How bad is the student loan situation in America? Here are two little statistics that should throw a little light on the matter: two out of three college student loans are in default; and then, the trillion dollars owed in college student loans in more than what is owed in credit card debt.
On average, a graduating student in America comes out with about $25,000 and student loans. That's about the average. Students going in into college, when they sign on the forms, think that this doesn't sound like a huge sum. They don't have much choice either there's less financial aid available now than ever before, now that governments across the country are bankrupt. And then, the job prospects that young graduates can look forward to, happen to not be that great. When fresh graduates can find paying jobs at all, they don't find that they pay very well. How exactly is this nation to help its students minimize student loan debt?
A lot of this trouble, experts in the matter say, comes about because people choose private college student loans over federal loans. Federal programs offer far better repayment options. There is a lot that can be said for consolidated loans. When you borrow $10,000 from one place, your minimum payment will be perhaps $150. When you borrow $5000 from two places, you could end up with two minimum payments, each being $100.
Long repayment terms can be a good thing. Young graduates don't typically earn much starting out these days. If they chose a short repayment period, they would probably not be able to afford those payments at the start their career. Typically, when fresh graduates find that they are unable to afford those payments, they just ignore them. And then those unpaid installments begin to pile up and they lose some of their options and rights. Being delinquent should not be an option. It can quickly overwhelm anyone.
There are so many college graduates out there who think that the standard repayment plan, involving paying everything back in 10 years, is the only option that's open to them. Everyone needs to know that reworking your loan is always possible. There are all kinds of plan options that you can pick, down the road. You can, for instance pick an income-based repayment plan.
The federal government needs to do a much better job educating young people in what happens when you let a loan slide. There are people today who took out $2000 student loans in the 70s and let it slide. Today, they are in retirement and they owe $25,000. They're having their Social Security checks garnished. The government needs to really do a better job educating young people about what happens when they don't repay their student loans properly.
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