The education loan trap

There are parents who want their child to go to the best possible colleges in the country, and they seem to be willing to do anything to let that dream happen. But little do they know that doing anything without proper research is going to make them suffer for life. I am talking about loans borrowed by parents for their children to pursue higher education in top notch colleges. It could also happen that the loan company does not show a clear picture of how the next ten years would be for them, or at times their whole remaining life. Loan schemes such as Parent PLUS have put a lot of parents under tremendous pressure because many of them are unable to reach even the principle amount decade after borrowing the loan while shelling out $1000 or more every month.

Some of the brightest students are not necessarily born in rich families. Although such students acquire scholarships and grants, the measly amount does not satisfy the financial requirements for some of the nation’s best universities. The only way to go is to borrow money through loans or go to a smaller university. Latter is rarely the choice parents would want to make, but some have to, because not everyone can pay for top notch colleges.

There are parents who still insisted of letting their child go to those big universities, and have regretted the decision. I recently read a story about Ms. Nemenzo, a freelance writer who took a hefty loan which was $8000 short of her annual income in order to pay for her daughter’s university expenses. Because the burden of repayment became too much, she took the wise decision to withdraw her daughter from expensive university and let her go to a City University of New York.

While applying for a parent PLUS loan, the government does not check your ability to repay, nor does it check your income, thereby making it easy to get the loan. It is quite easy to get PLUS loan, but it is quite impossible to get out of it, especially if you have overreached your limits. Some parents have even taken over a hundred thousand dollars in loan, imagine what would happen to their lives.

Such kind of stories are happening very frequently world over. Everyone wants a higher degree in their hands and they are ready to pay whatever it takes and however it be and if the student is coming to USA from some other country, he likely going to be hit with extra ordinary amount of fees. As a result the number of student loan defaulters have risen in many countries. Student loan services have adopted new ways to poke students and make them remember their loan repayment. By searching online on social media sites, they can track down defaulters and embarrass them or even exert pressure. Some have even contacted the employers and exerted pressure through their bosses. The rising need to get good education, lack of funds and unemployment looks like a good recipe to put all of us in the huge debt soup from which we can never recover!