Why Student Loans Suck… [Infographic]

While I rarely repost “infographics” here (most I see are pretty lame), every once and a while one just comes along and blows my mind.

In the past you’ve enjoyed ones on health care reform and the “too much credit” trend – today I hope you’ll take the time to dig into this beauty by College Scholarships.org:


I love how this not only outlines the problem in a fun, easy-to-understand way – but also provides several ways for you to fight back.

As most of you know, Sallie Mae is still an un-welcomed guest in our financial life. It’s stuff like this that gets me excited for the fast approaching day when we kick her to the curb once and for all.



112 thoughts on “Why Student Loans Suck… [Infographic]”

  1. I think that young people should be made to take a financial literacy course before they can get student loans. You are often signing loan papers at 17 and 18 when you have no clue about the repercussions. It’s outrageous. And the way in which payments are applied isn’t to your benefit either. Click my name for a great rant on student loans.

    1. A financial literacy course does no good when you are lied to, and you are unable to predict the future.

      I knew perfectly well what would be required to repay my student loans when I signed up for them. I knew I’d have to be able to make at least $30,000/year to keep up with payments. However, every one of the college advisors and experts back in the late 90s (when I started college) made a very effective case that with a college degree even in a liberal arts field, making that much was child’s play. They are still trying to make that case.

      The lie of course, is based on the average income of a college graduate. Of course, that lie does not take into account differing demands in specific fields. It does not take into account social class and connections *before* a student goes into college – for example that a student from a wealthy family would still make more than a student from a poor family whether he went to college or not! A college degree can amplify your earnings potential, but it has reached the point where it does NOT pay for itself in many fields, and instead becomes a negative on lifetime income. None of THAT was made clear. In fact, it was hidden VERY well.

      When I looked at “Jobs you can do with XYZ degree” type resources, when choosing a major, I would see lots of interesting jobs. I could do this one, I could do that one, a college degree was just the ticket! But when I had the college degree in hand, I found out, that it was NOT the ticket. For example, some jobs highly promoted in my degree field tend to have 1 opening for hundreds of applicants, and those openings are few and far between. That means that for every one person who got the job, hundreds did not. Yet it is promoted as something you can do with the degree.

      When I signed up for student loans, I WAS told that I risked default. I was NOT told that once I was in default for whatever reason (illness in the family is my reason, situation is over but the default is not), you could NOT get out of default. Sure, you can “redeem” the loan, but the terms of redemption are set up to make sure you can’t do it. For me, they want 60% of my take-home pay monthly to redeem my loans. That wouldn’t leave enough for my rather cheap rent, not to mention food and personal hygiene. The funny thing is, I could now pay the actual payments I originally agreed to. I just can’t get them to let me pay those payments. Instead, I end up paying MORE than those payments every month in garnishment, which will never pay off the loan due to collection fees.

    2. They do make you take entrance counseling about your loans today. When I started school back in the mid-90s they made you take a 4 hour seminar about the student loans that you were taking out. They also went over all of the financial aid options and even showed you where you could go to find a job on campus. Needless to say, I still have loans.

      Nowadays though, the entrance counseling amounts to an online quiz where the answers are provided. I can imagine that people learn quite a lot from that.

  2. I agree that students should take a financial literacy course. Why didn’t we learn THAT in Home Economics in school? Was it really that important that I learn how to sew and bake a cake? Learning what “APR” was and how to budget would have been far more useful.

    1. You can lead a horse to water, but you can’t make it drink. I was taught all of that in Home Economics, but like every 16/17 year old, I just didn’t pay attention.

      I got lucky and developed an interest in Finance and investment, after dropping out of University. I took what I learned from *personal* study and developed a plan: I worked for 5 years as a Nursing Aid, lived with my parents, and saved. I then returned to University, while working full-time, and got a B.Sc. in Computer Science, with no debt.

      I got lucky again. The company I worked for was a small, financial services software company. While they never failed to pay me, it wasn’t always easy for the owners, I got to see that. I got to see the accounting side of businesses both big and small, both successful and unsuccessful, both honest and crooked.

      I got lucky again. I had the equivalent of bankruptcy happen to my credit score (bit of identity theft). It’s amazing how difficult it is to function in society without credit. Renting things from hotel rooms, cars, or even steam cleaners, doesn’t happen; investment companies will accept a credit cards, but not government ID as proof of identity; purchasing utilities requires large deposits. While this has made life difficult from time to time, the end result was that I’ve been forced to live a financially disciplined life.

      For almost 15 years, I’ve never been *able* to take on debt, and I’ve learned to manage my personal finances the way businesses do. I’ve made on average 40K a year since graduating from University (10 years), and I’m now semi-retired.

      I was tutoring a student recently and was looking through her assignments; they were the same ones I had in High School. The most important financial lessons I have learned in life were laid out in those classes, but I didn’t learn them until I hit the school of hard-knocks.

      Ya, I got lucky, but I’m reminded of a quote from “The 13th Warrior”: “A man makes his own luck.

  3. I agree Baker, awesome graphic. I always cringe when a majority of my clients debt is student loan debt. You have very limited options when you can’t afford to pay it, and as your info graphic outlines, you will pay it. Some how, some way, they will make you pay it.

    1. yeah, the companies won’t back down on a $100 late fee. The lenders are crooked. I’ve forgiven people who I would say owe more than that to me.

  4. I think way too many people go to College. And of those there, way too many are studying crap that that isn’t valued in the market place. I highly recommend if you choose to go to college, studying part-time and working or preferably working on your own business.

    I was lucky in that I only came out of college with a $10,000 loan. This is because I worked for a couple of years full-time and lived at home to save before heading into university.

  5. My coworker and I were just discussing this issue today. I think that judges need the right to determine whether an individual should be able to discharge his student loan debts in a bankruptcy. My coworker strongly disagreed and thought that a student should have to return his degree upon discharge.

    While I think that people should pay their bills, it is unfair that student loan debt is one of the only debts you can’t discharge in bankruptcy.

