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THE BIG PICTURE
Credit provides capital (ie. money!) Historically, credit is very important because it fueled exploration, economic expansion, and innovation. Consumer credit provides the average person with purchasing power enabling immediate access to many items that are key to quality of life. Credit cards are the main form of consumer credit in the U.S. The downside of credit is debt. Debt must be carefully managed and aggressively paid off or it can seriously set back wealth- building efforts. Some forms of debt are beneficial for building wealth such as a college education, a car, and homeownership. To build a good credit history after college, pay your student loan back according to the repayment schedule. Contact the student lender if you need a deferment or forbearance.
PONDER AND PREDICT With regard to building wealth, time is a particularly powerful ally. How so? What power does time have over money? ______________________________________________________ ______________________________________________________ ______________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ PRODUCT PREVIEW DEBATE, PERSUADE, INFORM Free College: Good or Bad Idea?
In some countries, a university education is heavily subsidized (financially supported) by the government, so it is very inexpensive for students to attend college or career tech school. Compare this to education in the United States, where the recent average cost of tuition and fees was $32,405 at private colleges, $9,410 for state residents at public colleges, and $23,893 for out-of-state residents attending public universities. Some journalists, academics, and politicians in the United States want the government
to pay the costs of college education for all Americans. Supporters of this plan claim that it will reduce student loan debt, which is currently about $1 trillion and growing! That’s a big chunk of money no longer available for investing or saving for retirement. They argue that free college will improve America’s economic competitiveness by producing a more educated workforce, and reduce inequality by enabling all people to afford college.
Chapter 7 | The Credit Conundrum 124
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