Tardy college loan rules

The Baltimore Sun

When Polonius in Shakespeare's play Hamlet said, "Neither a borrower nor a lender be," he was a fortunate man.

He did not have a student loan, revolving credit debt, a car loan, a home equity loan or a mortgage.

In today's society, young people are weaned early on credit dependency:

Credit-card issuers can snare them before high school graduation, stepping up pressure at college orientation. Issuers bet mom and dad will step in with the cash if the student falls too far in the hole.

Too often parents and children view approval of a college loan with the same gusto as a college scholarship or money saved for college. It is not the same thing because the piper eventually must be paid.

Young adulthood for many Americans is indentured servitude to creditors. They leave school deeply in debt and begin their working life behind the financial eight ball.

This has repercussions for jobs they seek, since they often look at the immediate paycheck rather than long-term potential of a position. Or they may feel so hopelessly in debt that piling on more for clothes, high-tech gadgets, an expensive car or other luxuries doesn't seem to make much difference.

Borrowing for college often is a necessity but must be approached prudently. Families should carefully study the relative costs among the schools and determine the most attractive alternatives available for meeting them.

Financing of college, cars and houses often is conducted with less scrutiny than apparel shopping or vacation selection. Excitement rules, and people sometimes take the most expedient opportunity just to make it happen.

Practices of the student loan industry, in which colleges direct parents and students to preferred lenders without explaining that numerous choices are available, fit this national view of young people as a profit center.

Sure, parents should be more knowledgeable, but they often think with their hearts when it comes to their child's education. Colleges should do more to educate parents and students.

They should refuse payments, premiums or other inducements provided by lenders, while lenders should be more upfront with families about other options.

New rules for these programs proposed by the federal Education Department would require colleges to include at least three lenders on any list recommended to students. They also would remove most incentives offered to universities by loan companies.

This necessary action is a day late and billions of dollars short. Young people are paying a high price for living in a society that equates debt with adulthood but does nothing to help them handle it.


Andrew Leckey writes for Tribune Media Services.

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