Payday loans, waiting tables, and student loans - what do these three things all have in common? They are all ways to pay for college for many current students. Unfortunately, with the prolonged recession and recent changes in federal support for college loans, more and more college students are needing to turn to alternative ways to pay for their college - including taking out payday loans.
The question is: is this trend a good one, or is there something we need to do in order to stop it?
The answer of course, depends on who you are. Typically, payday lenders offer anywhere from small $100 loans all the way to $1000 loans, and they offer them to people regardless of their credit score (which is one reason why college students use them, as many students haven't built up their credit yet). However, the costs of these loans are very high, averaging around $17 per every $100 borrowed. This means a student who takes out a payday loan for $1K will end up spending around $170 in fees and interest - and the loan typically must be paid back in only 2-3 weeks.
Obviously, it's not the best situation for our college students to start their working career with more debt than necessary and I would argue that payday lenders are not doing anything bad in offering loans to students. However, as a society we need to decide to support our students better by offering better loan options through student aid. Yes, our country is in a deficit that we need to crawl out of. However, having a larger base of working individuals with college degrees will also provide a larger tax base, and will thus help us get out of debt even faster.
Here's hoping that our current college grads will be smarter than the rest of us, and help pull us out from the hole we have dug for ourselves!