At the same time, he said, some of these same institutions offer only small aid packages to needy students, which all but assures that they will not enroll at the institution. Some colleges also steer students toward their own preferred lenders regardless of the students’ best interest.
This imperfect system takes its highest toll on low-income students, who may deal with unfair loan terms or simply fail to apply for college. In one year alone, about 400,000 students with a quality academic record failed to attend college due to their low family incomes, said Tamara Draut, director of economic opportunity at Demos, a nonpartisan public policy organization.
“The least bright wealthy kids attend college at the same rate as the smartest poor kids,” she told the panel.
To Orman, student loan borrowing is “good debt,” meaning it will yield long-term benefits for those who complete college. But that may be a hard sell when debt for college easily can run $20,000 to $60,000.
“Your reality is that you have a lot of debt that you feel pressured to pay off, and that debt load affects your entire financial life,” she said.
--Charles Dervarics
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