A series of independent reports have revealed that the number of student loan defaults is rising at a pace faster than the national consumer credit card debt level. The cost of a college education is also rising sharply.
These kind of negative statistics indicate that Generation Y has been burying themselves in student loan debt. According to recent data of the US Department of Education, the sharp rise in college debt is a crises heading towards the same direction and same level as the massive foreclosure crisis. Despite the efforts of student debt consolidation services trying their level best to assist students to find their way out of their heavy debt burden, there is no such evident improvement.
As some reports indicate, the national default rate on the federal student loans is 7% for those student borrowers who started their repayment schedules in 2008. This default rate is comparable to the default rate on credit cards that is 8.8% and mortgage loans are 9%.
In the initial part of 2010, it had been calculated that the total amount on student loan defaults have grown to $876 billion. That number actually exceeds the amount that consumers owe on their credit cards.
What do financial experts advise about financing your college education?
The financial experts are worried about the rise in the student loan default rate. They are of the opinion that student borrowers just can't ignore the huge amount of debt -and neither can Congress. Real protections and change in the student loan industry must take place before the price of an education becomes unattainable. Here are some dos and don'ts that experts recommend;
• Do seek federal aid: If you've accumulated a huge amount of federal educational loans, make sure you apply for federal student debt consolidation loans. There are multiple benefits of such loans that help the student borrowers repay their federal educational loans in easy monthly payments.
• Do exhaust all your scholarship opportunities: Millions of dollars goes unclaimed by students every year. Exhaust all your scholarship app entries to get easy access to money.
• Don't rely much on private student loans: Most financial experts recommend student borrowers avoid the private student loans. They carry high interest rates, exorbitant fees and penalties when in default and the debt is not protected by consumer protection laws as credit card debt is. Therefore, you can end up with high debt that is extremely difficult to pay off.
What do the experts say about personal finance management for students buried in debt?
It has been seen that two-thirds of today's college students carry a sizable amount of debt with an average of $24,000 and rising with each day of default. The increase in the student loan debt level is hurting student credit ratings and jeopardizing their future job prospects. In order to make sure that all graduate students secure good jobs, experts have given some tips on personal finance management.
• Use a student budgeting calculator: Financial experts are of the opinion that students can only manage their student loans and make sure that they do not default on them by making a budget as per their needs. A budgeting calculator can help you make such a budget and follow it. You can find such calculators online.
• Prepare a new budget every year: If you want to get positive results so that you do not incur a huge amount of student debt, you should prepare a new budget every year. Following the same budget every year may not yield positive results. Therefore, it is more advisable that you evaluate a budget yearly, and make required adjustments.
• Make the minimum monthly payments: If you've taken multiple educational loans, make sure you continue making the monthly payments on these loans ON TIME or else you will dig yourself into serious financial trouble. Experts, therefore, advise people to protect their credit and their future by treating these loan payments as carefully as you do your auto loans and credit card debt. Meeting all monthly installments on time -will help you avoid falling into debt over your head.
In the end of 2010, the student loan debt level has nearly reached $880 billion. This number rises about $2800 per second. The lack of employment opportunities in the US is also boosting the number of American students who are defaulting on their student loans. The Fed is taking steps to bring the student loan debt level under control. Stay up-to-date on education news and proposed legislation that may provide opportunities to reduce and better manage your student loan debt.
Sandy Thompson
Education and Finance guest blogger
UPDATE: As an update to Sandy's blog, be sure to see the eye opening 27 minute file: Default: A Student Loan Documentary, and read my review (and see trailer) here: The Impact of Student Loan Defaults: A Lifetime of Debt
These kind of negative statistics indicate that Generation Y has been burying themselves in student loan debt. According to recent data of the US Department of Education, the sharp rise in college debt is a crises heading towards the same direction and same level as the massive foreclosure crisis. Despite the efforts of student debt consolidation services trying their level best to assist students to find their way out of their heavy debt burden, there is no such evident improvement.
As some reports indicate, the national default rate on the federal student loans is 7% for those student borrowers who started their repayment schedules in 2008. This default rate is comparable to the default rate on credit cards that is 8.8% and mortgage loans are 9%.
In the initial part of 2010, it had been calculated that the total amount on student loan defaults have grown to $876 billion. That number actually exceeds the amount that consumers owe on their credit cards.
What do financial experts advise about financing your college education?
The financial experts are worried about the rise in the student loan default rate. They are of the opinion that student borrowers just can't ignore the huge amount of debt -and neither can Congress. Real protections and change in the student loan industry must take place before the price of an education becomes unattainable. Here are some dos and don'ts that experts recommend;
• Do seek federal aid: If you've accumulated a huge amount of federal educational loans, make sure you apply for federal student debt consolidation loans. There are multiple benefits of such loans that help the student borrowers repay their federal educational loans in easy monthly payments.
• Do exhaust all your scholarship opportunities: Millions of dollars goes unclaimed by students every year. Exhaust all your scholarship app entries to get easy access to money.
• Don't rely much on private student loans: Most financial experts recommend student borrowers avoid the private student loans. They carry high interest rates, exorbitant fees and penalties when in default and the debt is not protected by consumer protection laws as credit card debt is. Therefore, you can end up with high debt that is extremely difficult to pay off.
What do the experts say about personal finance management for students buried in debt?
It has been seen that two-thirds of today's college students carry a sizable amount of debt with an average of $24,000 and rising with each day of default. The increase in the student loan debt level is hurting student credit ratings and jeopardizing their future job prospects. In order to make sure that all graduate students secure good jobs, experts have given some tips on personal finance management.
• Use a student budgeting calculator: Financial experts are of the opinion that students can only manage their student loans and make sure that they do not default on them by making a budget as per their needs. A budgeting calculator can help you make such a budget and follow it. You can find such calculators online.
• Prepare a new budget every year: If you want to get positive results so that you do not incur a huge amount of student debt, you should prepare a new budget every year. Following the same budget every year may not yield positive results. Therefore, it is more advisable that you evaluate a budget yearly, and make required adjustments.
• Make the minimum monthly payments: If you've taken multiple educational loans, make sure you continue making the monthly payments on these loans ON TIME or else you will dig yourself into serious financial trouble. Experts, therefore, advise people to protect their credit and their future by treating these loan payments as carefully as you do your auto loans and credit card debt. Meeting all monthly installments on time -will help you avoid falling into debt over your head.
In the end of 2010, the student loan debt level has nearly reached $880 billion. This number rises about $2800 per second. The lack of employment opportunities in the US is also boosting the number of American students who are defaulting on their student loans. The Fed is taking steps to bring the student loan debt level under control. Stay up-to-date on education news and proposed legislation that may provide opportunities to reduce and better manage your student loan debt.
Sandy Thompson
Education and Finance guest blogger
UPDATE: As an update to Sandy's blog, be sure to see the eye opening 27 minute file: Default: A Student Loan Documentary, and read my review (and see trailer) here: The Impact of Student Loan Defaults: A Lifetime of Debt
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Some advice I would give, which is not listed above, is to more carefully evaluate the cost of your degree when compared with the extra income it will buy you. My wife's interior design degree, which she hoped would land her a good job at a design firm, ended up getting her a low-level sales job at a bog-box retailer.
If the market is not paying well for the skills you are learning, then the value of the education, in real monetary terms, is limited, and your chances of not being able to pay your student loans goes way up.