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$35,000 per year. That’s the number recently reported by the National Center for Education Statistics as being the average annual tuition for attending a private nonprofit four-year college. For public four-year institutions, that number drops significantly, but still remains high at nearly $20,000 per year. Typically this means after four years, students who earn their undergraduate degrees will spend between $76,000$140,000. For most college students, that accumulates to significant students loans and steep future debt.
Tips for Future Borrowers
Through a dynamic interplay of factors, more and more students are becoming delinquent, defaulting, and experiencing difficulty in repaying their loans. To avoid repayment struggle, think about the following:
- Look into special loan repayment programs, including the Income-Based Repayment program (IBR) and the Public Service Loan Forgiveness program (PSLF).
- Research financial options between private and public colleges, the costs between them, and the financial aid offered at each school.
- Take advantage of educational initiatives offered by schools that cover student loan repayment, including student loan entrance and exit counseling.
- Don’t let parents do all the work. Have the student actively involved from day one in their student loan account so they understand the process.
- Develop good financial habits while in college (e.g. learn how to protect against identity theft and maintain secure credit)
Number of Student Loan Borrowers
Of the nearly 20 million American students who attend college per year, 12 million of them, or roughly 60 percent, borrow money annually through student loans. According to the Federal Reserve Bank of New York, during the first few months of 2012, people under age 30 were the highest number of students taking out student loans totaling approximately 14 million borrowers. Following the under-30 age group, 10.6 million people borrowed money between ages 30 and 39. Between the ages 40 and 49, 5.7 million people borrowed money. Overall, there are an estimated 37 million student loan borrowers who have outstanding student loan debt.
Credentials vs. No Credentials
Individuals who are between 30 and 39 struggling to repay their student loans are borrowers who are in delinquency. In other words, they’re more than 90 days past due on their loan. This groups stands at about a 6 percent delinquency rate whereas 40-something borrowers maintain a rate of about 12 percent. Borrowers in their 50s and 60s have delinquency rates of 9.4 and 9.5 percent, respectively.
One of the largest groups that struggles with student loan repayments is students who drop out of college prior to earning their degree. Between 2004 and 2009, only 21 percent of students who left their university with a degree became delinquent without defaulting; 16 percent defaulted. Meanwhile, a whopping 33 percent of undergraduate students with loans who left without a degree became delinquent without defaulting; 26 percent defaulted.
Struggling With Payment
Nearly half of 2534 year olds claim they can’t get a job. This demographic of unemployed, or under-employed, post grads simply cannot afford to pay back their loans on time time (or at all). As a result of the stockpiled student loans and lack of employment opportunities post graduation, 70 percent of this age group exclaim that it has become harder to make ends meet over the past four years. To alleviate the burden of stressful student loan debt, visit Studentaid.ed.gov for information about eligible forgiveness loans, qualifying repayment plans and scheduled monthly payments.
Monica Levine Once a loan agent, Monica went back to school to study business management and is now a professor of macroeconomics in California. She encourages her readers to continue to learn and continue to find new and better money management solutions. An online MBA program is easier to pursue than most might think and can help with the money management process.