College Graduates in Danger of Not Getting Jobs Because of Student Debt

If you recently graduated from college, you more likely have a student debt of at least $25,000 and looking for a job. Those without a degree are instantly disqualified from the American job market. On the other hand, for those who have a degree, your hopes might be futile.

Ever since 2010, student loan debt has exceeded credit card loan debt and auto loan debt.

San Francisco State University students, who have federal student loans, have an average debt of $18,000. SFSU approximates its default rate to be over 5 percent for the next year. This default rate is lower than 8.8 percent which is the national average.

Failure in paying debts damages credit value, and job applicants with bankruptcy records are avoided by a few employers. Moreover, poor credit hinders a person to be able to get loans that can help put up a business or get loans for a car or house.

However, the sad truth is that federal student loans can be paid only after graduation and normally takes 20 years. This is why a few students stop pursuing their dreams because of the prospect that the unemployment rate for college graduates of this year will be 50 percent.

The country’s three richest people would have to give 4.5 percent of their respective incomes to maintain federal loan rates at their current point for all students. According to a recent study, 35 percent of the college expenses are paid by families. Thus, while higher education fees increase, household income decreases.

In addition, another problem is the country must have an education system that is appropriate with the economy and public welfare needs.

These issues must be solved as soon as possible because if not, the next generations of graduates will only end up overwhelmed with misery. There must be an improved educational system that is within the means of all income groups.

Poor Kids Get Robbed of Private School Credit

The credit loan for poor children supplied by the federal government is being abused by some affluent families. The New York Times has unmasked this sully reality of breach in the tax education credit. The main intention of the credit was to supposedly provide for the less fortunate citizens to allow their children to avail private education. However, it has been a proven fact that it is now an avenue for parents of children who had availed private education to get the benefit for their children.

Only kids who have enrolled in public schools and the law were specifically crafted to differentiate “enrolled” and “attended”. According to the State Representative of Georgia, Mr. David Casas the law specifically used the word enrolled and not attending so that the scholarship could be availed by private school students.

In one of the meetings, parents were dubious of the idea and raised the idea as a scam. Once, a concerned parent questioned the law if it would qualify a student that has been attending a private school but also he enrolls in a public school just to avail the benefit. The child will be enrolled in two schools but he is attending the private school, the law only required the recipient to be enrolled in a public school and it said nothing about attending.

Though Mr. Casa reassured the parents that the program was not a scam, it is very clear that this requirement is a terrible idea and will blow up in the company’s faces in the near future. Currently, there are many programs like this that is operating across eight different states in the United States. The program costs $350 million of the states’ funds which has been paying for the education of students who attend religious schools and scholars for football.

The headmaster of the Covenant Christian Academy based in Cumming, Ga, Mr. Jonathan Arnold shares his dismay as he reviewed the names of current students who availed the scholarships.

Financial Setbacks for Engaged Couples, Ameritrade Reports

The majority of couples who are currently engaged are planning to pay all of their wedding expenses without asking for any financial assistance from their parents. Moreover, almost one half of engaged couples are planning to spend lower than $10,000 on their wedding day. This is according to a recent report from TD Ameritrade Holding Corp.

Moreover, the report also found out that the majority of lovers do not regard as deal-breakers setbacks such as bad credit, foreclosures, student loan debt, and unemployment.

In the end, the major problem is bankruptcy. In fact, over 3 out of 10 engaged people said that it would be one of the reasons to cancel the wedding. In addition, 27 percent said that they would reschedule the wedding.

According to Carrie Braxdale, managing director of investor services of Ameritrade, more couples are getting married in the latter part of their lives. Consequently, they are creating more financial problems into their marriage such as credit card debt and student loan debt.

The areas where couples are likely to have very high expenses for their wedding day are the Northeast, and then next to that is the West. The majority of people begin to set aside money in the same year prior to the wedding. On the other hand, 9 percent begin saving money for the wedding more or less two years beforehand.

Ameritrade also discovered that 41 percent of couples below 31 years old asked financial assistance for their wedding expenses from their parents, while 21 percent of older couples ask help from parents.

Based on data from wedding website The Knot, wedding funds are getting bigger for the first time since the year 2008 at the same time as the improving economy. Another report from XO Group Inc. last March discovered that 11 percent of couples have expenses exceeding $40,000.

With the exception of honeymoon expenses, the average cost for a wedding was $27,021. The most costly place to have a wedding is in Manhattan, with average costs of $65,824.

A Good Student Loan vs. a Bad Student Loan

Considering the total student loan debt reaching $1 trillion, and surpassing total credit card loan and auto loan debt, a lot of people of are becoming concerned of the drastic increase in college financing. Any loan is considered as bad loan right away and students who get these kinds of loans will almost immediately be living poor lives because of excessive interest rates. However, this perspective is not entirely true.

It might be considered unreasonable to borrow large amounts of money with high interest rates to finance a career that will not bring you much income. On the other hand, it is better to get a loan to fund your college education because it is an asset and a good investment as well. However, good and bad loans may differ from one family to another, so here are examples of a good and a bad loan.

Federal Stafford loans can be considered a good loan because it is believed to be one of the top student loans available as of this moment. For this kind of loan, your income must be low enough that you are not eligible for a subsidized loan. As a result, you will have an interest rate of 3.4 percent and the Federal government will be responsible for this interest rate until after your graduation.

But, the 3.4 percent interest rate is arranged to increase to a maximum of 6.8 percent on July 1 for the academic year 2012-2013. Fortunately, since the current US President Obama and the Congress is dealing with election once again, that increase is not possible to happen. In contrast, Stafford loans that are not subsidized by the government have an interest rate of 6.8 percent by now.

On the other hand, borrowing huge amounts of money to fund an overpriced school can be considered a bad loan. Although some might think that getting loans is worth it if you use it to finance college education in Harvard or Stanford, for instance, you will eventually face debt of roughly $60,000 or $80,000 after graduation.

US Congress Pressured to Stop Doubling of Student Loan Interest Rate

The US Congress is being pressured to do something to keep low interest rates on Stafford loans. There are 225,000 Georgia students who rely on these loans to be able to go to college. On Tuesday, the United States Senate will vote concerning the interest rates on the loans and if the Congress does nothing, then the interest rates might be twice as much starting July 1.

According to Georgia PIRG during a conference call, the current 3.4 percent interest rate on student loans will become 6.8 percent. Since students should reapply for the loans yearly, it will further increase the college loan debt load. Moreover, even before the doubling of the interest rate, college loan debt is already greater than credit card debt in the US.

For a typical Georgia student, there will be an added $913 in repayment costs if the federal Stafford loans charge a 6.8 percent interest rate. At present, a typical Georgia student owes approximately $19,000 by the time of graduation. On the other hand, the national average debt is $25,000.

Philip E. Hawkins, associate director of financial aid at Kennesaw State University, said that there are students who have difficulties in meeting their college expenses. Not only do they exert a lot of effort in meeting their expenses, but they are also concerned on how they are going to pay those loans after graduation.

According to Rich Williams, a Higher Education Advocate for Georgia PIRG, at present times, a college education is needed for students to be able to make progress. However, making the interest rate for student loans twice as much would hinder a large number of Georgians in attaining success.

In addition, Ron Day, the Financial Aid Director at Kennesaw State University, said that college costs are becoming much more expensive than before, add to that a declining number of financial assistance programs. As a result, student loans are turning out to be an unavoidable alternative for students to be able to pay for college.