    1. Hell, I would return my degree in a minute if I could get my student loans discharged. It isn’t earning me anything.

      1. I second that, Alvin! I have my degree right here… who wants it?

        Seriously, if I had known then what I know now, I might still have gone to college, but I would have NEVER taken out a student loan. Period. And if that meant I wouldn’t have been able to go to college, so be it. I wouldn’t have gone. My college education isn’t really doing anything for me now anyway. No loss.

  6. Our repayment on our (my husband and I) student loans is $597 a month EACH. $54 went to principle EACH. there’s no way we’ll ever be able to pay that back, we just keep forebearing. I can’t believe there isn’t a bigger movement to fight these guys, google student loans and you’d think there would be a ton of hits, but really there’s no one talking about this. Thanks for the graphic!

    ps. I’m recommending that my kids be entreprenuers, not college students.

  7. If I had to do it all over again, I wouldn’t even take out $1000 in student loans. I’d work my way through college. If I had done that, I’d probably have quit my job with a fabulous savings account and be working as a missionary with my wife in Paraguay right now. I wanted to attack my loans before, but this reinforced that. Thanks for posting it, Baker.


  8. Wow – fascinating info. I’m a sucker for a good infographic 🙂

    It’s funny – when you’re a student it’s such an automatic thing, like “yeah I’m going to take out student loans, it’s just what everything does.” And then you come out on the other side, thousands of dollars in debt and see the whole scam for what it is.

    Thanks for sharing this – you can bet my future children will know the truth about these deceptive practices before they head off for school!

  9. Expected. There sure be a big plan behind any projects like this, if it is not benefits them, they won’t do it. Haha
    Thanks for sharing this Baker, a clearer understanding. =D

  10. You are all so correct. There are many, many options when it comes to paying for school–or even GOING to school, for that matter. Not only are jobs and the job market changing drastically, but so is technology. And, you’re right, financial literacy is woefully low in this country–kids, young adults, and students alike. Through dialogue and education, everyone can learn to manage their own money and actually know about the options that are in front of them.

  11. On the other hand; shouldn’t we all be responsible for the debt that we incur? I agree, more education on student loans is needed but in the end you KNOW that you’re signing on for $10,000 or $40,000 and you have to think about how you’re going to repay it. A degree in grass epidemiology is not going to make the cut (pun intended). Just sayin’.

      1. Onioneye –
        What you will learn in a hurry, though, is that there are consequences for actions. What if I steal a car at 17 or 18? Consequences. What if I get pregnant at 17 or 18? Consequences. What if I borrow $20,000 at 17 or 18? Consequences — namely, having to pay them back. Who else should pay back someone else’s loan? It’s ridiculous to say that someone should be absolved of their debt merely because they didn’t know what they were getting into. On the other hand, I do agree that students should have more counseling on the repercussions of loan debt. Student loans suck, but it’s no one else’s responsibility to pay it back other than the borrower. I graduated 10 years ago and am still paying loans back. I benefit from my degree and don’t expect anyone else to pay for it.

        1. “What you will learn in a hurry though, is that there are consequences for actions.”

          The problem is, the consequences don’t come for several years after you take out your loan, and by then it’s too late. Great, lesson learned. But now you’re stuck with ten of thousands of dollars of debt and potentially (especially in this economy) no way to pay it back.

        2. Barbara Saunders

          I understand that logic, but the question remains: why is it that a 30-year-old who charged clothes and makeup at Bloomingdales and six trips to Hawaii can get out of the debt but a 17-year-old who didn’t know what he was doing (and could not even legally sign most types of contract) cannot? That is the part that is outrageous.

      2. Are you kidding me, onioneye? I started college at 18 years old. My tuition for 5 years totaled approximately $40,000. By the time I graduated, I had worked off over $30,000 of that. The rest was paid off in about another 7 months, and it wasn’t from the job that “my degree got me”.

        My parents both had loads of debt, and they told me NOTHING about being debt-free. It was my choice, because I knew going into massive debt was (and still is) logically a bad idea. I worked my ass off to pay for 75% of college before I graduated, and I worked my ass off to pay of the remaining balance. MY volition. Not my parents’, not my friends’, MINE. I had never even heard of Dave Ramsey at the time.

        When I hear people saying, “Student loans are criminal!”, what I’m really hearing is, “I don’t want to pay back my debt! Waaaa! Excuses!” Everything in life is a choice. If you really hate the lenders so much, pay off the debt and be rid of it, but don’t complain that your poor choices are someone else’s fault. Meredith’s comments are spot on.

        1. Thank you! You have described my feelings about the complainers down to the letter…as well as how I plan to approach my student loans in the coming years. College starts this fall for me and I plan on working in college and every waking moment during my summers off. I hate the feeling of dept and I wont allow myself to end up like my parents.

          1. You freaking ROCK, Kurt! It’s COMPLETELY possible to come out of college with little to no debt – it just takes work. Don’t believe what the masses say. I’m rooting for you!

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  13. I’m glad I am not living in the USA when it comes to student loans.
    In the Netherlands the schools are government subsidized, meaning you don’t have to pay 30k a year for an education. (nearly) Everyone can go to Uni.

    On the other hand, student loans are available and nearly everyone uses it (including myself) to have an extra income and uhm engage in social activities… yes social activities 🙂 I mean happy hour is only 1 hour…

    The loans have an interest of (top of my head) 4 % which is spread out over a 15 year payback plan.

    Unlike the USA where you start paying back pretty much straight away, in The Netherlands you start paying back 2 years after you graduated and the level of repayments is according to your income.

    An American mate of mine got is last loan check, and a week later he already got his repayment check to start paying back his loan! I could not believe it..

  14. We need more people like Elizabeth Warren that are able to stand up to politicians that are blinded by campaign donors, and say the truth. I honestly hope her new role as leader of the CFPB allows her to make real changes to prevent greedy enterprizes stealing from people, and increasing general awareness to rip-offs.

