College Loans Now

Our nation – both the citizens and the government – is drowning in debt right now.  Too much debt, much of it poorly structured, has put our economy in a slump.  So it may seem foolhardy to consider getting a loan for college now.  But there can be good reasons for getting a loan and higher education is one of them. 

 A “good debt” is one that allows the borrower to have something of value that will appreciate over time.  And the debt allows the person to obtain this asset with growth potential much sooner than if they had to wait to pay for the asset in cash.  An education that will allow greater earnings for the rest of your life can be worth borrowing for.  Government subsidized loans with low interest rates are optimal.  The Plus loans generally carry higher interest, so make sure that you can’t get tuition reduction or do a work/study program before getting into that tier of student loans. 

An element to examine closely now is taking a loan now that you’ll repay with an existing 529 plan or other savings that have been in the stock market.  There may be future growth in these accounts that would be worth waiting to receive.  You can pay the loans back early, but you generally can’t get college loans after you’ve take the courses and paid the tuition.  This is one of the areas where some professional advice can help you make an informed decision relative to your particular circumstances.



There’s good debt and bad debt.  Good debt can allow you to acquire an asset with financial advantages more quickly than you could have enough cash saved up to pay for it.  Lots of the common forms of good debt give you a tax break.  Mortgages and many student loans are good examples.  Even a car loan can be good debt.  There aren’t tax advantages for car loans, but if having good transportation allows you to have better jobs and more flexible career options, a car loan that doesn’t overburden you financially could be a good move.


Bad debt often comes about when the debt lasts longer than what was purchased.  Your instance if you eat out a lot, charge the meals on your credit card, and don’t pay your balance off every month, that’s bad debt.  And bad debt is usually easy to spot by the interest rate you pay, too.  Mortgages, student loans, and even car notes usually have pretty manageable interest rates.  Lots of credit cards have interest rates so high that just opening the bill will give you a nosebleed. 


Ending our Fiscal Fitness review with debt takes as back to where we started.  If you’re saving a portion of everything that you make, you won’t get into debt.  If you’re in bad consumer debt now, take the dual approach of beginning to save while you’re paying down your debt.  When the debt is paid off, you’ll have started the habit of saving and can supercharge your ability to sock away more for your financial goals.

Fiscal Fitness

There are some basics concepts that just about everyone should live with in terms of the finances.  These ideas as I’ll put them forth here are part of the philosophy of the Alliance of Cambridge Advisors.  (If you’re looking for an ethical capable financial advisor in your area, is a great place to look.) 

The Five Fundamentals of Fiscal Fitness are:

         Saving 10%

         Sufficient Liquidity

         Fund Pensions

         Having a Right Size House

         Controlling Consumer Debt

Over the next few postings, I’ll give you my version of these concepts and how the average person can apply them in their life.