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Volume 27, Issue 14, November 11, 2004

Features

Welcome to College! Welcome to Debt!

Life is expensive, and a good life can be down right pricey.

The process starts early. Childhood. The suburban child's needs are adequately provided for. Shelter in a nice home, three square meals a day and parents who at least love the child enough to prevent them from physical harm. Wants are given on top of the needs. Toys accumulate, are played with and eventually discarded. Instant gratification becomes learned and ingrained into behavior. Our parents became the bank or the credit card. Behaving or promising to behave in certain ways at some future time, the child begs, persuades and threatens with the result of the parents caving in to their demands.

The psychology of debt is learned early. Childhood gives way to adolescence, with its cars and its clothes, to adulthood with its homes, both stationary and mobile. The American way of life: borrowed money on borrowed time.

College opens many doors

of opportunity in modern life. A

bachelor's degree alone can put any recipient in a higher income bracket than what they have previously experienced. A degree can keep you from having to dig ditches for a living and any holes dug would be in the backyard garden in the suburban home.

A college degree, well used, can put a new graduate well on their way to a rewarding career path, an increase in social status, and an income that increases the chances of the college graduate's children to also attend college or university, possibly ivy league.

Nationwide tuition costs for both public and private schools and universities have steadily increased for decades and for the first or second- generation college student the temptation and oftentimes necessity of college loans and easily obtained credit cards can leave a heavy price after a student graduates.

Many first-generation students rely on federal financial aid programs such as grants and loans, and many are also required to keep a job, often full-time, during their college experience.

According to the National Association of State Universities, tuitions at public colleges are expected to rise nearly 11 percent, as schools struggle to offset budget cuts. This prediction follows a 9.6 percent in 2003.

Students do have options for both paying for college and avoiding unwise debt. Federal Grants and scholarships can often pay the bulk of tuition costs leaving the student with the responsibility of covering their living expenses.

Normally offered through banks, student loans provide an often double-edged option for paying the cost of a college education. With low interest rates, loans offer a tempting supplement to cover both tuition costs as well as personal costs. With low interest rates, student loans can be interpreted as wise debt, meaning that a long-term gain can be won from going into such a debt. Many students use college loan money to make major purchases such as automobiles because of lower interest rates and monthly payments.

Arguably, the shining trophy of the height of a capitalist economy, credit cards can literally bankrupt a student by the time thirty rolls around. According to YoungMoney.com, 78 percent of college students had at least one credit card, 32 percent had four or more and 95 percent of graduate students carried credit cards. The average credit card debt owed by college students is $2700.

YoungMoney.com also advocates simple tips for controlling debt. Use cash instead of credit cards whenever possible. Bank debit cards are also good alternatives to credit cards, and the fewer credit cards held, the better.