    BTW: The CSFB website was voted by Wired magazine as the “hippest” government site.

  15. There is a huge amount of irresponsibility on both sides when it comes to student loans. A friend of mine was recently complaining that a buddy of his can’t declare bankruptcy and get rid of his $100,000K+ student loan debt. He has a DMA in trombone. Who thought it was a good idea to lend $100,000 to a kid going to grad school for trombone??? And, on the flip side, to assume you can just declare bankruptcy and get school for free is unethical (and uninformed).

    I don’t have issues with student loan debt not being discharged because there are too many people who would just get free college.

    The availability of student loans makes people (parents and students alike) lazy when it comes to financing school because they can get easy money and not worry about it … until later.

    I read somewhere (can’t locate it right now) that the availability of student loans is part of what has pushed tuitions through the roof. Since people are able and willing to take on ridiculous amounts of debt to pay for school, schools can charge ridiculous amounts and students will still come.

    I hate my student loan — it’s our only non-mortgage debt — but it’s not Sallie Mae’s fault that I have it. It’s not the government’s fault. It not my high school’s fault. I took out the loans, I signed for them, and I’m paying them back. (I could lay some blame on my parents for not teaching my about financial responsibility, I suppose.)

    1. In Sweden going to Uni and Health Care is free…..

      But currently in America and a lot of other countries, there is not a supply of jobs for high educated people to fill.

      There was a great article in TechCrunch yesterday :http://techcrunch.com/2011/04/10/peter-thiel-were-in-a-bubble-and-its-not-the-internet-its-higher-education/

      Where Peter Thiel mentions that no longer an expensive education is a sure ticket for a good salary.

      Like you, I don’t mind paying back the loan as others before me did which allowed me to borrow the money in the first place. It is just annoying, like many others will agree, that the surplus of jobs is no longer there.

    2. The reason someone “thought it was a good idea to lend $100,000 to a kid going to grad school for trombone” is that they know the debt isn’t dischargable in bankruptcy. They WILL get that money back somehow.
      And the reason the cost of college has increased astronomically in the past 40 years and that so many scammy non-accredited for-profit college programs have come into existence is that these loans are no longer dischargable in bankruptcy, as they used to be back when it was more reasonably priced and it was possible to work your way through school. Now tuition can keep going up and people can get private loans to pay for it no matter how high it goes.
      Bankruptcy protected the little guy and incentivized smarter lending practices. Now, of course, the banks are protected.

  16. What a scam and a half. The only way this is going to stop is if people get drastic and refuse to go to college or at least hold protests until this shit is reformed. It amazes me that the general public just bends over and takes it in the proverbial poop shoot and then asks for seconds. Don’t blame Sallie Mae or Freddie Mac or Obama or the friggin’ Hamburgler for taking you to the cleaners. The only reason these criminals get away with this stuff is because most people go along to get along and feed machine themselves. If you drive a car, don’t complain about gas prices. If you’re getting foreclosed on because you got a subprime loan for a house you can’t afford, don’t complain about the banks…you get the idea.

    Why not just pay off the student loans with credit cards, then declare bankruptcy on the unsecured credit card debt? If you have tons of credit and you are in financial trouble this may be a way to get out from under the credit cards AND student loans. Desperate times…

  17. Thanks for the infograph! Like you, Adam, I can’t wait for the day when I’m student-loan-debt free. I’m less than a year from paying down my student loan balance. I graduated at 22, and I’m nearly 26. Even after receiving a $5000 Americorps service grant, making the payments every month (and choosing not to go to grad school!)…it still takes a LONG time and LOTS of perseverance. Best wishes on your debt-free journey!

  18. And of course, stop studying crap or hobbies like sociology, american studies, political science, etc. If you’re not studying to get a real job you better stop asking for a loan.

    1. This is a fallacy that that is spouted everytime this subject is mentioned. Nobody is claiming that we should feel sorry for the guy who took out a loan to get a degree in underwater basket weaving and now can’t pay it back. We’re talking about people who took out loans to become social workers, teachers, and other jobs that don’t pay a high salary.

      To make matters worse, many of these types of jobs require a masters degree, which is more tuition and more student loans. Even attorneys are caught up in this mess. Law schools love to talk about how much their graduates make, but what a lot of attorneys are finding out is that they do not make enough money after graduation to pay back their student loans.

      It’s easy to say that you shouldn’t take out a loan unless you know you can pay it back, but who knows for certain what their financial situation is going to be 4-8 years down the road?

  19. Consumers treat student loans like they do credit cards. They sign (probably without reading) a document which gives all the advantage to the lender and then when they can’t make the payments they complain about the terms they agreed to.

    The difference is of course that there is no exiting this debt through bankrupcy. Which is what happens when you borrow money from the government. If this system was designed like any other lending system, not nearly as many loans would be made because the banks wouldn’t take the risk. Because the government runs it as a social program (get as many students into collage as possible), they only way to protect themselves from the really bad risks they are taking (remember there is no real collateral on your student loan debt) is to force everyone to pay them back regardless.

    Is the system fair, no. But the system is not a secret. Most people are just not paying attention to the details in the loan documents. I realize that not everyone is a finanical expert but I still don’t understand how so many people can sign credit card agreements and loan documents without understanding what they are signing.

    Rant over.

  20. This feels like another gripe over people not wanting to accept responsibilities for their actions. The reason student loans can’t just be bankrupted off is due to the fact the the government is backing them, and the taxpayers shouldn’t be forced to take risks on investments. I’m fine with a private institution crunching the numbers and seeing the risk/benefit of giving a student a loan, and if they judged poorly on the person’s ability to pay it back, then they have to eat the cost.

    In this case, however, students are getting loans from the taxpayers – not some private group. In simple terms, that means me and my neighbors are paying for you to go to college. Yes, we’d like our money to be repaid, as we were nice enough to give it no questions asked in the first place. Please take some responsibility and kindly pay us back when you get the chance. I realize third party groups are in charge of the collection, etc. and can make a pretty penny, but that wouldn’t happen if you either didn’t take the loan in the first place, or paid it back like a *responsible adult* does.

