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Kamentez exposes prevalence of student loan debt

By Amanda Stegall
[email protected]
Staff Writer

Anya Kamenetz, former writer of the column "What's up with Our Generation? " for the Village Voice and current freelance writer for "Fast Company" financial magazine in New York, spoke to students and community members in the Lakeview Auditorium on Nov. 1 at 7 p.m.

Kamenetz researched debt issues among Americans and how to manage and reduce problems with debt. Throughout her lecture, Kamenetz presented problems to the audience and offered solutions and statistics to prove the danger that many Americans face on a daily basis.

"College is more important than it ever has been in today's world, " said Kamenetz, "The advantage for the job market has gotten larger for getting a degree and the penalty [for not getting a degree] has also grown. " Due to the increase in education prices, debt has a profound impact on people's lives.

" The main form of debt that several young people are having trouble with is paying off student loans, " said Kamenetz, as she addressed the stressful methods of payment for higher education. "There are so many private and governmental agencies that offer loans to students and it's incredibly easy to get money fast. "

With the astoundingly high amount of offers for loans that students receive, confusion is inevitable. "A lot of people are confused with the difference between subsidized and unsubsidized loans, " said Kamenetz, "What you have to keep in mind is that with a subsidized loan, the government pays your interest while you are still in school. Unsubsidized loans are given by private companies and you not only have the loan itself to pay, but a high interest fee as well."

"The government has begun to offer so many subsidies to students because the money is available and not much of it is required for the loan, " added Kamenetz, "It's the fastest growing form of student aid, and unaware students are getting into debt a lot more quickly. " Kamenetz continued to state that one big problem with government loans is corruption within the system and political involvement with the ease of loans rather than the complicated process of giving grants.

"Interest rates can be positive and negative, " said Kamenetz, "When saving money, you want an interest rate that will increase your savings. Save early in your life and the interest will add up to give you a higher end balance. "

The importance of credit plays a significant role in choosing the best way to get out of debt. "People have become obsessed with credit scores, " said Kamenetz, "but what most people don't realize is credit scores are created by the credit companies to make people use and apply for credit." Credit can be helpful or harmful and Kamenetz advised for everyone to know their own limits and make decisions involving credit based on a self evaluation. "Be careful and don't get in trouble, " cautioned Kamenetz, "if you have multiple cards don't transfer balances or spread a balance out over several cards. Having one or two cards for emergency purposes is a good idea, but having multiple cards with high balances and high interest rates can cause a lot of damage to your credit report.�

"Credit cards are a plastic safety net, " said Kamenetz, "but managing your lifestyle without credit is not a bad idea. " A problem with not building credit that Kamenetz addressed was applying for loans to buy a car or home and insurance. When applying for a credit card Kamenetz advised to search for a card with low annual fees and no teaser low interest rate. "Having a credit card is good, " said Kamenetz, "but never using it does not provide benefits. You should charge something to your card to build credit, but keep the balance low enough to pay off. "

To assist with financial management several websites are available for access. "I've met with the CEO of every website that I recommend, so there's no confusion about legitimacy,� said Kamenetz. "Another feature that I like other than the websites is banks will now send you a text message to let you know when you've overdrawn" she said. Kamenetz stated that most people have become influenced by marketing from the credit companies, but awareness should be constantly maintained when handling a situation involving finance.

"Credit card companies can change their regulations and terms at any given second and do not have to inform you of the change first, " she said, "so beware of interest rates and only paying the minimum balance. " Kamenetz stated, "Interest adds up and increases the length of time necessary to pay off a debt. "

"Now, because of debt, many students who have gone to college to become teachers are not able to take a teaching job because it doesn�t pay enough to clear their debt problems. This issue has caused an increase in enrollment in two- year colleges because the award of a well-paying job is immediate, " said Kamenetz in closing her lecture.

Kamenetz is the author of the book "Generation Debt" and is also a weekly columnist for the Yahoo Finance webpage and has her own blog at anyakamentz.blogspot.com