The Average Student Loan Debt
Where Do You Stand?
The average college student graduates with alarming amounts of debt. Who do you think is responsible for the costs? Graduates and parents who have signed on for multiple student loans are responsible for repayment, for as long as it takes.
While many parents have more financial experience, there are many more graduates who risk defaulting on student loan repayment due to lack of information and guidance.
Until recently graduates across the board have been completely unprepared to handle their loan repayment or manage student loan accounts. For this reason, more and more student loan providers and financial aid services have worked vigorously to present students with specialized loan products, such as affordable student consolidation loans, innovative deferment and student loan repayment options, all in a non-threatening manner.
College = Debt
Planning on college? Then plan on debt. Few Americans can simply write a check to cover cost of attendance. Regardless of the movement of the economy, it seems that college expenses continue to rise unaffected.
- Most undergraduate students graduate with close to $20,000 in student loan debt. This is a 108% increase in just a decade. And the differences are not that significant between public and private colleges anymore.
- Students who graduate from professional or vocational two-year programs are in debt as well. Many of them are responsible for nearly $10,000 in student loans.
- Graduate students must borrow even more on credit in order to complete their degrees. In fact the biggest borrowers of all are law students and medical students, both of whom end up with close to a whopping $100,000 in student loans! The earning potential in both fields is directly relative to the debt they have incurred, but most spend their first few years doing grunt labor as residents and as aides to established attorneys.
Student Debt Trends
As one might expect, the trend in student loan debt is directly relative to the continued rise in college tuition and expenses.
Federal vs. Private Loan Costs
A growing chorus of voices is sounding the alarm on student loans. Statistics reveal unexpected and dangerous trends: there are too many college students relying first on high interest, high limit alternative or private student loans than they are on low cost, low interest federal student loans. A fistful of factors has contributed, including: lack of proper financial aid guidance, an irresponsible lending environment, and unaffordable college tuition.
In the span of one academic year, 2004-2005, students increased their private loan debt by 30%
Failure to File FAFSA and Debt Mounts
Even more egregious errors occur when student borrowers fail to file a Free Application for Federal Student Aid (FAFSA). This application provides direct access to low-cost federal loans and grants. It is also required for many other types of loans and scholarships from outside sources. So the student that fails to file is most likely missing out on college, working his or her tail off to put themselves through part-time, or borrowing high cost and completely unnecessary private loans.
Guess what? Close to 8 million students fail to file a FAFSA each year.1
Pell Grant Borrowers Carry More Debt
Another surprising trend: Low-income students that receive Pell Grants are more likely to carry significantly more student loan debt.2
Student Debt Sabotages Graduate and PhD Seekers
Consider this: one survey of college graduates revealed an overwhelming number of respondents that were sidetracked from graduate or post-graduate study due primarily to existing student loan debt.3 Does this mean that if we were not faced with the mountain of student loan bills that we would be a more well-educated society?
Managing Debt: One Encouraging Trend
Since the late 1990s there has been a significant increase in students who are now utilizing student loan consolidation products or deferment options to more carefully manage the burden of student loan debt. Once upon a time such resources were frowned upon, a clear indicator of a poor financial plan. By today’s standards they are flexible and forgiving debt management tools.
Footnotes:
1“Missed Opportunities: Students Who Do Not Apply for Financial Aid,” ACE, October 2004, accessed October 15, 2007, http://www.cherrycommission.org/docs/Resources/Participation/Student_FinancialAidArticle.pdf.
2“Quick Facts About Student Debt,” Project on Student Debt, September 4, 2007, accessed October 15, 2007, http://projectonstudentdebt.org/pub_view.php?idx=125.
3Project on Student Debt.