    1. I think you may be looking at this from the wrong perspective. You argue that these student loans should not be dischargeable in bankruptcy because they are guaranteed by the federal government (i.e. taxpayers). I suggest that we wouldn’t have nearly the problem that we have with student loans if the government (the taxpayers) didn’t guarantee the loans. If the banks had a little skin in the game, they would be more diligent about who they lend to and how much they lend. In other words, it’s the government gurantee of the loans that has led to the problems.

      You can’t blame 17-18 year olds who take out these loans after being brainwashed by just about every credible influence in their life (parents, teachers, government) that they have to get a college education or they will suffer, but absolve the banks who profit from this scheme and the government that enforces it.

      1. Well we had a similar problem with the subprimes, everyone wants a loan, and people complain when they’re denied one. Do we stop allowing these kids to go to college altogether if they don’t seem fit to repay the debt sometime in the life? I have a feeling your solution (while I do agree with it) may cause a lot of social backlash.

        Great point though.

  21. I agree with the commenters who note that we have a responsibility to pay back student loans, and I am working through mine. However, I think in many cases, including mine, excessive student loan debt is also a case of parents taking advantage of children. Dave Ramsey would probably call this “financial child abuse” but unlike fraud, there’s really no way out. My parents made me to go to college so that they could take out loans and have me take out the maximum available loans. Some of these did of course pay for my education, room, board, etc. Many more paid for their household expenses, including cars and vacations. Perhaps I should have known better at 18-21, but I didn’t… And I also know I’m not alone. I have at least two other friends in similar situations. Now, I’m furiously working to get out of debt. 2-3 more years (I graduated in 2001!) and I should FINALLY be free!

    1. Very true. In the past ten years, inflation has remained extremely low, but the cost of college tuition has more than doubled. It has even outpaced the increase in the cost of medical care.

  22. I remember seeing this infographic months ago, and a few facts are wrong or a little skewed:
    – To be fair, loans originated by Sallie Mae are not completely risk-free to them, “virtually risk-free” might be a better descriptor, as I believe the Federal Government guarantees 95% of FFELP loans. I believe Federal Loan origination was only 30% of their business prior to 2010. They no longer originate federally guaranteed loans as of June of last year.
    – This picture really makes SLM out to be some monster, but if their loans were federally insured, the terms are no different than borrowing directly from the government, while the argument exists that a private entity could more efficiently service and collect the loans.
    – Let’s be honest, if the US government didn’t back up the loans, what bank would loan tens of thousands of dollars to a kid with no guaranteed future income and, on average, no assets?
    – Also, there are many, many reasons for accelerated cost of college tuition, and I believe that loans being ultimately profitable for the government is a very small reason. Until recently, colleges in general had very little incentive to control costs because of the increased demand for college degrees in the last 2 – 3 decades. Accessible financing is one reason for increased costs, but there are lots of other reasons as well.

  23. Note that you are saying “the current system of student loans is bad” not “student loans are bad”. When I graduated from undergrad, I had a few student loans which were easy to manage and well worth it when I consider the impact a college education had on my life. My more recent encounter with educational loans (grad school) has left a bad taste in my mouth. Impossible to refinance (and at an 8.5% rate) and difficult to manage (lenders keep changing as the government moves my loans around).

    I don’t believe this “all debt is evil”. I believe debt is a tool. The problem is when it’s used too much or used badly. Our current system of school loans encourages us to use this tool without really understand the consequences and that makes it bad.

  24. How is this a scam?

    People are being held accountable for signing a legally binding contract. The people who don’t make payments are punished. Fair enough.

    1. It’s a scam because very young people are being led to believe that a college education is their only shot at having a decent life and getting a student loan is a fast and easy way to afford college.

      At the same time you have banks that are making these loans without a care for how the loan will be repaid because they are guaranteed to get their money back. The system is set up to benefit the lender, while the borrower is left with a college degree that isn’t as valuable as they were led to believe, and years of student loan payments they often are unable to make.

      That’s why it’s a scam.

  25. I signed my first student loan paper at 17. It wasn’t large at all, nor scary. After that first semester, I could have walked away all together and never worry… But I didn’t. Too many people told me that I *had* to go to school and get my degree. It was necessary.

    I’ll graduate in December, finally, at 23. With close to $40,000 owed for all of that education, and a husband who will be moved around more often than I can sit and pay them all off. At this point, I know I should have done the same thing with school as when people said getting married young was dumb — ignore it and do what I felt was best for me. But what’s done is done and by the time I figured out I didn’t want it I was too far in to quit without getting it.

    I feel like my only remaining choice is the military. I can have a guaranteed income for four years and pay it off without worrying about moving and having to find a new job. (At my first base it took me 8 months, here it took me almost a year to land a good job. Not good odds.)

    I plan on killing my loans in ~3 years. Then I can be free and not worry anymore. What those few years will entail though I do not know. If I go military, there’s a chance I could be separated from my husband long term, not barring OTS and possible deployments already.

    I know the loans are my responsibility, and I feel bad that for a while my husband made payments on my original tiny loans. I told him I’ll pay off the rest of my loans at this point — It’s my mess to clean up. I just have some resentment that in the US too many people see this as a cure-all, when it’s not. (Especially in my situation where I want to move around often. Starting over all the time with that sort of pressure isn’t fun…)

  26. My Subsidized Stafford loans had a six month grace period after graduation before repayment began and there are many options for reducing payments (of course extending the time period) or requesting forbearance based on ability to pay. Unfortunately it does require being proactive and dealing with the red tape – which many people are not prepared to do as they struggle to launch a career after college. The thing that helped me the most was that I got a credit card offer early in my college career that had a “Student Loan Rebate” reward program – I used the card (and paid it off each month) throughout college, then used the rebate to make many of my early payments. Graduating during the recession is still causing me difficulty, but student loans have not been my biggest challenge. Of course, I didn’t max out my loans, took advantage of grants, and worked part-time; however, I can see where many students are ill prepared to make good decisions regarding loans.

