Are College Student Loans Financial Aid?

When our daughters were in their senior year of high school, there were several private organizations that sought out the parents of these seniors.  They advertised that, for a fee, they guaranteed they could help you obtain financial aid for college.  If they were unsuccessful, they would return your fee.

Although this company did encourage parents and students to complete and submit a few college scholarship applications, this is not what they were guaranteeing.  Instead, they also had each parent and student submit an application for a student loan.  Since virtually all of the students and most of their parents qualified for student loans, the company was able to announce that they had been successful in obtaining financial aid for you.  However, the question I had at that time, and still have, is this:  Do college student loans really qualify as financial aid?

Of course, since tuition rates have quadrupled in the past 30 years (while many salaries have not), it is virtually impossible for many students to attend college if they and their parents do not take out student loans.  However, easy student loans have also made it possible for colleges to initiate these huge tuition increases.  Without student loans, colleges would have been forced to hold the line on student tuition, or their only students would be those who had wealthy parents.

These college student loans are doing much more than allowing high college tuitions.  Because parents are also taking out student loans in order to help their children, these student loans are putting a heavy burden on many parents of retirement age.  As a result, this so-called financial aid is actually wrecking the financial security of many Baby Boomers, as well as their children.  Although there have been some efforts to petition the government for student loan foregiveness, so far these petitions have fallen on deaf ears.

Perhaps these college loans should be called by their real name:  consumer debt.  Anyone who reads anything about financial planning or retirement planning knows that consumer debt should be avoided at all costs, even if it means that your child must work their way through college, or that they must live at home and attend a local, two-year community college.

Let's keep things honest at the college level.  Student loans are crushing many young college graduates, as well as their parents who are reaching retirement age and who often can no longer afford to quit working.  What kind of "financial aid" puts this kind of burden on families?

By the way, you cannot get out of this debt, even if you declare bankruptcy.  About seven or eight years ago the federal bankruptcy laws were changed so that bankruptcy could not clear out student loan debt.  Our only choice is to continue the student loan repayment.  Perhaps federal officials saw what was happening ....

You may also be interested in reading:

Retirement Deferred by Parent Student Loans
The Scam that Promises to Fix Your Credit
College Does Not Guarantee Success
The Retirement Lie


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