Student Loan Debt

Written by Seth Cotterell
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Student loans are a great source of college financing. Stafford loans from the government are relatively easy to get, and loans from private businesses can also help ease the financial burden college imposes. Before you start accepting every available student loan, though, you need to seriously consider the ramifications and long term impact of your decisions.

Scholarships and grants are monetary gifts to students. They do not have to be paid back and they do not accumulate interest. Loans, on the other hand, will have to be repaid after graduation and they will accrue interest on top of the initial loan amount. Too many students load up on student loans only to face extreme financial difficulties once they graduate.

An Example of Student Loan Debt Calculation

Too much student loan debt can be crippling. Assuming a standard 10 year repayment schedule, a student who takes out $15,000 in student loans can expect to repay close to $23,000 when all is said and done. More than $7,000 of that amount is interest and monthly payments will be close to $200. The more money you borrow, the more you will have to pay back, and the more strain it will put on your available resources.

The problem with student loan debt has become so widespread that loan counseling is now required. Students must read information and sign a document stating that they understand their obligations and that they are in fact liable for the repayment of their loans. Another counseling session, called an exit interview, is usually required when a student graduates. This interview reminds students that they must now begin to repay the principal and interest of their loans.


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