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Sunday, June 2, 2013
WASHINGTON — With apologies to Dr. Seuss, I’d like to add some lines to his wonderful book “Oh, the Places You’ll Go!” which is a popular graduation gift for college students.
Today is your day.
You’re off to Great Places!
You’re off and away!
You have brains in your head.
You have feet in your shoes
You can steer yourself any direction you choose.
You’re on your own.
And you know what you know.
But you’d better know what you owe because your debt is high.
Oh, the places you’ll go once your student loans go bye-bye.
OK. Those last two lines are mine.
More than 38 million student-loan borrowers have amassed more than $1.1 trillion in outstanding debt, according to the Consumer Financial Protection Bureau and the Department of Education. A recent study by Fidelity Investments found that 70 percent of the class of 2013 is graduating with debt averaging $35,200, which includes federal, state and private loans as well as debt owed to family and accumulated through credit cards.
Many graduates can’t go any direction they choose. They have to take any job they can get. They have to move back home. They can’t buy a house or a car. They don’t want to get married and merge with someone equally indebted with student loans.
Consider the following:
Congress is making some effort to address the mounting student-loan debt. However, much of the bickering centers on the coming interest rate hike for federal loans. The rate is set to increase on July 1 from 3.4 percent to 6.8 percent. The Republican-led House passed a bill that would tie the rates for subsidized and unsubsidized Stafford loans to the 10-year Treasury note plus 2.5 percentage points. The bill faces opposition in the Democratic-controlled Senate and a veto threat from the Obama administration. Whatever the rate, we need a long-term solution to the amount of debt families are taking on.
In the Fidelity survey, half of the 2013 graduates with student loans said their level of debt surprised them. They hadn’t realized how much they had borrowed. Thirty-nine percent said that had they been aware of how much they would owe, they would have made different choices in their college planning.
So I say to the high school graduates heading off to college and planning to go down the street of student loans, listen also to these words from Dr. Seuss: “You’ll look up and down streets. Look ’em over with care. About some you will say, ‘I don’t choose to go there.’ With your head full of brains and your shoes full of feet, you’re too smart to go down any not-so-good street.”
Michelle Singletary is a personal finance columnist for The Washington Post. Her column runs Sunday.
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