Student debt overwhelms millions of recent college graduates and their parents
Many recent grads and their families are being overwhelmed by a serious student debt problem. American student loan debt has ballooned to more than $1 trillion, with more than 7 million borrowers in default. The United States leads the world in abandoning students to bear the enormous burden of educational loans.
This problem isn’t unique to the United States. But the level of debt incurred by student borrowers in the U.S. is higher than anywhere else on the planet. In stark contrast, Argentina, Sweden, Norway and Iceland offer students college education at no charge whatsoever. The UK shows concern by not requiring their students to make payments until they’ve earned the equivalent of approximately $33K per year, and even then only collect 9% of their earnings above the base amount of the debt. Many people from other countries are amazed that the American higher education system is even sustainable under conditions so adverse to students.
The price of education
The average student debt for a 2013 graduate is $35,200. Many of us want to pursue the American dream of a college education but in order to pursue it, we must take out loans to finance 4 or more years of college.
Average tuition, room and board for in-state students at four-year public schools is about $16,000; at four-year private schools, it’s approximately $40,000. When a student attends 4 years of college at a public institution they are most likely to pay at least $64,000 if they have no grants and do not live at home. Costs at the most prestigious post-secondary institutions are nearly $60,000 a year. The U.S. Department of Education is the largest provider of student aid in the nation, offering more than $150 billion per year in grants, loans and work-study funds to 15 million students.
It’s so easy to apply to schools of your choice and initiate a debt process that’s simple to begin and seems so right, yet may grow to become the greatest financial burden of your lifetime.
Living with Student Debt
Students graduating from college are plagued by mounting installment debt. Student loans, credit card debt and car loans contribute to the burden. When you can’t pay your loans it can be overwhelming. Those who want to minimize debt at a later stage in life need to learn debt management techniques early on.
Not all former students take advantage of loan consolidation. When you consolidate your student loans together, you can often pay the aggregate amount of debt back over a longer period of time and at a lower monthly rate. Those who qualify can get income based repayment, which helps those with lower income levels.
Student loans will be there until you have paid them off, unless you get debt forgiveness. Failure to pay back your loan can have many negative consequences. A likely result is a reduction in your credit rating. This might cause your credit card interest rates and monthly payments to soar. With a lower credit score, it may be more difficult to find a job or a place to rent or buy.
When you’re unemployed or have an extremely low income for the number of people in your household, you may qualify for deferment for forbearance status, enabling you to receive a temporary delay in making your payments. Just as importantly, your credit score will also be protected during this time.
By consulting with attorney Diana Revzin Esq, you may learn how to make the forbearance and forgiveness process work for you, and turn what seems an overwhelming student debt burden into a manageable one.