Frugaling

Save more, live well, give generously

  • Home
  • Start Here
  • Popular
    • Archives
  • Recommended
  • Contact
  • Save Money
    • Lifestyle Downgrade
    • Save Money with Mindfulness
    • Save at Starbucks
    • Psychological Trick To Reduce Your Online Shopping
    • Best Freebies
  • Minimalism
    • 8 TED Talks To Become A Minimalist
    • We Rent This Life
    • Everything Must Go
    • Lifestyle Downgrade
    • The Purchase Paradox: Wanting, Until You Own It
    • Nothing In My Pockets
  • Social Justice
    • Destroy The 40-Hour Workweek
    • Too Poor To Protest: Income Inequality
    • The New Rich: How $250k A Year Became Middle Class
    • Hunter Gatherers vs. 21st Century Desk-sitters
  • Make Money
    • Make $10k in 10 Months
    • Monetize Your Blog
    • Side Hustle for Serious Cash
  • Loans
    • 5 Rules To Follow Before Accepting Student Loans
    • Would You Marry Me?
    • Should I Have a Credit Card If I’m In Debt?
    • $50k in Scholarships in 70 Minutes

Student Loans: Gorge On The Federal, Financial Trough

By Frugaling 1 Comment

Share This:

I’ve been gorging on the financial trough that is the Federal government. They know how important I am, and they’ve been more than happy to open up their coffers for a swell guy like me. I’m part of the educated elite, don’t you know? They’re investing in me. What an ego boost!

Although, when I look at my Mint.com account, with all the accounts consolidated into one domain, I see a different picture. Suddenly, I appear to be the fool in a bigger game of Monopoly. I own nothing, and I’m being given nearly unlimited funds to continue deeper down this rabbit hole of debt. Today, that hole sits at $37,605 (see my previous post on debt that started this site) – a gut check that leaves me breathless and anxious. I’m told to rest assured: Everyone goes through this – it is nothing compared to other people. That doesn’t assuage my worries.

What does comfort me is that the greater economy is realizing the impact of over a trillion dollars in student loan debt. You see, economists and businesses have taken note. Even though the country has shrinking credit card debt, we’ve replaced it with student loans. It’s a shell game, and WE the students are going to be left with the bill.

Student loan debt is the responsibility of students, government, and corporations, alike. There are too many hands on the profits, and not enough students that know they deserve better. That interest rate that we pay, 6.8%, may be raised very soon if Congress doesn’t act. Even worse, banks prime rate for loans through the Federal Reserve is 3.25% – other rates are near 0% (citation). That prime rate is what banks get to lend money to suckers like you. Congress finances our student loans at 6.8%. Are you doing the math? I am. That’s 3.55% more than what banks pay to lend money.

Our government shouts from the staircases, halls, and opulent gardens that we are a country that prides itself on education. Education comes first here in America, and we are the best country because of it. Unfortunately, we are neither. The country is consistently ranked behind most of Europe for education and our crumbling, decaying system of education is hurting our future. One of the best ways we incentivize an education is by making Federal loans highly accessible. One of the worst ways we cripple our economy is by charging more than double the interest rates that big banks get. Where’s the logic? This seemingly short-term decision to pass on the debt to an even younger generation seems ill-advised and destined for long-term failure.

The government is profiting over this system of student loans. In fact, they’re poised to earn $33.5 billion for fiscal 2013 (link). If this was Goldman Sachs, Citigroup, and/or (insert bank name here), we would write this off as yet another crazy, astronomical year for the banks. But this isn’t a corporation or a for-profit machine. This is our government, which aims to protect against predatory lending. The irony? It’s doing just that.

Only 39 percent said they fully understood the burden student loan debt would place on the future, and 60 percent now have at least some regret over the choice of education financing. (AICPA Survey Results & HuffPo)

To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter. (New York Times)

I’m convinced that students (me included) are not able to accurately calculate and convert a bucket of student loan debt into a monthly payment – with compounding interest – on a salary that doesn’t exist yet. Good luck with your repayment plans!

Perhaps we need to tackle this problem at the government level, as well. Perhaps it’s time for our representatives to represent. Perhaps they can follow the lead from the champion of the middle class, Senator Elizabeth Warren.

The rise and noise over student loan debt has just begun. President Obama will be tackling this impending disaster soon, but will it be too late?

