Freshman 15? More Like the College $30,000
Carrying the weight of thousands of dollars in student loan debt is the new trend these days.
Increasing college and university tuition rates are resulting in higher debt costs for students who have to take out loans. The Experian Credit Bureau news blog reported that 40 million Americans now have one or more outstanding student loans, with balances increasing each year.
The Economist reported that student loan debt has increased to a record breaking $1.2 trillion, up 84 percent since the recession.
“I think that there just has been such a disconnect between the colleges and the loan systems,” Certified Financial Planner Shannah Game said. “The loan systems are run by the federal government, and there is just quite a disconnect between the price increases of colleges, and the student loan system trying to keep up with that.”
The federal government has changed laws on who can borrow and how much. According to Game, colleges and the government are not working together, causing this to be a much bigger problem than needed.
President Obama has signed an executive order called The Student Aid Bill of Rights, highlighting four main ways for getting students access to a better college experience, without the stress of hefty loan debt.
One of them is having enough information to choose an affordable loan repayment plan.
“When students are ready to pay back these loans, let them know what their options are; don’t just say you got to pay and that’s it,” CSUN Financial Aid Counselor Gregorio Alcantar said. “Let them know that, for example, there’s more than ten repayment plans available, so you can guarantee that you will make your payments.”
Entry-level job salaries are not always enough to compensate for the high monthly payments for each loan, and some students will still be unemployed by the time the first payment is due, making it difficult to pay the loans back.
The biggest question is, are students getting the education they pay for? or borrow for, as the case may be?
According to Pierce College Economics professor Dr. Pamela Brown, Americans are living longer and going to school longer. Students should consider college as a first step towards a career and choose their majors wisely, so that they will be making enough money to pay back their student loans as quickly as possible.
“If you pick Irish macramé of the 1820s as your master’s degree, it’s not going to be as affordable to pay back that loan, ” Brown said. “As I tell all my students, if you’re unemployed after college, it may not be the economy that’s the problem, it might be your major.”
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