    I’m thinking that government backed loans should use a simple method to determine repayment ability – require the student to work full-time for a year before they can qualify for the loan, then base their maximum loan amount on the demonstrated ability to pay (perhaps adding a modest adjustment for credit history). If you can’t qualify for enough loans based on your current earning potential, you could work on your education by degrees – learn enough to increase your income, then take a year off to demonstrate your increased ability to pay. Of course, we’d still have the problems induced by the economic cycles that the financial industry and FED impose on us, but that’s another discussion.

    As a borrower, I see the trade-off between student loans that cannot be discharged and consumer debt that can be discharged – students loans generally have interest rates comparable to secured loans; however, I think the other consumer rights protections for student loan borrowers ought to be restored.

  27. American society encourages selfishness.

    Education is completely free in countries like Denmark, Norway, Sweden. These people have the view that their population should be happy, healthy and well educated. That of course takes money, which comes from taxes that everyone is willing to pay because it benefits the society. And a happy, healthy and highly educated society is a prosperous one.

    Wake up America.

    1. “Education is completely free . . . ” You mean faculty and staff donate their time? I doubt it. I’m sure education is paid for in the countries you cite. It may be paid for by the government, but the government in turn has to get the money from somewhere. The countries you cite have much higher tax rates than we do. As for whether they are “happier” it seems unlikely. Only Denmark has lower a lower suicide rate than we do, Norway is a little higher than ours and Sweden’s is almost 20% higher. As a proxy for “happiness” that statistic seems as useful as any other that can be measured.

  28. Wow, that info-graphic really spells it out! I left law school in 1998 with about $65,000 in student loans. I cleared the debt in a deal the Army had at the time – for three years of enlisted service in a combat job specialty the Army repaid my school debt. Now keep in mind, this was peace time before the towers fell and I don’t know if they have this deal anymore (probably not). Don’t get me wrong – that was a tough three years – but I’m so glad I did it now.

  29. Man this sucks ass for American students. Here in New Zealand the government is the sole lender of student loans. Student loans are lent at 0% interest as long as you live and work in New Zealand. You are not required to make repayments if your income is less than $18,000 per year. Repayments above this threshold are 10% of your annual income over the threshold level.

    Feel good man.

    1. It’s very similar in Australia – the government provides interest-free student loans which are paid off out of your pre-tax earnings once you earn $47,196 or more per year at a rate of 4 % (capped at 8% for earnings of $87,650 or more). If you choose to make larger repayments of $500 or more you get a discount of 20%.

      Some of the stories on here are scary. I don’t see that there are people trying to “weasel out” of their student loans, I think they’re just arguing for a bit more consumer protection.

  30. Oh yeah and on top of the above, the government also subsidises 75% of the tuition fees. And they offer financial support/welfare to students to meet day-to-day living expenses.

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  32. I wish they would remove the “protections” the private student loans have. You have more protection if you have cc, and get those under 21 cannot get one on their own. I checked out a private student when I was in college, I had a 760 credit score and no cc with a rate over 10%. I called and asked what the rate would be and was told somewhere between 6-20%. I asked if they could tell me the rate for a person with a score over 760, a bank can, a cc company can, why not the SL company? I was told they could not tell me the rate until I applied. How does that make sense?
    Also, because of how our college financial aid system is set up, parent can and do take advantage of their children. “You have to give me X of your student loans/grant or I will not fill out the FAFSA next year.” I know many people whose parents said that, one even went to the financial aid department to see if they could do something in this situation (like use the parents’ last FAFSA for next few years) and was told, until you get married, have a kid or go in the military you must have your parents information. How is that ok? How is that one person must have another information (according to the federal government) get the other person does not have to give that information, lord you cannot even sapena it.

  33. Lame sauce. I knew Obama was just a big idiot that’s trying to destroy the country before he leaves office… That really sucks. I have a student loan. 🙁 and it’s building interest. I better save up and pay that off quick!!! I can’t believe how much dishonesty is involved with how the government functions.

    1. Yeah, I’m not sure how you read that and think Obama is destroying the country. Every unfair (to the borrower) provision of student loans has been in place for quite some time. The major change Obama made to student loans is that private companies no longer act as middlemen to initiate government backed loans – they’re all Direct Loans from the Federal Government. If anything he destroyed small companies whose primary business was FFELP origination and servicing (you can make your own judgment as to whether that was good or bad for society).

  34. Yeah, I’m afraid of graduating. My parents didn’t help me with tuition, they made too much for me to get any government assistance, my grades weren’t enough to get any scholarships (2.9) and I’ll be leaving school with 70k in debt with a Computer Engineering, which I feel I’m not prepared for at all. Anything I’ve seen in the area wants the degree AND experience. I have experience…8 years of retail because I didn’t have experience to get the computer related jobs. Now, when/if I have a kid, I’m not gonna force college on them if they have other sensible plans. Not worth it.

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  37. Sadly, many students do not think, or consider, paying of their student loans while they are in school. Most can afford to make some kind of monthly payment, even if it’s only $25.

    I take out the amount I am eligible for in government loans each year ($5,000) and then make monthly payments with whatever I can and pay it back the summer after with my summer jobs. I’ve paid hardly anything in interest and I’ve got killer credit compared to most of my peers since I’ve paid off loans in full at the age of 19.

    This would, of course, be more difficult if you have to take out loans for your full tuition amount, but is still do-able with a job during the school year.

    Great site!

  38. Thank you so much for sharing this and putting it up. We are all fed up about being lied to and paying student loans all our lives. I have been out of college for 10 plus years and I am STILL paying my student loans monthly. If I only knew better that the system was just 1 big scam, we’d all be in a better place. No wonder so many of us are falling behind financially. The system is created to let us fail. It makes me so angry to know this. Thanks for shedding light on this matter, it is so important!

