It's no secret that student-loan debt has become a burden for students, families and for our nation. Now, just as we are $1 trillion in the hole from this kind of debt, experts are saying we've got another problem on our hands—college dropouts with debt. According to a recent Education Sector report, nearly 30 percent of college students who took out loans have dropped out of school. And, of course, those loans still need to be paid off by their borrowers—at a disadvantage. According to the report, "Those who dropped out had higher unemployment rates and made less money than those who graduated. Borrowers who dropped out were more than four times more likely to default on their loans."
The reasons for dropping out vary. According to a Pathways to Prosperity study by the Harvard Graduate School of Education in 2011, "Many of these students are frustrated by an education they often find irrelevant and removed from the world of work." Additional reasons include not being prepared for the required academic work, family, jobs and cost.
Marian Castelli of Connecticut spoke to The Washington Post about her daughter's reason for dropping out of the University of Hartford after one year. Castelli said it was partly because she was "racking up more debt than she thought she could afford." Her tuition was $20,000 a year, and she didn't want to be slammed with having to pay $80,000 in tuition for a four-year degree.
There is no easy answer when it comes to college loans, but financial-aid expert Mark Kantrowitz has a bit of insight that every student and parent should take to heart before they sign up for loans or choose a college. In an interview with Mara Grbenick for MarketWatch, Kantrowitz said:
Know how much debt you are really going to end up with and calculate the monthly loan payment. There are online tools for this. Think about the life goals you have and how those payments will affect your ability to meet those goals. Will you need a car? Do you want to save for a house or your children’s education? When evaluating college costs, make the cost of your loans tangible and specific.
For more insight from Mark Kantrowitz, click here.
Student-loan debt is a major problem. Share your thoughts on how this crisis can be curbed in the comments below.