Loans and credit are important to our economy. Few people can say
they have never borrowed money. Most homes and cars today are
purchased with borrowed money. Understanding how loans can be
used to help achieve financial goals, as well as when they can derail
financial plans, is very important in today’s economy.
Loans
Reading Prep. As you read the
chapter, think about the role interest
plays in borrowing money. Consider
why banks pay you less to borrow
your money, which comes in the
form of your deposits, than they
charge you to borrow theirs.
College
and Career
Readiness
Section 8.1 Loans and Interest
Section 8.2 Installment Loans
Section 8.3 High-Interest Loans
Section 8.4 Student Loans
“Student loans are incredibly helpful as long as you plan ahead and
don’t get in over your head. If used wisely, student loans can help get
you through college and into the real world.” ~ Vince N.
Money Matters
Student Debt
Eighty-two percent of college students are
carrying a credit card balance and are incurring
fi nance charges each month.
The average college undergraduate student
carries over $3,000 in credit card debt.
College freshman carry an average of more
than $900 in credit card debt.
Only 15% of college freshmen have zero
balances on their credit cards.
Sixty percent of college students are surprised
at how high their credit card balances are.
Forty percent of college students admit they
had purchased items with a credit card even
when they did not have the money to pay the
credit card bill.
In addition to credit card debt, the average
graduating senior has more than $20,000 in
student loans.
The Credit CARD Act of 2009 restricts credit
card issuers from giving a credit card to anyone
under the age of 21 unless they can prove they
have enough income to repay credit card debt.
Without this proof, a cosigner is needed.
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