Class Discussion: The Downside of Student Loans

Teaching tip: There is a very good, short, three and a half minute video with the author of the article that can be played in class to begin a healthy class discussion.  It works well in particular is you have your students read the article first.

A recent article in the Wall Street Journal titled “To Pay Off Loans, Grads Put Off Marriage, Children” reported on the potential consequences of taking on too much in the way of student loans.  In Chapter 6 of Personal Finance, Turning Money into Wealth we look at student loans, and then in Chapter 7 we take a look at all debt in the section “Tying Things Together: Debt and the Real World.”

If you’re a typical college student, as you enter the real world you’re going to take with you a college education, some hope and potential, and lots of debt.  And that includes, on average, 4.6 credit cards and an outstanding balance on those cards of $3,173.  In addition, about half of all graduating college students have loans, and those loans average almost $28,000.

According to the Wall Street Journal article, the consequences of taking out too much in the way of student loans includes delays in buying cars and homes, postponement of marriage, risks for parents who co-sign, difficulties in renting homes, and more.  The bottom line is that taking out a student loan is a significant personal finance event, and one that you should truly understand beforehand.

Discussion question:

1.  Have you taken out college loans?  Did you receive any counseling before taking out your loans? How do you think those loans are going to impact you in the future and what would you do differently if you had it all to do over again?  Be prepared to discuss your response in class.

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