. 1, 2006, to Sept. 30, 2007, and who defaulted before Sept. 30, 2008, according to the U.S. Department of Education.

In other words, the department reported, nearly a quarter-million student-loan borrowers went into default during that year.

Gulp. And there's more...

Go to StudentLoanJustice.org and read the stories of "victims" living under crushing student loans. Also go to http://www.defaultmovie.com and watch the poignant trailer from "Default: The Student Loan Documentary." The feature-length film chronicles the stories of borrowers who, years after leaving school, are trying to repay loan balances that have ballooned to two or three times the amount they borrowed.

For so many, the heavy borrowing is unsustainable... Until there is a sustainable solution, there has to be a sea change in the view by many parents and students that college at any cost -- no matter how unaffordable -- is worth the years of financial burden and perhaps ruin.

The more I learn, the more discouraged I get. People at either end of the economic spectrum have access to money to pay for college, but if you're somewhere in between - even struggling to pay bills and keep your head above water financially - you'll be hard pressed to afford a college education for your child. Borrower beware, indeed.