I’ll kick off my inaugural post with a current hot topic: the student loan debate.

Let me preface this post with a little background if I may, I am the product of student loans and I also work in the financial aid area of higher education.

First and foremost let’s distinguish between federal student loans and private student loans. Federal student loans are distributed by the federal government and are managed/collected by government chosen lenders. The federal government sets the interest rates, loan limits, and repayment terms. Private student loans are distributed, held, and managed/collected by private loan companies. They also set interest rates, loan limits, and repayment terms.

Federal loans have aggregate limits per grade level and overall limits. You cannot accrue more than $57,500 in federal loans for an undergraduate degree (not including interest). If you personally are graduating undergrad with hundreds of thousands of dollars in debt then you did not use just federal student loans. The federal government does not have defenses in place for forgiveness or discharge of private loans.

The debate these days is that student loans are the devil and the federal government should forgive all student loans. Students shouldn’t graduate with hundreds of thousands of dollars of debt earning a college degree. Repayment is a burden that causes students to forgo basic options that adulthood is supposed to afford them i.e. students are so busy making student loan payments that they can’t buy a house or build their savings. And somehow this is all the federal government’s fault and they need to do something about it.

Somewhere along the way we have chosen to remove all self responsibility from this equation. The choices the student makes can greatly impact the role student loans play not only in their college careers but in their life. It starts in school. What kind of student were you in high school? This will affect the options you have for other types of financial aid (non loan aid). What type of school are you interested in attending? Do you have backup/alternative choice schools? Do you understand the difference financially between public and private universities? Is community college an option for you? Essentially did you choose a college or university that not only checked all the academic boxes but the financial ones too? I attended a public state school for undergrad and I can say without a shadow of a doubt I received just as good of an education as if I had attended a private Ivy League. Point being you don’t have to saddle yourself in debt chasing a “good” education.

Did you take out loans only for what you needed or did you take out the maximum amount because it was offered to you? Just because you are eligible for a certain amount in student loans does not mean you are obligated to take out the entire amount. You can personalize your financial aid. Find out what your cost of attendance is or the educational charges for the semester/year and tailor your aid to fit your charges. Did you know you can make student loan payment while you are in school? If you are able (many students are not) make payments on the loans you already have.

Do not go into borrowing with the mindset that you can eventually receive student loan forgiveness. Student loan forgiveness the way it is currently set up is extremely hard to come by. Thousands apply and very few are granted. Forbes reported in May of 2019 that of the hundreds of thousands that applied over 99% of applicants were rejected.

Even if the federal government came in and forgave current student loans this will only apply to federal student loans. Yes this would be a cure for an ill that plagues so many but there are still private loans (a whole other post) which no one is talking about. So to make a blanket statement that the federal government should forgive all student loans is inaccurate and ineffectual.

There are many things that you, the student can do to curb how much loan debt you are personally responsible for.

Sure, there are all kinds of other factors that come into play with the cost of college and how families are expected to pay for it. Trust me I’ve heard everything. The thing that you can do now is educate yourself and make wise decisions that fit your goals. I had an econ teacher in college that said, “if you can’t change the system, game the system.” This is the environment we are in and you need to learn how to live in it.

Keep the conversation going in the comments.