And the contract terms on private college loans are rigid to the point of cruelty. Borrowers have almost no say and little ability to renegotiate the terms if financial trouble occurs – an inevitability. Many private lenders don’t allow students to pay down the principal of a loan, which means endless payments just to cover the high interest, without ever chipping away at the real amount. Payment options like forbearance are temporary and restricted; prepayment or consolidation are largely forbidden. The most dangerous part for such a significant debt is that there is no escape, no way to ease the burden.
Private or publicly guaranteed student loans are a sideshow. Our K-12 schools should be teaching basic math, skills that students can use to understand the implications of their choices.