    1. Let’s not play the blame game. It’s not a scam. It allows people to make adult decisions. If you couldn’t handle the decision you made to go into debt then I’m sorry but that is your problem.

  39. I love this.

    I think one of the best things I ever did was pick a reputable, but low-cost tuition. My tuition was really cheap, and I left with a very small student loan under $3k. I could pay it back even while working for almost nothing in NYC. That same school I went to tuition spiked the year I left and every year since then.

    If I had that debt, I wouldn’t be able to live in NYC, I wouldn’t be working in creative fields, I wouldn’t be investing in courses and things that matter to me like travel.

  40. My wife just graduated med school and has more student loans to pay back than anyone on the planet. We knew what we were getting into, and adjusted our previous and current lifestyle to fit our income. We are paying back over two grand a month in loans now, and you don’t see me whining about it. It’s well worth the investment and am not looking to skimp out on our obligation or blame the government for me not being able to afford a Ferrari.

    We’ve both gotten amazing educations and are in turn paying for the opportunity and costs for doing so. This is the land of the free.. and with freedom comes responsiblity, as hard as that can be to accept for some people.

  41. Spot-on. I’ve wondered lately if easy, government backed loans given to people who really can’t afford them but think it’s the normal thing to do are driving a college tuition bubble (remind you of any other recent bubbles?). The key to affording college is to save early and often, earn whatever scholarships you can, and then pay as you go. Starting off your professional life burdened with debt isn’t the way to be successful.

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  44. It’s an amazing eye-opener. Thanks for sharing.

    I find it amazing how many students are in school – going for a degree in a field they have never worked in or interviewed in. Why spend 4-6 years in school without interviewing at least 4 or 5 of the top performers you can get introduced to?

    I didn’t start looking for a job in my field until I graduated. Nobody in my four years told me otherwise.There is something wrong with this picture.

    My kids will be taking a much different approach to higher education than I did.


  45. I’d love to repost this to my blog, but can’t find it on the collegescholarships.org website. I’d like to be able to link back to the page it came from.


  46. Interesting comments here. I was fortunate enough to grow up with parents that made me work at SAVE each summer of high school. This money was specifically to be used for my education. I hated it at the time, but the fact that I never had to take out a student loan has made me very grateful.

    I have said for the past year or so that Student Debt will be the next bubble. As was pointed out in the graphic, it won’t be the lenders that collapse, but the students coming out and unable to find a job to pay them off. I know many people “Go back to school” after being laid off, just so they can get the student loan to live off of. That is a financial death spiral.

    1. “Has to incur so much debt…”

      No one has to incur student loan debt. It’s a choice. There are thousands of students who do not have student loan debt, either by their parents good planning and hard work or the students good planning and hard work or a combination thereof.

      That said, the system is broken. But what I see in this discussion above and below are several separate discussions that are related but are being dangerously combined (and here I’m responding to more than just Brian).

      1) Is college worth it? (and this brings up a million more distinctions and questions)
      2) Is the student loan system corrupt?
      3) Why are we not educating our kids on the dangers of debt?
      4) Why are we not saving money for our kids?
      5) Should we encourage our children on a different path?
      6) What will the college education system look like in five years/ten years/twenty years, etc?

      What concerns me with aspects of this discussion are the people here who go from the premise of “Student loans are a scam” to the conclusion “College is therefore not worth it.” That is a complete fallacy. Two different discussions there.

      There are THOUSANDS of alternative scenarios for paying for college. Hundreds of thousands of available scholarships in varying monetary amounts. Attending community colleges for the first two years to save money, or taking dual credit/AP courses in high school. Kids being encouraged to work and save. And then the MOST important aspect of this discussion for the future generations: the parents. Save/invest some money in a 529 plan or something more flexible over 18 years so the kid at least has a choice.

      I completely understand saying that a parent will encourage their kid to be an entrepreneur and not a college student (college is not the be all end all, and I like the creative thinking), but I don’t like the implied abdication of responsibility on the parents end.

      If you want to talk about the worth of a college education (which in my experience was SO much more than just a degree), then we can talk about that. Let’s just not group it all in together.

  47. Wow, I knew I didn’t like student loans, but this makes me dislike them even more! If I were to go into debt, I would rather go into debt on a business or something that would give me much more return on my investment. Don’t get me wrong, I’m not advocating debt or bashing getting a college education. But I know to many people who are $100K+ in debt and are only making $40k per year. In those situations it just doesn’t seem worth it.

  48. Supporting the current law making discharge of students loans virtually impossible out of a sense of “buyer beware” (you should have known) is simply unrealistic when faced with the size of the problem. NOTE: *This doesn’t mean that I’m unwilling to pay back own my student loans as some of the comments have assumed.* I have a BOATLOAD of student loans b/c my law school was expensive, and I wasn’t on the no-debt-bandwagon from birth or even adolescence.

    I’m more than willing (and currently, more than able) to pay them back, but that’s not true of everyone. So do we just let these people be crushed under the massive weight of their hasty and youthfully-entered obligations? Especially when the system is so clearly rigged to exploit. IMO, it’s in all of our interest to fix this.

    Don’t forget that the 7 yr aftermath of bankruptcy is no picnic and that the infographic only indicated a 1% rate of opportunistic defaults! There are plenty of people who would do everything they can to avoid bankruptcy. Some people, in some circumstances should be able to discharge (or reduce) their loans. Legal tests can be created to avoid exploitation by individuals, but Congress has simply punted.

    Thanks for sharing the info graphic, Baker! Despite being relatively educated on the topic, I learned a couple of new things about the process!

  49. what should I do if I have 68k worth of loans consolidated through sallie mae? seems like i will be in this jail for a long time :/

  50. Barbara Saunders

    For those who assume that kids with lots of loans chose expensive schools, that’s not always true. I had classmates at Stanford who said the financial aid they got made it cheaper to go there than to the UC – even with in-state tuition. Stanford paid their board and Cal-Berkeley did not.

