100000 In Student Loans

$350000 – Average student loan debt

$250000 – Average credit card debt

$170000 – Average car payment

$150000 – Average rent/mortgage

$120000 – Average utility bill (phone, electric)

$100000 – Amount owed on the average college degree

$75000 – Number of students graduating with at least $10k in loans per year

$50 – Percentage of graduates who take out at least $20k in additional loans after graduating

$30 – Percentage of graduates working in jobs they did not have before school

$20 – Percentage of people who graduate with student loans

$10 – Percentage of Americans without their own savings account

$5 – Amount of money left over after paying off bills, utilities, taxes, and debt

$0 – Percentage of American families who don’t have enough money saved to cover unexpected expenses

$0 – Percentage saving $1000 a month, 6 years from now

100000 In Student Loans

Loan Amount

Student loan debt has soared in recent years. As of 2017, total student loans had surpassed $1 trillion, according to the Federal Reserve Bank of New York. Many college students take out loans just to pay for school, but some graduate with thousands of dollars worth of debt that they struggle to repay.

Interest Rates

While many people think interest rates only apply to mortgages, credit cards, and car loans, it turns out student loan interest rates are among the highest in the country. According to NerdWallet’s 2019 College Debt Report, the average rate on federal Stafford Loans was 5.31% while private nonprofit student loan interest rates averaged 6.41%.

Default Rate

Those who default on their student loans may not face penalties immediately, but over time those delinquent payments add up. By 2023, the Congressional Budget Office (CBO) estimates that nearly 1-in-10 borrowers who started repaying their loans in 2012 would miss at least two consecutive monthly payments by then. That amounts to about 100,000 defaults each year.

Average Annual Cost

The average annual cost of federal student loans tops $26,000, according to the Department of Education. While the exact cost of private student loans varies based on the type of loan, the average annual cost of these types of loans can top $40,000.

Lifetime Earnings Impact

According to the National Center for Education Statistics, the median salary of someone with a bachelor’s degree was $57,580 in 2018. Over a lifetime, however, workers with bachelor’s degrees earn 18.6% more than others with no postsecondary education. Those with master’s degrees earned 28.9% more per hour and doctoral graduates earned 30.8% more.

Future Earning Potential

Even if graduating debt-free sounds great, that doesn’t mean students will always have jobs with six figure salaries. According to Indeed, roughly half of U.S. job postings require a four-year degree, but less than 10% of entry-level positions actually require a degree. If you’re looking for a lucrative career after graduation, consider going back to school for advanced degrees in subjects like math, science, engineering, or business.

Current Student Debt

If you do end up taking out a student loan, make sure you know how much you owe before signing anything. The Department of Education says that it will provide current balances on its website. You’ll need to fill out additional paperwork if you want to cancel, consolidate, or change terms of your loans.

100000 In Student Loans

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100000 In Student Loans

FHA loans

FHA loans are designed to help low income individuals get financed for a home purchase. These loans have lower interest rates than conventional mortgages, making them a great option for people who qualify. However, they do carry some restrictions on what kind of property the loan can cover. One of these restrictions includes not being able to buy homes that are less than 30% affordable. Another restriction is no financing more than four times the median household income in the area where the house is located. That means if someone is seeking a $200,000 home, they cannot use their loan funds to pay for more than $400,000.

Conventional Mortgages

Conventional mortgages work similarly to FHA loans. The difference between them is usually based on credit score and the size of the down payment. People who make higher down payments tend to receive lower interest rates while those who don’t make any sort of down payment may find themselves paying higher monthly payments. A homeowner’s credit history can affect the rate at which he or she will pay back the mortgage, and as well as how much they’ll end up paying each month. There are two types of conventional mortgages: fixed-rate mortgages and adjustable-rate mortgages (ARMs). ARMs adjust the amount of the monthly payment based on certain criteria, while fixed-rate mortgages remain the same throughout the life of the loan. When choosing between the two, it is best to choose a fixed-rate mortgage if your financial situation allows for it.

VA Loans

VA loans were originally created to give veterans easier access to the housing market. If you’re a veteran and looking to own a home, then this type of loan could benefit you greatly. Because these loans are backed by the government, they provide several advantages over private-sector lending options. You won’t need to document your military service or prove that you’ve been honorably discharged before qualifying. Additionally, VA loans often allow borrowers to take out larger loans amounts than what would normally be possible. Borrowers can put down as little as 3.5 percent of the total cost of the home, although the maximum allowed down payment varies depending on the state you live in. Also, the interest rate on these loans tends to be lower than conventional loans.

Home Equity Lines of Credit

Home equity lines of credit, or HELOCs, are small unsecured personal loans taken out against the value of the borrower’s home. To apply, borrowers generally need to show proof of reliable income and a stable job history, among other requirements. Once approved, borrowers can use the money to accomplish anything from major renovations to home improvements. Unlike traditional mortgages, a home equity line of credit doesn’t require full repayment until the balance reaches zero. At that point, interest stops accruing. As long as homeowners keep making their regular monthly payments, they can continue drawing on the line indefinitely. Interest rates on HELOCs are typically higher than those charged on other types of loans, though they still tend to be cheaper than mortgage rates.

Refinancing Your Mortgage

Refinancing your mortgage is the act of taking out a new loan on top of whatever principal and interest you currently owe. Refinancing usually involves getting a fresh batch of paperwork, submitting old information, and finding a lender willing to take on the loan. Refinanced loans are sometimes referred to as second mortgages, but they aren’t always treated the same way as traditional mortgages. Many refinancers forego the opportunity to prepay the first mortgage and instead opt to add the additional funds to the existing debt. Others only finance a portion of the original loan. Either way, refinancing a mortgage can lead to a lower monthly payment and a longer period of time before reaching the zero balance mark.

Closing Costs

Closing costs are fees paid to close a real estate transaction. These fees vary significantly depending on the state you’re buying or selling in, the property’s location, and the number of contracts involved. Closing costs can range anywhere from 1 percent to 5 percent of the sales price, so hold off on shelling out extra cash until after you’ve received all of the final numbers.

Points and Fees

Points and fees are similar to closing costs, except they charge lenders a flat fee rather than charging it on a per-transaction basis. While points aren’t inherently bad, avoid paying more than one-half point on a mortgage unless you have the exact same loan terms offered everywhere else. For example, if you shop around for a 10-year fixed rate mortgage, but the lowest rate available is 9.25 percent with 0.75 points, you should take the deal. However, if you see a 12-year fixed rate mortgage with 2.25 points, it might be worth considering.

100000 In Student Loans

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