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.
Universities or colleges are either ran for profit or non-profit. A college who runs as a for-profit college is seeking to make money as a business entity, while a non-profit college is run without the intention of making money and is granted special tax privileges by the IRS. There are some major differences when discussing non-profit and for-profit colleges in America.
No matter which type of college a student chooses to attend, a student must weigh how much they can afford for their education, their desired career and connection to the school. You should feel a deep desire to be a part of the community at the college that you choose to attend. It should not matter if the college is for profit or non-profit, but that you choose the college that is right for you.
Many college students wonder why they should even consider investing in the market when they are still in college. College is expensive and paying for it can be very difficult for people, so even considering investing is a crazy thought for many students. If you’re fortunate enough to have scholarships, grants or parent help you may have extra money that you’re not putting towards your education.
There will essentially be no other time in your life when you’re not required to pay rent, pay for groceries and utilities. This extra money should be used to plan for your future, and by investing money you’re setting up a great fund for your future.
Investing requires a lot research, knowledge and discipline. Students would best served by going to a financial advisor. The advisor can help them decide how much to invest, the type of investment and advise them how to monitor the market and make choices regarding their investment.
Before meeting with an investor, it’s wise to brief yourself at least a bit about the investment journey. Here are a few steps about starting the journey:
These steps will help to prepare you to invest your extra money, and start making a profitable future before you even graduate. This is a sure fire to hit the street running, and start a journey to a successful life as a working and profitable adult. Before investing be sure to do research about all of your choices. While investing as a student can be quite profitable, it can also be quite intimidating. Knowing your options and knowing how to increase your profit will go a long way in your investment journey.
Many people start off applying for college and financial aid at the same time. However, they are unaware that the financial aid process should start years before they even select a college. Here is some helpful information regarding college costs and planning for it.
Determining the Total Cost
The US Department of Education estimates that the cost to attend a public college is between $15,100 and $32,900. Starting early to prepare covering college costs means you need to know how much you are looking to pay out of pocket in school and what you will look at paying once you are out of school. Loans are the amount of money that will need to be paid back and scholarships and grants generally do not need to be paid back. There are exceptions such as if a rule is broken, you may forfeit additional funds or may be required to pay them back.
The best way to get an accurate figure of how much your college costs will be is to get the information either directly from the school or from a reputable website. Their College ROI Rankings resource has so much information loaded about educational statistics. You can go to this site and search for schools and get the information you need to help you form an educated decision. Make sure you are looking for the total expenses. This includes tuition, fees, and living arrangements, both on and off campus.
Find All Financial Support
A good place to start calculating how much aid you need assistance with is the Federal Student Aid Department (FSA). They have many tools and calculators. You will initially complete your Federal Application For Student Aid (FAFSA) application, which in the end gives you the estimated amount you are eligible for in student loans and the Federal Pell grant. This is also your application to qualify you for many other grants and scholarships.
A key tool to use of the FSA is the FAFSA4caster, which provides you a college worksheet guiding you to understand you eligibility and how much you need to save. You can also use the College Navigator to get information about the average amount of student loans, Pell grant, other federal grants, and institutional scholarships that are awarded.
Once you have figured out your need, you need to determine how you are going to cover your balance. Keep in mind, most of these calculations are determined based on you taking the federal loans. If you are not interested in any loans, you do have some work cut out for you, unless you are working and can dedicate income payments for your tuition as you go.
The American student loan debt has risen in the past decade from $240 billion to $1.2 trillion with the average graduate exiting school having approximately $29,400 in student loan debt, with government and private student loans. Such a rapid increase has mimicked the housing market bubble and the steady increase has many wondering if the higher education bubble will soon pop as well.
Is History Repeating Itself?
With the high national average of student loan debt, that number is expected to rise by 6 percent each year. These loans students secure are similar to the mortgage loans that left many homeowners, without a home. Of the $1.2 trillion in student debt, about $1 trillion is comprised of Federal student loans. With interest rates climbing on both private and federal loans, students are expected to pay much more over the coming years.
The Bubble May Not Pop
However, students are still graduating in an economy, though improving, still has left many unemployed. Students and their families are realizing that because they seek out higher education opportunities does not mean they will secure a job where they can make affordable payments. Students are now either waiting until they can find affordable options to continue school or finding alternate methods. So, private lenders have changed their lending standards and loans are not as popular. So some would say, the bubble has stopped growing or already has burst.
There however is a way students can receive their education and avoid the higher education bubble all together. They can get a budget together while still in high school. This helps planning to be easier. They can apply for scholarships, grants, and negotiate with schools for reduced to no tuition rates. Also, they may inquire about work-study opportunities on campus while living at home to decrease the cost of living. If they must take a loan, they should pay the interest while in school so the bubble doesn’t grow.
With so much student debt, there are actually many ways students can pursue their education and avoid getting loans way over their head. The following methods include loans, scholarships, grants, and donations.