    Part of the problem is the complexity and lack of transparency: how many other kids chose the community college route over a private or four-year school thinking they were saving money and ended up paying more in the long run?

    1. If anyone is like I was, there is also the fact that you might go to a cheap school, but you stretch out your education into 5 or 6 years. The stupid things you do when you’re young…

  51. A majority of people taking out loans think everything is greener on the other side. However, like most things in life, not everything is black and white. If you go to college, you need to have a plan and fully understand what you are getting into. Otherwise, you’re just wasting your time.

    The most common mindset of people that go to college is, “I want to have a good job and make a lot of money”. This is the exact mindset that leads young adults to take out massive loans and start life with a huge anvil holding them down.

    Investing in a college education is like any other investment. Except, for this investment (college), you’re betting against yourself that you will come out on top when you have finished your degree. For most people, this is a poor investment that they have to pay off for the next X amount of years.

    However, with such a wealth of information at their finger tips, a lot of young adults can avoid the pitfalls that many people have already made. There are tons of things all over the internet that warn people about what the worth of college actually is (like this post). If people would take 5 minutes to google search these things, they might think twice about taking out that loan for the semester.

    I am a prime example. I went off to college without a clear plan of what i really wanted (even though I thought I had it all figured out, like most 18 year olds think). I racked up about 25k in debt after 2 years at a private school. I knew something didn’t feel right, but it’s hard to go against the grain of society. I ended up leaving the school even though people closest to me (family members) thought I should just stay since I was already there 2 years. However, I knew I would be making a terrible mistake, so I left and attended a public school near my house and I commuted everyday, not paying a dime since my aid covered the tuition. I do feel the education was better at the private school, but not for the price.

    In this time, I formed a plan and stuck to it. I got the job I wanted, and I am at the company I wanted to work for (with some networking). However, most people don’t have that clear defining moment until after they pile on debt and graduate school, and it is very unfortunate.

    After finally being a college graduate and not just another statistic (for the most part), I would tell people that starting off at a community college is the best option. Take classes that you actually enjoy and think hard about what you want in life, not just a job. I know it’s easy to take that free money, but you will be regretting it 4 years from now. Debt is debt. Period. Minimize it anyway you can.

  52. I didn’t realize that student loans were the reason colleges/universities were able to overinflate their tuitions. Thanks for the heads-up.

  53. The name of the game is indentured servitude. The student loan industry creates an indentured servant of every person from the middle class who dares to get an education, guaranteeing their service to corporate masters for decades at the least. And of course, darn near the only way to escape this is to get free college from military service, so you’re either an indentured servant or an indentured mercenary. Everybody wins except you.

    This is not the case in free countries.

  54. Without a doubt, the most complex, frustrating questions I get come from people who are trying to deal with their student loans. It’s such a nightmare – worse than the IRS. Great breakdown of a broken-down process. THANKS – I’ll be passing it around!

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  56. I was the first child in my family to go to college out of town. I went to a Bible college, so my loans were small, but still, my parents were unaware of what the student loan debt would look like, and so was I. I had never had experience with debt, but I knew my parents had. Had I known then, or been better prepared by them, I would certainly not have done it the same way. I would have probably waited, but I may not have met my husband, so it kind of all worked out for the best, in spite of the fact that we still owe about $8800 and I graduated 9 years ago. It will be our last debt to pay off, but we will hopefully get it done in the next two years. We have one other credit card which is about the same amount, but the interest is 28% compared to the locked-in 2.25% of the student loan that we got when we consolidated. Have it come out automatically and you are even better off. It knocked off at least .5% of our interest rate to do that. My payments are under $100 each month. My kids will NOT have student loan debt, no matter what.

  57. It’s so crazy that many students have to count on a student loan entrapment just to get through school these days. This leads to a much tougher road to financial freedom later on. There’s almost a trillion dollars worth of student loans out there that can’t be discharged and we thought Credit cards were bad!

    Dwight Anthony
    Financially Elite Blog dot Com

  58. Just one more example of how wallstreet uses Washington rhetoric to get it’s dirty work done. Complete slight of hand. While everyone is watching the right hand, the left is doing something else.

  59. This was fuel for my fire. I hate SallieMae more than I hate any other company on the face of the planet. I want them to get as little money from me as possible. Right now we are living soully on my husband’s income and my entire paycheck goes toward paying off our $40K loan. I checked on it this morning and I have dropped $12K on that puppy since January. I love it!

    Thanks for posting

  60. I’m about to finish graduate school with tens of thousands of dollars in loans, and many of my friends will have closer to $200,000 in loans. Having so much student loan debt will affect our lives for years and impact major life decisions, such as buying a house and having kids. I am worried about the impact that student loans are going to have on my generation as a whole.

    I created a forum at http://www.repaymystudentloans.com to create community for people dealing with the stresses of having student loan debt. Please join the discussion.

