Student loan defaults are rising, according to an article in the Washington Post. A quarter of a million student loans went into default in the Education Department’s most recent period. Some blame high interest rates on student loans. However, a survey by student loan provider Sallie Mae and Gallup identified another factor in the high default rate. Some 70 percent of students and parents either did not consider the student’s expected post-graduation salary or said it did not make a difference on their borrowing decisions.
With tuition at many schools rising far faster than inflation, paying for college is no easy task for many families. However, to not take into account a student’s potential post-college earnings before deciding how much to borrow is a huge mistake. One idea that more families should consider is the European tradition of a gap year, a year following high school graduation in which many students explore what they’d really like to study in college while earning money to help pay for their education.
You’ll find links to some of my favorite sites for info on saving for college and paying off student loans here.