There have been countless news articles and opinion editorials discussing an emerging crisis; the student loan problem. Most of the articles trend for a few days, we make a little noise on twitter, and then it all dies down. Meanwhile, the problem keeps deepening, and according to Forbes, student debt currently stands at $1.6 trillion. The debt has grown by 156% and is the fastest-growing part of the American household debt. Yet, few to no legislators seem to be thinking about long term measures which can be taken to deal with this problem.
Fast Facts about the Current Student Debt Crisis
- The country currently has 44 million student loan borrowers
- 65 percent of students who graduate from nonprofit colleges around the country have student debt
- Every student on average owes $35,000 of student loan debt by the time they are graduating
- One in every 10 students with loans is unable to make their payments on time, which leads to higher interest rates, charges, and other fines.
The Problem with Student Loan Repayment Rates
Most students repay their loans when they join the workforce after graduation. Generally, the lenders will take between 5 and 15 percent of the student’s salaries every month. The exact amount depends on the amount of money you borrowed in student debts, your salary and the interest rates which you agreed on. If for instance, you borrowed a loan of $80,000 with a 6% interest rate, you will have to pay $888 every month for a decade.
But, is it Possible to Get out of the Student Loan Crisis?
Have you ever wondered what students would do with that kind of money if student loans did not exist? $888 per month at a 10 percent interest rate would $5,225, 848 by the time the student turned 67 and retired from the workforce. Imagine having such a decent sendoff from the workforce.
The good news is that it is very possible to get out of the student debt crisis. Here are some ways that pioneers are tackling the crisis:
- Some universities have made the cost of education in their institutions as free as possible for in-state students
- Students are being taught how to manage money from as early as when they are in high school.
- Parents are getting into the habit of establishing a college fund for their children.
As a student, you are advised to do a lot of research about the cost of education in a certain institution before making an application. Sponsorship and scholarships also reduce reliance on debt. These simple steps can help you graduate from college debt-free. Contact us