Over half of the 20 million people who start college each year must take out loans to help cover the ongoing costs of higher education. While this means all new graduates with loans are likely to start their adult working lives struggling financially, the greatest impact is on the students who were statistically disadvantaged before they even stepped foot inside a college.
People who might find themselves struggling more with paying back high tuition costs include students from poor families, minority college students, female college students and students who are their families’ first generation to attend college.
Quite obviously, the majority of students with debt are from families who are unable to help pay their way. The average amount of debt for a student in the USA is nearly $30,000 after graduation. Students from poorer families who will not be able to help support them, coupled with the increasing lack of appropriate job opportunities after graduation means that poor students are going to be battling to repay their loan. This alone may mean the difference between choosing to go to college or not.
Minority students are more likely to take out loans compared to their peers and it is proven that as a minority, you will have less employment opportunities. Their ability to pay back the loan is clearly inhibited by these conditions. Also, out of all minority students who dropped out of College, most indicated that financial burden was the significant reason why.
Women are also affected in this way, while the costs of tuition are the same for women and men, gender wage differences are a very real occurrence in employment, with women earning as much as 23 percent less than men in the same job. Women earning less income directly affects how much they can put back into paying off their student loan.
Students who are the first in their families to attended college quickly find themselves in uncharted waters, without older family members to guide them through the processes and advise them on loans and financing. They may make financial decisions that are not to their best advantage, such as taking out private loans, not researching or knowing how to apply for grants and scholarships, or finding out the best accommodation or tuition options.
The USA’s student debt total has increased to over one trillion dollars and a large chunk of this debt is attributed to people who are statistically proven to earn less, and are less able to pay back their loan. It is time to start looking at how we can halt this piling on effect, and give the best start to students who have worked hard and earned their degree.
With rising cost of college at both public and private college, many students have turned to student loans to make it through school. But is this the right solution for students? With more and more student loans being given every semester, life after college can become a struggle. These students may be faced with huge monthly payments in the future. With around 30% of students already behind on at least one loan payment, many have been putting their lives on hold.
How High College Debt Can Hurt
Loan payments for many are so high that many serious life decisions are being put on hold right after college to accommodate the high payments. Such decisions can include having a family, getting married, puchasing a car, or buying a home. Others may put off furthering their education for a few years while they try to save. But when you cannot afford basic needs, saving also becomes harder. Graduates may opt for payment plans to afford things like homes or cars. Or, worse, they may end up taking out more loans. This can result in debt piling up for years to come.
The Truth about High College Debt
High college debts can seriously hinder future prospects now. Not only is finding a job now very difficult after graduation, but affording high loan payments is, as well. This is especially true when you may be searching for work for a few months. Do not take out a large amount of loans for your education. Instead, think and plan for your life after college now by doing your best to save money. Do not let high college debt be a weight upon your shoulders after your graduation day. Instead, we offer another way out.
Finding a Way Out
So what is the way out? Namely, planning. Start planning for your future, now. Look for scholarships and low tuition before entering college. Do your best to fully research all financial aid options. All these tactics are especially important if you are a nontraditional student just now going back to school. Studies show it may actually be harder for you to pay back your loans. Understand what increasing tuition can mean for your future. Get educated and start saving today!
With the rate of both federal student loans and private student loans increasing, many are looking for another way to fund their education. For many, a debt free education is the ultimate goal. This is where income share agreements might work for students. Here, we will look at why income share agreements appear to be such a great option. We will also talk about what income share agreements offer, and political developments in the field.
The Real Issue
As mentioned above, the real issue here is the debt and loan repayment they face after college. Increasing tuition has meant that so many students have had to take out many federal student loans and private student loans. Even the government has noticed that this a real issue for students just out of college. The current economic situation and high unemployment rates have only worked to compound the problem. Because of this, students have looked for various options that can help them to lower the overall cost of education. They hope this can lower the cost of any future loan payments.
Why Income Share Agreements Offer a Real Solution
Income share agreements are a way to possibly provide debt free education. These agreements allow students to share stock in themselves. Investors simply invest in the students they believe to be the most promising. In return, these students agree to share a percentage of their income for a particular amount of time with these investors. In many cases, the cost to repay these sorts of investments would be much less than monthly loan payments for private student loans. In some cases, they could be even cheaper than payments for federal student loans. Income share agreements offer a real possible solution to the current student debt issue.
Recent Developments in this Field
Various companies, like Lumni, Pave, and Upstart are already offering students income share agreements. Recently, legislation has been introduced in the US to actually define exactly what these agreements constitute for students after college. It seems that these agreements can work for nearly anyone. It can also allow investors to fund the education of students with limited means and unlimited promise for the future. Finally, students can consider shopping for the best education, not just the best price, once again.