According to a new report from TransUnion, the burden of student loans on young people, ages 20 through 29, is much heavier than it was for that age group a decade ago. On average, a twenty-something today has about $25,000 in student loan debt.
That is up about $10,000 from 2005. There are several reasons for that according to some economists and financial experts but it is a point of common observation that the consistent uprising in student loans is mainly due to the poor management of debt by the individuals and stringent monetary policies adopted by the state.
In order to eradicate the burden of student loans and making it more effective, students have to take initiative in combating this situation by efficiently managing the debt and using it for productive purposes.
Also, student loans can be bargain shopped. Check the StudentLoanHero site for price comparison.
For some, student loans were a necessary burden during college which led to a better paying job in the field of their choice. Too many student loans develop a feeling of free money available to students at their disposal or just something to deal with after graduation. No matter what the perspective is, the student loan is causing individuals to start drowning in debt and getting stressed when they are unable to pay off.
According to recent research, average student in the United States graduate with the debt of around $40,000 in student loans, and those who continued higher degrees and witched to majors or went back to school that number gets significantly larger. In fact, according to the Federal Reserve Board Survey of Consumer Finances, almost 19 percent of borrowers owe $50,000 and above (with 5.6 percent owing over $100,000).
EDUCATION DEBT IS GOOD DEBT:
There is no doubt that study can improve one’s finances and but generally we know quite a lot of people who owe so much debt with no real earnings to make up for that. An enormous amount of satisfaction is a guarantee as result of learning but that would only be possible if the burden of debt is not that gigantic which seems so inevitable. Too much debt acquired specifically for learning would be a great step-change as the probable outcome of higher education would enable higher future income prospects.
COMPLETE HIGHER EDUCATION:
Simply leaving education for debt is not the way to go as the cost of acquiring higher education costs more and that dropping it half way as much as completing it. Students who dropped out in 2009 owed almost three quarters as much ($13,200) on average as students who completed their graduation ($18,000).
BORROW AS MUCH AS YOU CAN PAY:
No doubt student loans are the cheapest loans around. They are usually interest-free and people also obtain the advantage of the federal student loan forgiveness programs where they have to repay comparatively less. But that certainly does not mean that one should start acquiring it without having a specific purpose in mind as this scheme is not designed for borrowing for unconstructive purposes. People having the probability of not being able to pay off the loans in the future mustn’t take it as this will only pile up the debt burden and they would end up doing refinancing and hedging their loans that can never remove the debt but can only make it easier.
UNPAID STUDENT LOAN DOES NOT AFFECT THE ABILITY TO GET CREDIT:
It is a common perception among individuals that if they are in engaged in student loans than their credit getting ability gets weaker and they are not able to get loans for housing and car etc. But that is not the case as student loans are not the usual kind of loans and credit lending agencies prioritize people who have pounded on student loans and they would not necessarily be at a disadvantage. The most important factor that is considered in lending by the agencies is the income of the individual to meet the repayments of along with all the other costs of living.
PAY YOUR DEBT AS FAST AS YOU CAN:
In order to make your debt useful it is advised to start repaying the debt as early as they become due simply because paying late or not paying at all is not a healthy sign whether it’s a student loan or any other kind of debt one has to be punctual in debt repayment. The biggest drawback of paying late or not paying at all is its direct implication on the credit score which ,if, goes down causes difficulty in getting new loans or increasing your credit limit. Another obvious effect is the heavy penalties and interest charges that are accrued increasing your financial burden. Tackle this up by setting automatic payments with your bank.
By considering the above facts one can manage his or her debt more efficiently and the burden of debt can become a blessing because in this day and age avoiding debt is not the way to go achievement is how you manage the debt in a more effective manner!
No Nonsense Landlord says
I remember when I first took out my student loans. I was actually working a part time job, and was able to invest some of the loan money. Interest rates were a lot higher, and loans were only ~$2500 back then.
College is great if you can keep going. I always was afraid of dropping out, as I knew I had loans to pay if I did. So, it compelled me to do my six years to get a four year degree.
Mathew Jade says
It’s always encouraging to hear experiences of personnel like you who have faced these situations in the past. Everything to learn sir!
[email protected] says
I have actually heard that student loan debt is even higher – nearing $30,000 per graduate. I really encourage everyone to have no more than $10,000 by the time they get out of college, because even that is a challenge to pay off. If you have to go higher than this, maybe it would be worth taking a semester off and working to make up the difference. Postponing graduation is far better than being handcuffed by debt when you get out.
Higher education is putting young individuals in a tough situation. You can’t get the job that you desire without a diploma, but getting the diploma is going to set you back significantly financially. The average debt amount for graduating students seems to be growing every year. Students need to be educated on how they can help themselves reduce this amount throughout their educational career.
Mathew Jade says
Exactly, Derek but the fact is generally students are dropping out of college because of debt without realizing that there are alternate options available like loan forgiveness and refinancing that could help students at least complete their college. Future is not that dark as it seems !
Mary Grace says
I think its a burden and a blessing. it’s burden because it is a liability, it is a blessing because a student can pursue his study because of loans. ^_^ You have a nice post here.
Mathew Jade says
Thanks Mary ! That is my point actually it is a two-dimensional picture and depends upon the perception of people as they take it. . . !
Becky Law says
I still believe it’s a blessing because it gives opportunity for students to finish college and can attain a better future. Great post!
Mathew Jade says
Glad you like it Becky, I completely agree with you. Loans could be paid off in the future but once the age and time to acquire education is gone there won’t be anything left to come up with. .
Students loan facility in my opinion is the good thing. There are many eligible students who not so financially sound can continue their studies with this facility.
Sometimes I question if this debt will be worth it for the next 30-40 years of my life. I keep debating on whether or not I should go to a cheaper school. There are so many what ifs in my head about education.
Bryan McDonald says
Thanks for your topic. I think I should make a plan for myself to get out of debt. It’s really difficulty for my family monthly.