More and more college graduates seem to be talking about the same thing. How am I going to pay off my college loans? We have created a student debt juggernaut that is overwhelming. According to Student Loan Hero, a website that tracks the student debt statistics, just last year the average student debt of a graduate rose 6% to a new all-time high of $37,171.00. Nationally, the student debt load rose to 1.4 trillion dollars. That’s greater than what Americans owe for car loans and credit card debt. In fact, this issue is so great that it was in the national spotlight during the campaign season last year, with both democrats and republicans seeking to resolve the issue. If we are not careful, the student debt juggernaut will keep growing and cause many college students to stumble for years after their graduation. What is the solution?
Student Debt: The Governmental Solution
Student debt has become so large that both republicans and democrats have taken notice. And, although their solutions are quite different, even their acknowledgement of the problem should cause us to take notice. President Trump, on the campaign trail, proposed revising the federal loan forgiveness program. His idea was to shorten the length of the debt forgiveness program by making the minimum payments higher. But many believe that this would only create a greater rate of default. The current rate of delinquency and default looms around 11.2%.
Other governmental solutions include: eliminating PLUS loans and privatizing all student loans, using federal loans to refinance private loans, or even using some form of employer contribution system. No one is turning a blind eye to the situation, however, no solution seems to be within reach. The only prediction…greater student debt.
Student Debt: Good Financial Planning
Even though there are many who graduate college with a load of student debt, there is another alternative. But this alternative is not for the timid. It takes hard work and sacrifice. It is possible to put a plan together that will allow you to get a college education and not incur a mountain of student debt. Not many people plan enough for their college years simply because loans have become so readily available. Again, you can create a college financial plan that will meet your needs.
Do you have a good financial plan for the college years? The best plans start when the future college student is still in preschool. But there is no bad time to start planning. These plans should include both financial planning and college preparation. Start a plan today. If you need help designing a good plan, contact us!