Don’t Get Trapped by Student Loan Debt
Student debt figures can be truly terrifying. Some students — and their parents — borrow too much, repay too little and let debt block other financial goals. But you don’t have to join their ranks.
Read these 10 scary student loan statistics — and learn how to avoid becoming just another number.
1. U.S. borrowers carry more than $1.3 trillion in outstanding student debt
This amount, constantly ticking upward on a student loan debt clock, is mind-numbingly large. But students who make consistent cost-conscious choices can avoid contributing to that outsized number.
Determine early whether a college is affordable. Apply for scholarships and on-campus jobs. And consider a lower-cost online course or community college degree.
2. The average 2014 graduating cohort carried a student loan bill of $28,077
Paying back that $28,077 — the average among 1,043 ranked schools submitting data to U.S. News — could cost nearly $300 each month. That assumes a 10-year repayment plan and 5 percent interest rate.
Repaying based on income or stretching repayment over more years can reduce that monthly bill.
3. Borrowers entering repayment in 2012 have defaulted at an 11.8 percent rate
The good news is that this number, which is the three-year default rate, has declined in recent years, according to the U.S. Department of Education.
The bad news it that the consequences of default are high. They may include wage garnishment and heavy fees, among other repercussions. To climb out of default, debtors may consider rehabilitation or consolidation.
4. Just 41 percent of the class entering college in 2008 graduated in four years
This number comes from the 1,235 ranked schools that submitted data to U.S. News in an annual survey.
Students who fail to graduate on time pay for an extra year — or more — of college, absorb more tuition increases and enter the workforce later. College hopefuls who want to graduate promptly can research schools with high graduation rates and aim to limit work hours.
5. Borrowers older than 60 owed $58 billion in student loans in 2014
The amount borrowed by the 60-plus set is on the rise, according to this report from the Federal Reserve Bank of New York. Plus, borrowers older than 65 more likely to hold defaulted debt.
Older borrowers can fast-track payments to tackle debt early. If they’re still repaying parent loans, they have fewer repayment options than their children but can seek professional help.
6. Black and low-income public college students borrow more and more often
While fewer than two-thirds of white public university graduates take on debt, more than 80 percent of black graduates borrow, according to the public policy organization Demos.
Low-income and minority students can research ways to reduce borrowing and choose the right college financial fit, but they may need to make an extra effort to tap their network of college-educated adults for guidance.
7. Parent PLUS borrowers defaulted at a 5.1 percent rate
This three-year default rate for parents entering repayment in 2010, according to the Department of Education, may not look frightening at first glance. But keep in mind that parent PLUS borrowers don’t have all of the repayment options that students have.
Parents struggling with PLUS debt can work with their servicers to get an affordable plan. They may also be able to take advantage of one workaround to qualify for Income-Contingent Repayment.
8. Grad students borrowed a median $57,600 in grad and college debt
Graduate school costs have contributed to about 40 percent of U.S. student loan debt, according to this statistic from the New America Foundation.
Graduate students have few limits on accessing federal loans, including Grad PLUS loans. Before signing onto debt, they can get creative with grad school financing and consider all their options for repayment.
9. More than 2 million grads say student debt delayed their starting a business
Graduates carrying debt may be losing their entrepreneurial spark, according to results from the 2015 Gallup-Purdue Index study.
While students may think that debt will delay their business plans, they have resources. Federal borrowers can get on plans that fluctuate according to monthly income and postpone payments in times of hardship.
10. Student debt is surpassing groceries as a primary expense for many borrowers
The average head of household younger than 40 owes $404 in student loan debt per month, according to federal data analyzed by The Associated Press. That’s more than they spend at the grocery store.
Debtors with an unmanageable monthly bill can look into income-driven repayment or consolidation to stretch the length of repayment or lower their monthly bills. Devising a monthly budget doesn’t hurt either.
Take Control of Your Debt
Don’t become another student loan statistic.
Get more information on paying for college and graduate school, including advice on student loan repayment. And join the conversation by following U.S. News Education on Facebook and Twitter.
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Avoid Becoming One of These 10 Scary Student Loan Statistics originally appeared on usnews.com
