The Savage Truth on Money, 3rd Edition

CHAPTER 12The Savage Truth on Paying for CollegeA Burden and a Blessing

Going to college has always been part of the American Dream. For a nation of immigrants, a college education meant that children would always do better than their parents. Now college costs have become the American nightmare as more than $1.5 trillion in student loans burden an entire generation—and their parents.

The problem of student loans has not only become a headline number—and a political issue—but an economic crisis that is impacting our economy. Debt-burdened graduates (and dropouts) are delaying getting married, forming families, and buying first homes. That should not come as a surprise, when a significant portion of every paycheck swallowed up with debt repayment.

The parents who cosigned much of this debt burden are finding their own retirement plans impacted by student loan debt. Americans over age 60 owe more than $86 billion in student loans, according to a Wall Street Journal study. In one recent year, the federal government garnished Social Security benefits, tax refunds, or other federal payments of more than 40,000 people age 65 or older!

It’s a sad Savage Truth that you cannot escape repaying student loans. They are almost impossible to discharge in bankruptcy, requiring stringent proof of “undue hardship.” Once you sign for a student loan you will owe it—and all of the interest that accrues while you are repaying, or deferring repayments, through some of the plans described in this ...