Share the wealth:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • More
  • Click to share on Pocket (Opens in new window)
  • Click to share on Tumblr (Opens in new window)

Related

Filed Under: Loans

Comments

  1. Dyepempibre says

    May 16, 2013 at 4:51 pm

    Article is interesting, but i wonder where i can find good company for pre settlement funding, any ideas?

    Reply

Join the Conversation: Cancel reply

Follow

  • Facebook
  • Google+
  • Pinterest
  • RSS
  • Twitter

Subscribe

Best Of

  • American College Students: In Debt, Distracted, And Doomed
    American College Students: In Debt, Distracted, And Doomed
  • The New Rich: How $250k A Year Became Middle Class
    The New Rich: How $250k A Year Became Middle Class
  • Dating As A Minimalist
    Dating As A Minimalist
  • The Real Reason Poor People Can’t Save
    The Real Reason Poor People Can’t Save
  • The 5 Minute Guide To Reading Credit Card Terms And Conditions
    The 5 Minute Guide To Reading Credit Card Terms And Conditions
  • Was Albert Einstein A Minimalist?
    Was Albert Einstein A Minimalist?

Recent Posts

  • How to Eat Healthy on a Budget
  • How To Live Stream Your Art
  • 5 Fun Summer Activities on a Budget
  • How to Pay Off Medical Debt
  • 5 Ways to Save Money Before a New Baby

Search

Archives

  • June 2023 (1)
  • May 2023 (2)
  • January 2023 (1)
  • March 2022 (3)
  • February 2022 (2)
  • November 2021 (1)
  • October 2021 (2)
  • August 2021 (4)
  • July 2021 (5)
  • June 2021 (3)
  • May 2021 (2)
  • January 2021 (2)
  • December 2020 (2)
  • October 2020 (2)
  • September 2020 (1)
  • August 2020 (3)
  • June 2020 (1)
  • May 2020 (2)
  • April 2020 (1)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (1)
  • November 2019 (5)
  • September 2019 (4)
  • August 2019 (1)
  • June 2019 (1)
  • May 2019 (1)
  • April 2019 (1)
  • March 2019 (3)
  • February 2019 (1)
  • January 2019 (3)
  • December 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • June 2018 (2)
  • May 2018 (1)
  • April 2018 (5)
  • March 2018 (6)
  • February 2018 (4)
  • January 2018 (1)
  • December 2017 (10)
  • November 2017 (3)
  • July 2017 (2)
  • June 2017 (5)
  • May 2017 (2)
  • April 2017 (8)
  • March 2017 (4)
  • February 2017 (3)
  • January 2017 (2)
  • December 2016 (2)
  • November 2016 (4)
  • October 2016 (2)
  • September 2016 (1)
  • August 2016 (4)
  • July 2016 (1)
  • June 2016 (3)
  • May 2016 (3)
  • April 2016 (4)
  • March 2016 (5)
  • February 2016 (2)
  • January 2016 (2)
  • December 2015 (3)
  • November 2015 (5)
  • October 2015 (5)
  • September 2015 (4)
  • August 2015 (6)
  • July 2015 (8)
  • June 2015 (6)
  • May 2015 (14)
  • April 2015 (14)
  • March 2015 (13)
  • February 2015 (12)
  • January 2015 (15)
  • December 2014 (10)
  • November 2014 (5)
  • October 2014 (6)
  • September 2014 (7)
  • August 2014 (12)
  • July 2014 (11)
  • June 2014 (12)
  • May 2014 (16)
  • April 2014 (13)
  • March 2014 (13)
  • February 2014 (9)
  • January 2014 (20)
  • December 2013 (9)
  • November 2013 (18)
  • October 2013 (15)
  • September 2013 (11)
  • August 2013 (11)
  • July 2013 (27)
  • June 2013 (18)
  • May 2013 (16)

Best Of

  • American College Students: In Debt, Distracted, And Doomed
  • The New Rich: How $250k A Year Became Middle Class
  • Dating As A Minimalist

Recent Posts

  • How to Eat Healthy on a Budget
  • How To Live Stream Your Art
  • 5 Fun Summer Activities on a Budget

Follow

  • Facebook
  • Google+
  • RSS
  • Twitter

Copyright © 2025 · Modern Studio Pro Theme on Genesis Framework · WordPress · Log in