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  62. For those that are boasting about working through school and paying off the 30k debt they graduated with I am curious to know what fields you studied…. What was your major? Either you are an insomniac, the first human on earth that doesnt need to sleep for 4 years (going to school and working every night) or you are just the coolest Mother F&%$er on the planet. If you studied anything REMOTELY close to say engineering, higher mathematics, aerospace technologies yadda yadda yadda I HIGHLY DOUBT you had the SPARE TIME to find a PART TIME JOB to cover a tuition that PROBABLY came close to 40K PER YEAR!…. ….. Now was it my choice to attend such an institution; yes and shame on me. I knew I couldnt work ALL that debt off on an ongoing basis sooo instead I busted a$$ packed on the credits and got it all done in 3 years! That was how I saved 40K in one year… But now I sit with 6 digits worth of debt and the economy takes a giant S%^T on everyone…… Am I complaining about being responsible for my debt?…Not at all…Do I feel a sense of entitlement??… NOPE…….. Am I complaining that I have been dropped into a job market and economy that is about as stable as a Nuke Plant in Japan….. YES! Could I have predicted that when I was 17?… NO!… Decisions were made to go to school and enter a field based on ALL AVAILABLE information at the time. ..The fact is we all went to school for the same reason and this sh^% just isnt paying off anymore… Now , following a time of BAILOUTS I look at how our country has allotted these funds. Obviously the goal was to jumpstart the economy, save it from a turbo meltdown and get us back on our feet. Of the institutions that recieved bailout money, how many are prospering as you would have thought they should by now?… Has their bailout really served its purpose? The FACT is , in the end the economy is driven by folks like us. Most of the college graduates will NOT be buying NEW cars, wont be buying HOMES, wont be going on VACA, DONT drive far to save gas, have REDUCED discretionary spending…….. Multiply that by EVERY graduate crying poverty, and you have yourself a major economic anchor…. Would it be right to give us all bailout money?… Honestly, probably not. Would it be better than bailing out the corporate shmucks who are still getting million dollar bonuses….. DAMN STRAIGHT! …. To make it fair there could be government incentives that would pay for folks to go to school and REIMBURSE those AWESOME people who already paid off that 4 year debt of 30k…. All I know is that +700 Billion dollars would have been better spent on the people and their future, and Im confident that the economy and shrinking middle class would be heading in a different direction………When did it become criminal to help out your fellow American?

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  64. As a bankruptcy trustee I’m here to tell everyone that declaring bankruptcy just to get rid of student loans debt is not the way to go. I can’t even explain to you how many people come to me asking me if they should declare bankruptcy just to get out of the student debt. In most cases, the answer is “no”, it’s not worth it. However, it depends on each particular case so consult with a bankruptcy trustee before you make a decision. Most trustee offer free consultation and they can give you a quick answer for free.

  65. Hey Baker,

    I saw this article and it really hit home. With my unbelievably huge amount of student loans, I don’t know what I would done if I didn’t get a job after graduation (which was a very strong possibility with the economy the way it was).

    I think this gives even more reason for parents to take responsibility and take action to help their kids be more proactive in funding their college (after all parents pay for the bulk of the loans). There are some other ways for people to save on their education besides what was mentioned. For example, between AP and community college credits offered at her High School my sister entered college with about 30 credit hours under her belt (one less year of loans for her). There are also online community colleges that offer the same entry level classes at a much cheaper rate that you can take while at your university.

    I’ve also found that talking to the financial aid office pays off well as they are always willing to give tips and tricks to best finance your college experience. As far as scholarships go, I think simply the student being a little proactive goes a long ways. There are tons of scholarships out for just about every niche.


  66. I love this infographic. I wish I’d taken even a moment to think about whether taking out loans was a good idea even way back when I went to college. As a journalism major, I have the second most useless degree out there; all that money I borrowed and paid back could have been saved by just getting a job at a newspaper and WRITING. Alas.

    What I find really, horribly fascinating about the infographic though, is the alarming number of misspelling and missed punctuation. (For the record, I’m being kind of funny here – but even one misspelling in a post about the “value” of paying for education, even ONE misspelling is too many.) Just for the record, for anyone who might not know, “it’s” means “it is” and “its” modifies a noun, as in “its purpose”. Get it right. It’s important.

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  69. just stumbled across this… i like many of other americans & commenters have excessive (and by excessive im talking a total of $170k in private/federal loans) for my BA + MFA degrees. since graduating ive been un able to find work for a total of 3 years and incurred over 30K in interest and fees. I finally found a job (that i like) it pays nothing ($40k) and is a 50mile round trip (no public trans avail) commute (200$+ a month in gas)
    I wish i would have had articles like this when i was in school, i had no idea, i was told by my schools financial aid office to ‘sign here’ and ‘dont worry they will only make you pay back what you can afford’ back when i started my undergrad jobs were all over the place and having a bachelors degree actually meant something. to say this has ruined my life is maybe slightly overdramatic, to say it has hampered my life? yes it has. i share a 1 bedroom apartment to save on money, i dont buy a lot of items, i dont go out to eat or drink i try to save all my money to pay down this excessive debt that i was not prepared for. i cannot blame anyone but my self, i should have know it was too good to be true, my hope is that others can see posts like this and learn before it is too late. if i pay my minimum payment ($700 ish a month) i wont have my loans paid off until i am in my early 60’s and will end up paying well over 100$ in interest, how sickening

  70. I didn’t fully realize my student debt until my last year of school. It was so overwhelming that I found it hard to sleep and concentrate on my school work and part-time job. Mostly I was devastated that I could have been so irresponsible. Luckily I’ve been able to stay employed these last 4 years since graduating, but I really want to go back to school or change careers and it’s just out of the question. What you don’t think about when you’re young is how the opportunities shrink very quickly…

  71. Concerned Student

    Sometimes, despite the consequences we ‘the students’ don’t have a choice. Going to school with scholarships, grants, and fed-loans is the lesser of other evils. Some of us start at ZERO and run the risk of going a negative direction. It COSTS to chose the so called ‘right direction’ and unless we are okay with living that other way… there’s no other choice. Everything has a cost; mind, body or conscience… one is always sacrificed. My question is, why must the cost for EDUCATION be so high? And merciless?

  72. What ever happened to personal responsibility? I wanted to go to an expensive private school at 17 and knew that I could not afford it so I went to a cheaper public school. I’m so grateful that I did not apply because my major pays peanuts if you don’t have a masters. I lived within my means, avoided credit cards and graduated with more in savings than in loans. I took loans thinking it would build my credit and got tired of paying the bill so I paid them off.

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  74. I remember Bank of America came up with a program called “Keep the Change”, where they rounded up every purchase to the nearest dollar and open a savings account for you. Now I wonder if you did this for student loans, where every purchase you did was rounded up, placed into an account that made direct payments into your student loans. Would you use this? What if this service also gave away 5K monthly in a raffle, would you join? The raffle would be completely free, all you would have to do, is be part of the program by signing up? Thoughts?….

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