How Much of a Financial Burden Do Student Loans Place on Students?

7 min read

Student loans are a huge burden on students. However, they are just that: student loans. Even if someone graduates college debt free with no loans at all, those who took out loans still have to pay them back. I know many people who graduated college nearly 30 years ago and are still paying off their student loan debts. There are some ways to get out of these burdensome payments faster. Here are some tips:

Paying Off Your Loan Early

If possible, try to pay off as much as you possibly can in the beginning. If you do not have any extra money to pay off your loan early, then ask family members or friends to help. You may even consider asking your parents for financial assistance (if you haven’t already).

Refinancing Your Loan

You might find refinancing to be useful. In fact, you should check out refinance options before making any major decisions about repayment. There are several things to think about when considering refinancing. Be sure to consider whether or not it would be cheaper than continuing to make interest-only payments. Remember that your interest rate could go down in the future! Also remember that refinancing does carry risks. There is always a chance that your new lender won’t honor your old lender’s terms. Make sure that you understand these risks before deciding to refinance.

Debt Consolidation

There is one thing that you should never do. That is, consolidate your loans. Most lenders will tell you that consolidation is a good idea, but consolidation is not a good idea. When you consolidate your debt, you end up paying higher interest rates and you don’t end up saving anything. Instead, you end up paying more interest over time. So, don’t do it!

Get Help From A Credit Counselor

A credit counselor is an expert-trained individual who helps consumers manage their finances. He or she can help you work out a repayment plan that works best for you. You may qualify for federal programs like Direct Consolidation, which provide low-interest loans that help you pay down your debt.

How Much of a Financial Burden Do Student Loans Place on Students?

That says it all. Many people think student loans are bad, but what if they were actually helping out? What kind of burden do these loans really put on students?

Here’s the video description: “Student loan debt is one of the biggest problems facing millennials today. But how much of a burden are student loans really on students? How many students just give up their dreams because their parents won’t help them pay off their debt? Can we still afford higher education without making everyone else pay for our tuition? These questions and more are answered in this video!

G-Luke produced the music.

How Much of a Financial Burden Do Student Loans Place on Students?

Student loans have become a major burden for students around the globe. But is debt really a burden? I asked my friend and Forbes contributor, Karmen Clair, who was recently named “The Best Financial Adviser” at the 2018 Financially Fit Awards. We discuss student loan debt: what it actually means, how much students borrow, how long they pay off their debt, and if the government should forgive student loans!

How Much of a Financial Burden Do Student Loans Place on Students?

$1.5 Trillion: That’s how much student loans have ballooned since 2003. This is according to a report released yesterday by the New America Foundation. This amount is approximately 10% of the total national debt.And student loan debt now sits at over $1.5 trillion.

Over 1 Million Americans- By 2020, one million American students could default on their student loans and face financial ruin. But there’s no way of knowing whether the number will reach that mark until then.

4.8 million people—The average monthly payment for a student who borrows for four years would exceed $500. That means that the average borrower will owe approximately $17,000 after they graduate.

6 Million Default Rate: If the trend continues, about 6 million borrowers will default on their loans by 2025. That’s nearly twice the current rate.

Half of Young Adults: About half of young adults between the ages of 20 and 30 carry some amount of student loan debt.

70% of Graduates—In fact, if you graduated from college last year, chances are that you still have student loan debt.

1 in 5 Public College Graduates—That’s about 17 percent of public college graduates.

Many graduates use what is known as “unemployment insurance.”That comes with its own set of problems.

8 Percent Of Public School Students-That means that almost half of all public school students have student loans, even though they’re not eligible for federal aid.

11 States- According to the National Center for Education Statistics (NCES), states with higher levels of education tend to have lower rates of student loan defaults among their residents. Arizona tops the list.

25 Years: That’s the expected timeframe that a typical graduate will work before being able to pay off their loans.

42 Days—That’s the amount of time a typical student takes to repay their loans.

Average Annual Interest Rates: Undergraduates face interest rates of around 9% on average.Graduate students pay about 7% per year.

Average Loan Balance: Another way to look at this data is in terms of average loan balances across the country. Undergraduates owe about $29,600 on average, while graduate students owe just under $20,000.

How Much of a Financial Burden Do Student Loans Place on Students?

In an effort to boost the economy, the federal government has decided to raise student loan limits to $26,500 per year ($10,000 per semester). Is this idea worth the cost?

According to the National Association of Consumer Bankruptcy Attorneys (NACBA), the average monthly payment on federal loans was about $250 in 2011. According to the U.S. Department of Education’s Financial Aid website, the maximum amount borrowed for 2014-15 is $31,000 (which includes both undergraduate and graduate loans). If these statistics are accurate, then the average American student borrower owes approximately $30,600 in debt. However, if we take a closer look at how much Americans actually borrow, the numbers change. In 2013, only 29% of undergraduates took out loans, while 45% of graduates took them out. As reported by CNBC, student borrowers have been borrowing an average of $10,000-$20,000 each year since 2009. Of course, not everyone borrows for their entire education; however, the vast majority of students do.

Given that students borrow approximately $100 billion annually, it would seem that the interest charged on the loans would continue to rise as well. However, according to NACBA, a recent study conducted by the Institute for College Access and Success (TICAS) indicates that there has been no increase in the rate at which college tuition costs have risen over the last decade. Moreover, TICAS reports that the total percentage of college graduates who owe any kind of debt has declined by almost 10%. Furthermore, the median amount owed by graduates who borrowed money has decreased substantially. These findings suggest that universities and colleges have not increased tuition costs to cover the additional income being earned by graduating students. Instead, colleges and universities may be able to generate extra revenue by increasing the number of students attending their institutions.

So what does all of this mean for those currently carrying student debt? Does it make sense for students to borrow thousands of dollars per month in order to pay for college? According to the Center for Economic Policy Research (CEPR), the answer is clearly no! According to CEPR, the average student loan balance is now close to $27,000, which equates to a nearly $300 monthly payment. Unfortunately, many families cannot afford to pay off their student debt after graduation. Approximately 40% of graduates still owe money three years later, and around 12% remain so indebted five years after graduating. A portion of those who fail to repay their debts ultimately end up in bankruptcy court. On top of that, some people never pay off their student debt. According to a report published by CNN Money, 42% of student loan delinquencies were 30 days past due, 32% were 60 days late, and 18% were 90 days or more behind in repayment.

Are these types of statistics discouraging? Yes, they are. However, the good news is that student debt is not insurmountable. While it might seem impossible to avoid owing money on student loans, it is possible to minimize the amount you are paying. You should start by looking into refinancing options before deciding to go back to school. By doing so, you can lower your monthly payments and possibly even reduce your outstanding balance. Additionally, you could consider going part time or switching majors to obtain a degree that is less expensive and easier to complete.

Another option you might want to consider is seeking additional financial assistance. Many schools offer scholarships or grants that can help offset the cost of attendance. These programs are often advertised throughout campus, making them easy to find. Some programs require a certain GPA or test scores to qualify, while others are merit-based. Once again, it pays to look around before committing yourself to a single institution.

As mentioned earlier, student loans can be a burden on millions of individuals across America. However, there are ways to make sure that the debt doesn’t become too burdensome. If you’re struggling with student loans, don’t hesitate to ask for additional financial aid. In fact, the sooner you begin working towards repaying your loans, the faster you’ll get ahead.

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1 comment:

This post made me smile. I’m glad you mentioned the cost is low compared to buying a home. Home ownership rates have been falling for decades. That’s why you see more short sales today than ever before. People realize home ownership is not affordable anymore.

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