Personal financial planning includes a variety of things, including managing debt, investing, paying bills and creating budgets. Loans have a tremendous impact on an individual’s personal finances because of their long-term conditions. Individuals face long-term, complicated obligations when taking out a loan. One should seek out the best deal. Subprime loans, which are loans that are given to individuals with less than stellar credit, continue to put Americans in more debt. The affects of subprime loans are about to affect the student loan industry. This can have a drastic affect on the personal finances of many college students, including myself. These effects will be negative.
It will become even more difficult for underprivileged students to secure student loans. Sometimes it seems like it isn’t enough to be intelligent and gifted. One has to have financial resources this day and age. Students will face higher interest rates, and will also have to have higher credit scores than before to get the student loan. Loan discounts and consolidation are also expected to decrease as banking institutions cut back on subprime loans.
It is unfortunate that some people will not be able to get the student loan money they need, but this is something that America’s banking institutions need to do. It is irresponsible to give large amounts of money to people who may not be able to pay it back. It also does a disservice to those people; private student loans usually have a high interest rate.
With rising tuition costs, and a fragile banking industry, paying for college will certainly become more difficult. Banks will have hardships, but the burden will be placed on the borrowers. That is why it is important for college students to budget, save and look for funding elsewhere. College Board and division of financial aid offices are great resources for students. Loans should be a last option. Keep grades up, work hard, and do community service. This increases the chances of receiving more forms of financial aid.
College funding is becoming a hot topic among democrats. Senator Obama proposes a $4,000 stipend for college students who perform community service. Both candidates support more government spending on education as well. According to Barack Obama, The United States spends 10 billion dollars a month on the Iraq war. It would be nice if some of that money was being spent on education. Education is increasingly becoming more and more unaffordable.