Monday, August 27, 2012

College Debt for Life?

When I was in college in the '80s the growth rate for college tuition was 10% much higher than the rate of inflation at the time. And it appears that things have not changed since then. The cost of college continues to growth faster than anything else and beyond reasonable expectations (see graph at right).

The result is that many Americans now graduate with a huge debt that takes decades to pay back and prevents them from buying a house and otherwise establishing a normal middle-class life.

What was new to me this morning is that even senior citizens are affected by college debt. SmartMoney.com reports the Federal government is docking an increasing number of Social Security payments to pay back college loans, up to 15% of the monthly benefit. Now these are not deadbeat seniors who failed to pay back their own loan after 40 years but rather parents & grandparents who co-signed loans for their children or grandchildren.

So beware, co-signing a loan can follow you into retirement!

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