Avoid private student loans at all cost by Clark Howard

If you're not familiar with Clark Howard, you definitely should be. He is hands down the most practical person on handling money and I am a great fan of his radio show.

I consider his advice gold. Here are a few words of advice from him. He has much more at www.clarkhoward.com

"I read in The New York Times that student loan debt is being called the "anti-dowry" because it hangs around your neck like an albatross in your 20s and 30s and makes you less of an attractive prospect for marriage.
Now comes word from the Consumer Financial Protection Bureau that private student loans stink. Just like I've always said!"
A warning for parents and grandparents

  • Parents do not feel guilty that the expenses of providing for your family are preventing or have prevented you from saving for your children's college education. Let go of that guilt. It's more important to save for your own retirement, because there are no scholarships, loans or work-study programs for that!
  • Grandparent, do not sign for student loans for your grandchild. It's not a good way to show your love for your grandchildren.
  • Students, do not convince yourself that a degree is worth any level of borrowing. If you must borrow, never borrow more for a 4-year degree than the entry level salary you expect to earn after having received that degree.
"Never borrow any private student loan money. Only borrow what's permissible under the federal student loan program. Do not go to private lenders. Period."

Updated June 2018 from Clark Howards site

Dangers of private student loans

"Avoid private student loans at all costs. Back in 2005, the private student loan industry bought off enough politicians to gain the right to do any and all tactics short of causing you bodily harm in their efforts to collect on their money. You have no wiggle room when it comes to repayment options, like you do with federal loans as I explain below. Private student loans typically can’t even be dismissed in bankruptcy."

His rules of student loan borrowing

  • Never borrow more for a four-year degree than the entry-level salary you expect to earn your first year after receiving that degree.
  • Consider doing the first two years of your studies at a community college, and then transferring those credits to the school from which you want your degree.
  • Never borrow any private student loan money! If a degree exceeds what you can borrow under the federal student loan program, you should either pick a cheaper school or work your way through school.