Peer-to-peer funding has been around for some time, but more so thought of for businessloans. This is an excellent alternate method to finance one’s education. They have low fixed rates varying from 6.73% to 9.36% APR. There are no hidden fees and it’s an easy application. Prosper and the Lending Club are two well-known Peer-to-peer funding lenders.
College Debt Solution also offers some Peer-to-Peer lenders they partner with. Borrower’s present their case and a lender or lenders pitch in what they can to create a win-win situation for a
Find a Benefactor.
There are many well-known programs, such as the National Health Services Corps, AmeriCorps, ROTC programs, and the Peace Corp that have programs set up to forgive student loan debts in exchange for their service commitment over a course of a few years. Other programs exist as well such as with nursing opportunities or for teachers teaching in inner city school systems.
Get a Non-Traditional Scholarship
Instead of applying for scholarships based on need, racial backgrounds, or academic achievements, you can apply for a non-traditional scholarship. Look into out of the ordinary requests such as unique designs for fashion school or a scholarship where you volunteer to help an exotic cause.
Check Out Alternate Social Media Sites Methods
You can turn to social media sites such as Edulender and Sponsor My Degree to see if you can have others sponsor your education. Set your profile up and request donations for school on your Twitter, Facebook, and LinkedIn sites.
With the cost of college rising every year, students are faced with the dilemma of choosing quality education and obtaining a lifetime of debt. Students are starting to question if a college degree is really worth the cost of paying for that degree over their entire adulthood.
Another important factor in the discussion about the affordability of education is that the unemployment is so high in today’s economy-that many college graduates cannot get a job. It’s much harder to pay back student loan debt, when one has no income to do so. Many college graduates are forced to work part time jobs, which barely cover living expenses, much less student loan payments.
But there is still much research that indicates that there is a definite gap between college and high school graduate earning levels. College graduates make about $17,000 more than those with only a high school degree. There are not as many high paying jobs available in today’s workforce, which do not require a college degree. High school graduates are left with service, retail and blue-collar jobs that usually do not pay as much as business, healthcare, law or education jobs of college graduates.
Most high school graduates will simply not have as many opportunities to make a high salary with the jobs that are available to them. Even working as an executive assistant or secretary can require a college degree in today’s economy. It’s clear that obtaining a college degree increases one chances of becoming a higher income earner and finding a career that will bring about future advancement and raises.
Young adults also have the option of attending trade schools or earning a two year degree. These options may be cheaper for students who have chosen career field or whom cannot afford a four year degree. Students will have significantly less debt, but often can make a higher income than high school graduates with no further education.
With student loan debts possibly being over $30,000 once a student graduates, it’s important to plan ahead of how to successfully pay off your student loan debt and not feel the financial pressure. Here are a few techniques to successfully manage your student loan debt.
Get an Accurate Measure of Your Debt
Before you graduate from school, calculating your total and up to date balance can keep you in the loop of how much you have borrowed and what you are looking at being responsible for paying back. If you are starting after you have completed school, do so as soon as possible.
Contact your school and ask them to send you a copy of your financial aid history. This will have each disbursed loan and grant amount sent to the school. You can also ask your lenders for a copy of your account balance. Finally, log onto the National Student Loan Database (NSLDS) to pull your electronic history of your disbursed financial aid. Be sure to contact any private lenders as well to get their copies. Now compare the three and verify the accuracy of your account balance. If there are any inaccuracies, contact the lender as soon as possible to get everything straightened out.
Create Your Financial Plan
Now that you have calculated all of your loan balance, you can create yourself a budget. The true budget needs to consist of your student loans, current living expenses, and any additional debts. However, first we will just calculate your monthly living expenses and current debts and subtract that from your monthly income. Be sure to leave room for entertainment expenses and money to put into a savings account.
The number you reach afterwards should be positive. If not, and you are in the red, you need to come up with a plan to get yourself out of your current debt situation. If you are in the green, congratulations, this amount can be used towards paying down your student loan debt. Now you have a number to bring back to your student loan lenders.
Go Over Repayment Options with Lenders
Contact your student loan lenders to decide on your repayment plan. You already selected a plan when you completed your Master Promissory Note. However, you are at liberty to change your repayment plan. There are four basic loan repayment options, all of which can be switched to another plan at any time. Be sure to go over options with your lender if you are not able to make any payments.
For additional assistance to understand your repayment options as well as the application process, visit www.collegedebtsolution.com/Federal-Loan-Consolidation
Find Out if You Qualify for Incentives
Make sure to talk to your lender regarding incentives. Most will lower your interest rate if you select an automatic payment plan. Another incentive is the loan forgiveness program. Working in a public service job in a low-income community or volunteering at these jobs, can student loan debt. Visit the College Debt Solution to find out more about the Loan Forgiveness Program.
If you need to strategize on paying your loans off, target paying your private loans off first. Their interest rate may be higher thus increasing the amount you pay back substantially more, if you cannot afford to pay more on it. Also, you may not have access to other loan incentives like multiple payment options.