The Federal Student Loan Trap

One of the biggest traps that young people get caught in today is the student loan trap.  Colleges and universities have a good things going when they sell ‘Education’ to young students coming out of high school.  The Federal Student Loan program is easy for students to enroll in school on, and can become a large loan in a few short years.  The loan has built in default protection for the Federal government, so therefore the loan must be paid for to settle it, or it will follow one their entire life. 

The route of the federal student loan can be a life long trap for students not using common sense.

What are colleges and universities selling?  Prospective students are told they are gaining useful degrees that will offer them a career that will enable them to be able to pay back the loan following school.  However, students soon learn once enrolled that in order to gain a degree in one field, they must have passing grades in many classes that have no relevancy to that field. 

Classes for an Engineering degree may require credits in ‘psychology’ and ‘political science’ for example.  If you fail a subject, despite having strengths in the field one desires to study, you will not get your degree.  Universities and colleges offering these ‘degree’ programs justify this by calling it a ‘well rounded education’ approach. 

Additionally students are enticed into the system to just get started and later determine their ‘major’ after attending school for a few years.  This approach makes embarking on an educational path purposeless.  The best advice a student considering a college education could receive would be to decide the following before starting. 

1)      Have an educational goal before you start.  Decide on a field, and a degree before running up the student loan.  Don’t start spending money to just ‘be in the college environment’.  One should ignore the culture of the university or college, and take a practical approach achieving a worthwhile goal and adopt a hard work approach to achieving it quickly.

2)      Look at options to get this degree without taking out a federal student loan.  Try to work part time and pay as you go, for example.  Perhaps you can borrow from a family member, and repay them after college. 

3)      Most important of all, if must utilize a federal student loan for your education, then only choose a degree program that will give you a readily marketable skill in society immediately when you graduate.  Such degrees might be a law degree, accounting degree or a medical doctorate degree.

Federal Student loans will remain on your credit report until paid in full.

Federal student loans do not go away until they are paid and settled in full.  They do not fall off your credit reports even in default for decades.  They leave delinquency marks on your credit report, and lower your credit scores if not paid on time.  In fact they are the most brutal form of loan in existence, and they are also so easily run up to extremely large amounts in just a few short years, which can require a person to be making payment for many years after they finish school. 

So I would suggest all prospective students to consider the three points I listed above before ever considering signing papers on a federal student loan.  They can be a helpful tool if one is achieving an education in a marketable skill only, but in obscure, untested and unmarketable degree programs they can become a ruthless trap is one cannot establish a career following school. 

So many times I see young people working in lower wage jobs after running up a huge student loan, and living a life of indentured servitude to the government for decades following. This is why I say that student loans are the biggest trap facing young people today.

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