Minimizing Student Loan Debt for Better Futures
Education is undoubtedly the key to a brighter future. However, with the cost of higher education rising, it can be difficult for many students to gain access to tertiary education without the help of either federal or private student loans.
Student loans are available to most students who are qualified and accepted into a college or career training school.
What do Student Loans Cover?
Student loans are used to cover much more than the cost of tuition. Although tuition makes up the majority of the average loan, other essentials can also be covered. These include living costs, accommodation, textbooks, and other education materials.
The reality for most students is that a college degree would not be possible without the help of a student loan. Another reality is that the cost of education has become a huge societal problem, and student loan debt has been labeled as a crisis by some academics.
Important Student Loan Statistics
Student loan debt is worth more than every other debt class, with mortgages being the only exception.
- Student loan debt amount is more than $1.5 trillion in the United States.
- More than 45 million Americans have some student loan debt.
- The majority of debt is held by graduates who are in the repayment period.
- Only 7.4 million borrowers are still studying.
- Almost 19 million Americans have student loan debt between $10k and $40k.
Student loans can have a significant financial impact on college students. Debt can delay you from starting a family, purchasing a vehicle, and searching for a first home. Up to 30% of graduate students move back in with family after college, due to the financial burden of making loan repayments.
What Can You do to Minimize Student Loan Debt?
Without significant financial backing from family or notable savings, you will most likely need student loans to earn a college degree. There are ways that you can minimize debt through creative financial thinking. You can reduce loan size by borrowing only the exact amount that they need for tuition and expenses. Part time work can offset the total loan amount, and you should shop around when considering different colleges and the financial assistance they provide. Options like grants, scholarships, and even combining community college with public college can help to reduce the size of your student loan debt.
If you have to borrow student loans, sign up for federal student loans FIRST because they offer borrowers greater protection especially during repayment period. Learn ‘what to consider before taking out a private student loan’
As a result of effects of COVID-19 pandemic, the CARES Act was established. This law, among other things, allows you to suspend your federal student loan payments between March 2020 though Sept 30, 2020 without penalty. Note, this is not available for private student loan borrowers. See what the experts at Bankrate.com has to say on this and how you may find some financial assistance.
The cost of education has more than doubled since 1985, even when considering inflation. With rising costs, there also comes an increased demand for student loans. If you want to minimize your college debt, you should look for creative ways to minimize loan spending. Even the smallest reductions in borrowing could help graduates to become debt free, faster.
In our next article, we will talk more on creative ways to decrease your need for student loans.