Friday, May 16, 2008
Student Loans the new Sub Prime Crisis?
Recently while zoning out in front of the T.V. I heard several advertisements for student loans. These ads suggested that students could borrow up to $40,000 per year to cover college expenses. This seemed exorbitant so I researched a little and sure enough websites such as Astrive.com and ThinkStudentLoans.com both offered these amounts. I know some high profile private schools are expensive, but to offer a young adult right out of high school $40,000 a year for school seems ludicrous. Someone could potentially accumulate $160-200,000 dollars of debt before the age of 25. This seems like a recipe for disaster with tons of kids bogged down by enormous debt my guess is a large number will default on the loans. Sometimes I feel overwhelmed with a car loan that will only take me four years to pay off, not the rest of my life.
Granted there are some stipulations different from Sub Prime mortgages. The loans require a credit check and some require a co –signer; however the amount of debt students generally between the ages of 18-25 can incur in a short amount of time seems to indicate a high amount of young adults defaulting on loans because they were unable to grasp the financial situation they put themselves into.