Everyone I know is paying off student loans. I’m fortunate enough to be making my payments with no problem but I did struggle with them in the past (when I was significantly more broke). But with the economy as foul as it is, more and more people are getting behind on their loans and even going into default. And those that do, according to this story in the NY Times, are finding out just how much of a hassle dealing with their lender can be.

“More borrowers may begin to discover the harrowing consequences of reneging on student loans in the current economy. Numbers of borrowers behind on payments and in outright default are rising for some types of loans, and the tight job market makes it harder for graduates to find jobs that let them pay off debts. At the same time, investors are pressuring lenders to raise revenue by minimizing losses. Investors also expect more revenue from those lenders that operate collection agencies.” –NY Times

At the end of the day that all means more phone calls from collectors and a more stressful life for people who fall behind, so do your best not to.

One interesting thing about the NY Times story, though: they feature a 38 year-old activist who is fighting the student loan companies over their tactics. The problem: he’s behind in his own student loan payments, yet quit his job because he didn’t get the raise he wanted, and also spends time and I’m assuming money on tango and salsa lessons. How’s that work?

I read somewhere that poor people think about surviving day-to-day, the middle class thinks check to check and the wealthy plan for generations down the road. So what are you doing to ensure your future generations will have a stronger financial life than you did?

The thing I decided to do over the weekend was start college funds for the babies in the family. I have one newborn little cousin and one who’s three; they’ll both be getting 592 college savings plans in their names. I called up a financial adviser at Fidelity, where my sons’ college plans are and found out that anyone can start a 529 plan for a kid — you don’t have to be the parent. You can start one with as little as $50 and some of the plans allow you to deposit as little as $15 automatically per month. Sounds like a little, but even that much over the course of 18 years will add up to at least books for a semester or two.

Most 529 plans are associated with or sponsored by a state — you don’t have to live in that state to enroll in them, though, and all have federal taxes deferred on them. There are some state tax benefits, too, but you’ll need to read the fine print on which plan you choose to figure out which is best for you.  You can go to www.savingforcollege.com to read up more on 529s.