College Debt is on the Rise
Around this time of year, our offices look to see the new college debt statistics. These statistics reflect the amount of indebtedness associated with the most recent graduating class. These numbers are always on the rise. For instance, in just four years the amount of indebtedness has risen 37% (27,000.00 in 2012 to 37,000.00 in 2016 as reported by Mark Kantrowitz, of Cappex.com). In 25 years the amount of indebtedness has risen almost 200% (12,000 in 1990).
The untold story is that while college indebtedness has continued to rise, wage growth has remained relatively steady. Huffingtonpost reports that “Median wages have increased 1.6% over the last 25 years while median debt has risen 163.8%.” They project that “student debt at graduation for the typical bachelor’s degree recipient could exceed annual wages by 2023.”
To further complicate the problem, grants and scholarships for college have not risen to meet the heavy financial demand. There is a widening gap between the cost of college and the award packages offered by many colleges. This leads many people to leverage their future with a heavy load of debt.
College Financial Planning is essential
This is why financial planning for the college years is essential. There are many options for each individual to prepare for the college years. These options range from savings accounts, to investment options, to college decision counseling. While not every option applies to every family, many of the options available could save thousands of dollars over the course of one’s college experience.
Our best advice is to seek out a financial planner who specializes in financial planning with the college years in mind. This is an area of special focus for our offices. We have a varied approach that includes: college mentoring, SAT/ACT preparation, financial planning, and much more. Each plan takes into account the individual goals of each client to minimize the debt load of the student.