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Summary:
The article begins by explaining many financial aid options offered by Sallie Mae, but continues by explaining how those aid packages do not allow an most individuals to attain a college education without accumulating debt. It goes on to explain briefly how debt is differentially accumulated by income class. This is followed by an explanation of the different types of loans that are commonly taken out and explains that even with aid and the best loan options, more loans are usually necessary. It then goes into defaulting on loans, and how to avoid it. The final section is about loans and their effects on taxpayers. It explains two types of loans, their benefits, and why both are used. An explanation about the drawbacks of privatized loans backed by the government follows this. The article finishes with a summary of the hazards of college loans.
Citation:
Martinez, T. P., & Martinez, A. P. (2006, Jan 30). Reality-based college loans; present programs insure lenders, not students. The Hispanic Outlook in Higher Education, 16, 28. Retrieved from http://search.proquest.com/docview/219295143?accountid=13626
Authors:
The authors Tony Martinez and Alison Martinez have both written many papers on the subject of student loans and support their information with relevant studies and sources.
Key terms:
Financial Aid Package – This is a group of grants and scholarships given in this article by Sallie Mae, with the apparent intention of allowing individuals in financial need to acquire a college degree. However, it is explained that this is rarely enough financial aid.
PLUS Loans – This stands for Parent Loan for Undergraduate Students. The article states these are a very viable option for attaining financial aid, however it also explains that almost half of the individuals who can take them out do not know what they are.
Stafford Loans – The most common type of loan according to this article. The article also states that like many other financial aid options discussed, they do not provide enough to attend college.
Quotations:
“A study released Nov. 1, 2005, shows that grants, loans and expected family contribution leave an average shortfall of $4,689 per year below the cost of attendance for students from families with $32,288 annual income or less. … Financial aid packages given to students from families with income up to $62,240 leave $3,600 of need unmet. A 2001 PIRG study by the same group showed that high-income students faced a shortfall of merely $400.” (28)
This clearly illustrates the differing impact of student loans to pay for higher education.
“Shireman understands why students hesitate to borrow. "The truth is, it is dangerous to borrow," he points out. "There is a danger that you won't complete your degree, or if you do complete your degree, you won't get the job that gives you the extra income to repay the loan.” (28)
This clearly illustrates the risk involved in taking out a loan.
“Shireman warns that our heavy reliance on loans to finance postsecondary education influences individual students in ways that harm our whole economy and society. Heavy college debt dissuades graduates from much-needed but less lucrative careers in teaching, social work and religious service. College debt might delay marriage, family formation and home ownership. College debt makes it hard to save for retirement and for the education of the next generation.” (28)
This explains some of the possible drawbacks to taking out loans to pay for college.
Value:
This article explains much of the financial aid information that I will require as a basis to discuss the causes and possible effects of privatized college loans. It also gives a description of information about the Sallie Mae Corporation, giving specific examples instead of general information. The article also discusses income class differences in financial aid and accumulation of debt. In addition, the presentation of information about student loans in relation to both borrowers and taxpayers separately gives a comparison of perspectives relevant to my topic. In addition, the studies mentioned give possible additional sources for my research.
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