College Education: A risky investment

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Today, college studies are becoming more and riskier financial pursuits. Read this article about the risk of college. It is now becoming more and more expensive to take one’s child to college. One of the reasons behind this is that students’ loan rates have gone up and continue to increase at an increasing rate. What this means is that there will be higher debts on the side of both the student and the parent. It means that the more time the student takes to repay the loan, the higher the debt will be.

Huge debts

gaShgashgsAs of December 2012, the outstanding balance on college student loans in the US was $996,000,000,000. Of this, over 60% had outstanding loans of above $10,000. 25% of them were 25 years and below. Most of this are kids straight out of college with no income and no prospect of getting any at least for two years to come. This means that their loans will continue to increase due to the interests charged and penalties.

Although the student loans help out a great deal, one should be very careful while applying for them since repaying them has proved to be quite an uphill task. Sadly, when applying for them, most students do it as if this is some free money. They are never conscious of the fact that at some point, they will have to repay this money. It is, therefore, advisable that one makes their kids aware of what applying for those loans entail.

Make the student loan work for you

fgasgsahgsSome wise students use the extra money they have to come up with businesses that will give some returns at the end of the day. This is a great move as the business is able to support them before they even get a job. There are others whose business become truly successful that they even don’t have to look for jobs. All they need is to nature the job, and it ends up supporting them even in repaying the loans.

As a parent, it is wise to start a college fund for the kid so as to ensure that they have some money when they get to college. That way, they will have less financial burdens when the time comes. Having some money put aside means that they will not have to shoulder huge student loan burdens.

Conclusion

It is also important to remember that student loans cannot be discharged on a claim of bankruptcy. This means that one will have to repay their student loan no matter what. Therefore, it is good to know that like with many other investments, college education carries its own risks that parents and students alike need to think about.