A new article in the Wall Street Journal suggests that college students are borrowing more money than ever before. Students are not only borrowing more money, but more students are borrowing in general. Per the Journal, this is having more severe implications than just the obvious burden of debt. Students are not buying homes or starting families as soon as they use to. This is causing ripples in the macro-economy.
In addition to the debt concerns, the article suggests that colleges and universities are misreading the situation as a whole.
Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts. Loans can give colleges an artificial sense of a family’s ability to pay tuition. To some extent, that false sense of security gets built into the assumptions schools make when setting prices, say experts. The idea is that as prices rise, families borrow more and more, spurring prices to rise further, which in turn requires more borrowing.
Ohhhh SNAP!!! I was right. In a blog earlier this week, I suggested that IU is missing the boat with their “tuition credits” solution. Their system gives a “discount” to full time B or better students. This practice is short sited, and it will only serve to put the average student at a bigger disadvantage.
You don’t have to agree with me, but if you don’t…take it up with the WSJ.
And I’m out.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.