Last May, this newspaper ran an editorial noting that Maine students carry the second-heaviest student loan burden in the nation.
The writer cited research by the Institute for College Access and Study, which figured 2010 graduates received, along with their diplomas, an average debt of almost $30,000. The conclusion was (and still is) that students and their families should be well aware of the interest rates attached to their loans, and what the total amount of debt is they will incur.
The editorial also noted that the federal government is developing a tool to help figure those things out. It’s in the beta testing stage, but it’s still worth a look: www.consumerfinance.gov/payingforcollege.
Meantime, the state of Maine has come up with a resource, titled the Downeaster Guide to Common Sense Student Loans. It’s the latest in a series of quick reference booklets published by the Bureau of Consumer Credit Protection.
David Leach is principal examiner at the bureau and co-author of the Downeaster Guide.
“Furthering one’s education beyond high school remains a key pathway to a productive career and higher income,” Leach said recently. “At the same time, escalating costs make it more important than ever for students, parents and others to carefully evaluate the expense and financing of a higher education.”
The 60-page guide wastes no time in offering useful data. The inside front cover features a table showing monthly payments, total interest and total debt over the term of loans ranging from $5,000 to $200,000. The table assumes an Annual Percentage Rate, or APR, of 6.8 percent, the rate of unsubsidized federal Stafford loans for the 2012-2013 school year (subsidized loans have a 3.4 percent APR).
The guide points out in some detail the differences between the two types of federal loans. For subsidized federal loans, the federal government pays the interest while the student is enrolled in school. As of July 1, 2012, interest starts to accrue upon graduation. With unsubsidized federal loans, interest starts to accrue as soon as the loan is disbursed.
The authors of the guide also spend a good deal of time examining private loans. Their conclusion: Use them as a last resort, since they don’t offer the borrower protections and repayment terms that federal loans do. While interest rates and fees on federal rates are known, costs of private loans may not be known until the borrower submits an application.
The guide offers real-world advice about choosing a school and a major. It also explores locating sources of free money (grants, scholarships and tax credits), working one’s way through school and finding ways to cut expenses while going to school.
It’s a worthwhile volume for prospective students and their families to explore in detail.
A hard copy is available through Maine’s Bureau of Consumer Credit Protection. Call toll-free, 800-332-8529, or find the online version in the “Consumer Guides” pages of the Bureau’s website, www.credit.maine.gov.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email contacexdir@live. com.
Why don’t they do like Mitt Romney suggests and instead of taking on all that student loan debt just borrow money from your parents! It’s that easy.
Could actually work if you had smart enough parents who planned ahead…
at least you may be able to get the loan interest free and cut out the corrupt slave driving bankers….ahhhh, I mean the federal government
yeah, just have mommy and daddy pay for everything. that’s realistic.
You actually think the reason so many kids can’t get money from their parents to go to college is because their parents aren’t smart enough to plan ahead? Your post is an insult to the many working class parents who would give anything to help their kids if only their paychecks didn’t have to go to the basic necessities.
Maybe hard working people have enough integrity not to work for a bank. I do not hate rich who earned it. I hate the rich who cross moral lines to make it. Hire lobbyist Bribe IE. Walmart bribed Mexico $25 million . Find “legal” way to get out of paying thier fair share. Took bail out with super low interest only to show record profits. Some people are not playing by the same rules as others. I also do not care for people who do not try and abuse the system poor have no monopoly on this.
For info purposes, I had very little help with college with a wife and one then two kids, got my engineering degree from Umaine after 5 years (changed majors after 1 year), and had around 60k in student loans. I worked while going to school as well, but I couldn’t avoid getting the loans. My payment was around 600 a month to begin with upon graduation but I had to lower it by extending the payments to twenty years. Private loans saved my butt a couple times, but it dried up quickly when I ran out of cosigners. We need to support our students and do what we can to be competitve in science and engineering. The biggest thing students need to do is plan ahead and figure out how they are going to get through school, a lot of kids don’t plan at all, and just feel entitled, which does not fly with professors when you have that attitude about classwork.
Maine’s 529 plan, The NextGen College Investing Plan is a good place to start saving early. Replacing debt with savings can be a big help.
“Replacing debt with savings can be a big help.”
Hear, Hear!!
too bad the federal reserve has a stated policy of robbing your savings by 2% annually through their ‘target rate of inflation’!
gotta love the ‘progressives’ and the wonders of their centrally planned economy…
ROMNEY / RYAN 2012 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
End the Fed!!
As long as Obama and his mindless followers are running stuff, an education is useless. Just sign up for public assistance and sleep until he’s GONE.
The hypocrites in the ivory towers rail against the 1% as they line their own pockets with loot taken from students who leave college with $30k+ in debts. The real problem is that college costs have risen at twice the rate of inflation.
Don’t go to college right out of high school, for, most have no idea what they want to do, and do not pay the greedy colleges to find out what you want to do. Go in the service, no a bad deal, go to work, but by all means, do not incur debt, or do anything illegal. Find a living space, whether it is a van, a camper, top of a garage, but, something affordable, and do things in time off, go and see, take a bus trip across the U.S., spend a winter on a Florida beach, allow yourself to be free, to which, pursue an education on life, and find what your bent is, your talents, you are a U.S. citizen under a duress government, be careful, be happy, and understand and watch for all the pitfalls, which, can be human or government made, but, by all your smarts and guts, you must be independent, take care of yourself
and be not a burden to anyone, or cause a burden to anyone.
That’s actually pretty good advice.
All educators should be taught poverty 101. The social class bias in education . Oh this kids was an eagle scout, Ski team, Hockey player, etc. He gets in. Well poor people can not afford to d those things. Education is more about Indoctrination and money than truely educating people. We should do a real study about how much money spent on education and the real outcomes. Let say less than half or the poor who go to college get a degree. then only half of them get good jobs because of college . $100k In debt. Now lets compound the interest and be real about the odds of it being worth it. I believe most people could educate themselves for almost free if they were taught how. Dose anyone really believe if a white kid grow up on welfare with SAT score the same as high as GW. would get into Yale? Factor in SAT scores are strongly related to parents income and many smart people never get a degree doors do not always open to them. Low income kids are not taught to advocate for themselves and thier parents do not. Then the teachers say well he did not ask for help. We have a system that is biased against low income people from the start. Not that most teachers do not care they just do not understand. Colleges spend millions on sports to benefit a few. Just not as great a deal for some people as others. How the real world really works will never be taught in school.
Yes, good comment,and more true than one might believe.