Student Loan Debt – Be Careful
Student Loan Debt Horrors
College tuition and related costs have skyrocketed over the past decade. This is causing many students to struggle with a large amount of student loan debt when they graduate.
In 2013, the average student loan debt was roughly $33,000.00. The shocking part is that this figure is 70% higher than it was 9 years ago! In total,the number of students that apply for student loans almost tripled to over $950 billion. If you are worried by the mounting college debt, this is an article that may be of importance to you.
If you need to finance college with a loan, learn what impact this could have on a college student’s life. It is important to look at the exact cost of attending a college and the amount and duration of payments after graduation. Student loan default is increasing.
Few parents and young adults are fully prepared for the amount of student loan debt facts and the stress that debt places on the young adult’s future. A survey done by the American Institute of CPAs found that a whopping 60% of student loan holders feel regret over their college financing.
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It is recommended that your entire undergraduate student loan debt should not be greater than your salary the first year post graduation. If your expected beginning salary for your field is $30,000 a year, do not exceed $30,000 in undergraduate student loan debt. If you find that your loan debt will be higher, ask the school about additional alternate financing like a school work program or choose a school that has a lower tuition.
Lower Student Loan Debt
Attending a community college for a couple of years prior to a university or other college is a great money saving choice. After two years you will be able to easily transfer to another college, saving thousands of dollars. If it is possible to live at home instead of at the college dormitories, you will save on these room and board excess costs. You can also get a job while attending college and work on paying off your student loan debt before you even graduate.
If you have younger children at home, consider taking half of the money they receive as gifts and placing that into a college fund. While that may not be as fun for the child at first, later on down the road he or she will thank you for it. Extra money you have can also be divided up and placed in a child’s college fund. Like savings accounts, this can grow into quite a college fund that will help offset education debt.
Remember, the longer you carry a debt the more interest is added on to that debt. Once you graduate, allocate as much money as possible to paying down your college debt.
Budgeting for college expenses may seem overwhelming in the face of rising tuition, but there are options out there that can help you to reduce your education costs. Talk to a college counselor and other financial advisors to best help you avoid carrying a large student loan debt. Not all degree fields require an education by an Ivy League school. Think before you leap.
Gust Lenglet is the CEO of HBS Financial Group, Ltd., an accounting & tax preparation firm in Maryland. He has more than 25 years of experience in the banking and financial industry. Gust started his career as a loan officer at a major national bank, and then moved on to become controller of a major law firm. In recent years, he has written many financial articles that have been published on Ezine Articles and many websites.