Those of us who are interested in personal finance are aware of notion that student loans can be that proverbial monkey that people want to get off their back. A loan taken when young can take years to pay off, and keep a person in debt for a while.
We’ve talked about the value of college in debates on college vs. entrepreneurship, as well in a discussion on how education can increase wealth. One of the other factors in the equation, which we touched on in those posts, is the reality that student loans can be a real burden. Thus it’s important to choose schools and programs wisely, and consider ROI.
A recent article in the Washington Post actually brought this last point to light in a way that certainly caught my attention. According to the article, there are many people in their 50’s and even 60’s who are paying down student loans. That’s right: student loans can be a burden for senior citizens!
A chart in the online article indicated that of the student loans that are past due as of the 3rd quarter of 2011, 12.1% were for people in their 50’s, and 4.8% were for people in their 60’s!
That’s really something else. Those debts just don’t go away. Now, to be sure, some of those people might have taken on loans later in life upon returning to school. That doesn’t make it any less unpleasant to have debt later in life though. But more eye opening is the notion that some people are still dealing with their initial round of loan obligations as they near retirement eligibility!
While I think that it can be said that a lot of debt is bad, student loans can be a more tolerable version of debt since it is being used to invest in one’s future and potential earning power. That’s different from buying an overpriced house or car. However, this goes to show that not all student loans are smart, and good loans can become bad if the repayments aren’t managed properly over the years.
To avoid such a situation, it seems like a good idea to strongly consider ROI when picking out a school and program. Unless a school is a world renowned name brand, such as an Ivy or Ivy equivalent, it seems like a really good state school might be a better investment than an expensive private school without the name brand. Does that make sense? Also, majoring in underwater basket weaving or some similar non-marketable endeavor is sure to wreak havoc with that ROI as well.
The big thing I see is that getting a good foundation of financial knowledge when growing up, from a parent or guardian, can be invaluable to people. Signing up for significant debt shouldn’t be considered a rite of passage for everyone, when the idea for many of us is to work toward financial freedom.
Can you imagine not being able to buy a grandchild a toy, because you had to pay off your own student loan?
My Questions for You
Does this surprise you at all, that there are people out there in their 50’s and especially 60’s that are still paying off their own student loans?
What do you think a solution can be for these types of situations to be avoided?
Did you have any student loans at any time, and how long did it take to pay off? Or, if you still have them, when do you envision getting them paid off?