Let’s be honest about it: Student loan debt is hurting the country. A big part of the problem is that 92% of all student loans are federal loans. So when those loans aren’t paid, we get stuck with the bill. The rate of delinquency on federal student loans is about 25% for those out of school and out of deferrment. And as you probably know, student loan debt exceeds all other consumer debt.
The average student has $33,000 of student loan debt. That’s just the average though; some have zero dollars and others have $200,000+. Collectively, the number is high enough that it hampers the ability of people to go buy a first home and save for the future.
A radical approach to tackling student loan debt
So I was inspired by this story of grad student who made a radical choice when facing having to borrow to a lot of money. Instead, a Canadian named Evan spent a year living in a tent while he attended University of Manchester in England to study astrophysics.
The tuition at the school was $30,000, and he was loathe to take on additional costs for student housing. So he made his home in a camping tent in somebody’s backyard after he paid them a small fee to put his tent up!
But Evan wasn’t acclimated to the cold. So he had to wear two pairs of thermal pants, a sweater, a onesie and a jacket to keep warm. He would shower by using the facilities at school!
I’m not telling you to do this. But I bring this story to your attention because a lot of college costs are discretionary. We’re not paying the money out, so it doesn’t seem like a burden at the time. Then poof, you finish school or you drop out and then those bills come due.
Here’s what I am saying: Maybe you go to community college to cut the cost of a degree in half, or you work while in school. Whatever it is, be careful taking on the student loans. Because not only do you have the debt, but some lenders actually don’t play it straight.
Discover is the latest private student loan outfit to get in trouble for illegal collection tactics and inflated bills. When you owe money, you always deal with people who might play it dirty. But I don’t want you to end up with a mountain of debt in the first place!