Christian Student Loans

Ask Chuck: Are Student Loans a Scam?

Ask Chuck your money question

Dear Chuck,

When students paid 10% on student loans, we couldn’t get 1% interest on the money we put into savings. It seems that students and families who continue to take out these loans are getting ripped off. Could you please talk about wear and tear?

Looks like wear to me

Student Loan Forgiveness Program
Occupy Wall Street protesters participating in a street theater production carry signs around their necks depicting their student debt during a protest against rising national student debt in Union Square, New York on April 25 2012. |

Dear looks like wear and tear to me,

There are many aspects to this question that I will attempt to address: first, the issues of usury and scams, and second, some possible solutions to student debt.


Usury, as defined by Merriam-Webster, is “the lending of money with interest for its use, especially the lending of money at exorbitant rates of interest”. Usury laws are an attempt to protect people from predatory lenders who tend to take advantage of people in desperate circumstances.

Typical federal student loan rates for people with good credit today range from 4.99% to 7%. In the case you cited, a 10% interest rate for student loans is above the market rate, but does not fall within the definition of usury. It thus appears relative to the market rate for passive savings, but you must compare it to the available market for student loans.

Student loans are legal and optional, and most do not borrow the money in desperate circumstances, but rather to pursue a desired goal. However, many students and families who take out these loans are unaware of the long-term consequences.


Student loan debt is second only to mortgage debt in America, as millions borrow to go to school in hopes of a better future and increased lifetime earning power. But the “take your way to a degree” method continues to get more expensive and isn’t expected to change anytime soon.

“How Government-Backed Student Loans Killed the American Dream for Millions” by Daniel Kowalski reveals that there is absolutely no incentive for colleges and universities to lower their prices. He reports that in 1980 there were 3,231 institutions of higher education in the United States, but in 2016 there were 4,360. Referring to a Forbes article, he claims that the average price of tuition fees Education has grown eight times faster than wages since the 1980s.

Another Forbes article states that tuition at Harvard in 1840 was $75 per year. If this price had increased at the same rate as prices (or the rate of inflation), the cost in 2015 would have been $1,703, not $45,278. (Tuition for 2022-23 is $52,659.) “But it’s debatable whether today’s college graduate is actually more educated than in 1840, when individuals like Samuel FB Morse and John Deere revolutionized communications and agriculture, and some with much less. education (think Abraham Lincoln) made great contributions to law and politics,” the article states.

Today, many university graduates are underemployed, but there is no evidence that this was a problem among 19th century graduates. As federal aid has increased, tuition has increased. The proportion of recent college graduates (the article is dated 2015) in the bottom quartile of the income distribution is lower today than it was in 1970 – before the Pell grants or the massive federal loan programs. In addition, administrators now outnumber professors.

Student loans have benefited colleges and universities, with the burden falling on students, taxpayers, and those hoping to graduate in the future.

Many people are discovering that their assumption that a college education was necessary for financial security was wrong. The opposite happened. Students often graduate and debts, sometimes hundreds of thousands of dollars, but without job security.

Merrill Matthews wrote a compelling article titled “University Endowments Should Be the Main Source of Student Loans”. “At the end of fiscal year 2020, the market value of college and university endowments was $691 billion…If colleges and universities were to turn to their endowments as their first line of student loans, they could decide to reduce their costs. control,” the article says.

How to Avoid Student Loans

Parents should not borrow money for their children’s higher education. If you want to help cover your college education, start saving early. Demand academic excellence from your schools to prepare your children to qualify for scholarships. I used to tell my boys that getting good grades would be the best paying job they could get in high school. Our rule was that no one would borrow to go to college. Either we would find a way to pay for it through savings, scholarships, and jobs while we were in school, or they wouldn’t participate.

Here are some tips for students who want to get an education without borrowing money:

  • Start saving early and learn how to budget.
  • Research the average salaries for careers that interest you before you go to college.
  • Consider trade schools.
  • Consider careers that don’t require a college degree.
  • Complete the FAFSA (Free Application for Federal Student Aid) early.
  • Apply for grants and scholarships early.
  • Students must work part-time, live at home, and take advantage of community colleges.
  • Accelerate the time it takes to complete the college degree by:
    • Take AP and college courses in high school.
    • Participation in summer and winter courses.
    • Take more than the average number of class hours.
  • Rent or buy used textbooks.
  • Become a Resident Assistant (RA) to get room and board for free.
  • Pray and seek wise counsel.

Dealing with Student Loan Debt

If you currently have a student loan, consider refinancing options to lower your interest rate. Make a plan to apply any extra income to debt reduction. Try to pay it back as soon as possible. Ask the Lord to help you achieve this goal.

In addition to student loan debt, if credit card debt is a source of financial hardship for you or someone you know, Christian Credit Counselors is a trusted source of help toward financial freedom.

Chuck Bentley is CEO of Crown Financial Ministries, a global Christian ministry founded by the late Larry Burkett. He is the host of a daily radio show, My MoneyLife, featured on over 1,000 Christian music and talk stations in the United States, and the author of his most recent book, Economic Evidence for God?. Be sure to follow Crown on Facebook.

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