If you worry about paying off student loans after graduating from college, you are not alone. College debt is a major hurdle most graduates will have to contend with as they pursue their chosen career path. There is a staggering $1.5 trillion in debt that 44 million Americans accrued to pay for college. That puts one in four people who went to college in serious debt. There are many ways to handle debt and get out from under the pressure of student loan payments.
Average Student Loan Debt
In the past dozen years, the average student loan debt has more than doubled. Upon graduation, the average student loan debt is more than $35,000, which is $20,000 more than students owed after completing college in 2005. The average student loan payment is around $300 a month depending on the amount, interest rate and time period for the payoff. For instance, at the average interest rate of 6.8 percent over a 10-year-payment plan, a student will pay $280 a month on a loan amount of $25,000. The average monthly student loan payment has increased from $227 to $393 from 2005 to 2016, according to the Federal Reserve Board estimates.
Effect of College Debt
The high average amount of loans after college has created a wave of issues for graduates. The Federal Reserve has noted that a decrease in home ownership can be directly related to the increase in student loan debt. More students are attending college to compete in a higher skilled worker employment pool. The future job market will require more than a high school degree, according to the Georgetown Center on Education and the Workforce. Just over 30 percent of Americans currently hold a bachelor’s degree or higher. Students take a college loan because they sense that it is necessary in order to have employment and better job opportunities. The hope is that they will be able to pay it off when those high-paying employers come calling.
Plan to Get Out of College Debt
When a plan is set for getting out of debt, it can offer relief and hope. There are programs for college students drowning in debt. The Student Loan Forgiveness programs consider the income and potential earnings of college graduates to find ways to reduce the loans and make them more manageable. Pay off higher interest loans first. Call the loan company and ask for a reduction in the interest rate if you pay more or a reduction in the overall amount if the monthly amount is raised. Often a loan company would rather work with a client and get partial payment than risk not receiving any funds at all from the struggling student. Once the higher interest rate is paid off and you’ve paid at least the minimum on your other loans, you can use that monthly amount to pay off the lower interest loan debts. This system saves money that you would have been wasting on the higher interest loans if you simply paid the minimum.
Kimberley McGee is an award-winning journalist with 20+ years of experience writing about education, jobs, business trends and more for The New York Times, Las Vegas Review-Journal, Today’s Parent and other publications. She graduated with a B.A. in Journalism from UNLV. Her full bio and clips can be seen at www.vegaswriter.com.