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[quote=Anonymous]This is a big problem with the student loan industry.   Students qualify for more money than they need for tuition, books, and fees -- and they have some extra money sitting there in their account.  Instead of sending it back, they find it useful to use it to cover some living expenses too (so they don't have to work so much and can focus on their classes, which makes sense.)  rather than put these expenses on a credit card, with a high interest rate, they use student loan money with a low interest rate.

Sounds financially reasonable -- except if they get totally in over their heads because with student loans there's no way out if you can't pay it back.

I think student loans should be capped depending on what field you are studying in and what your expected job would be upon graduation.   Students should not be able to borrow (at the reduced rate offered by lenders for loans backed by the federal government) more than half their starting first year salary for the job for which they are preparing,  in their location; prorated somehow by the actual job offers in that field.  If students really want to study in that field despite not being lent enough money to cover tuition -- either they need to come up with the money OR they need to borrow the money at a much higher cost from their credit card company.   Since the credit card companies will bear the risk if the student defaults, they will have a lot of incentive to research which fields are turning out successfully employed students and which are not -- and they can charge interest rates accordingly.

If you want to borrow $20K to become certified as a Special Education teacher  -- go nuts!   If you want to borrow $120K to become a lawyer -- I don't think so.[/quote]

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