[quote=UCGal]The other issue with student loans is that they are not dischargeable in bankruptcy.
Students are encouraged to take on this debt. Often they are young with little financial sense. So they just keep borrowing and not downsizing their lifestyle appropriately (as mentioned – putting living expenses on the student loans).
The biggest problem with student loans are that they are given to kids who’ve never lived on their own.
Financial education – the basics – should be mandatory in high school as part of the college requirements. Not just 2 years of a foreign language.[/quote]
Another issue is the ease at which a student can place their loans in deferment or forbearance after they get out of school. A student can easily get 36 months of deferment and 36 months of forbearance, and all the interest capitalizes upon entering repayment again. Only authorized periods of deferment will the government pay for the interest on the subsidized loans.
Borrowers that get out of school with $20K in debt, can easily have their balloon to $30K in debt by using these deferment and forbearance periods.
