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November 27, 2017
Average Student Loan Debt Will Scare You
By Kim P
On average, college graduates leave college with over $37,000 in student loan debt. Some leave with as much as $121,000 in debt. Many graduates remain in debt until they are well into their 40s.
Did you know: The total amount of student loan debt in the United States as of 2017 is $1.4 trillion. This amount of debt is only second to mortgage debt and is significantly more than the total credit card debt. In the first quarter of 2017 borrowing for federal loans was at $136.3 billion which is down 3% from 2016.
Read this shocking guide to learn the truth about student loans.
The Student Loan Crisis
Paying Off Student Loans- What is the average time to pay off student loans?
The Standard Student Repayment Plan has student loans paid off in 10 years. Unfortunately, 20 years is more common today.
Did you know: If you are not able to make the standard repayment the Federal Government provides you with 4 different income driven repayment plans?
These options can help lower your monthly payments and extend the life of your loan to make repayment manageable. Remember though the longer you repay the more time interest will have to accrue.
- What is the minimum monthly payment on the Standard Repayment Plan?
Your monthly payment will not be less than $50 on the Standard Repayment Plan. Payments are made for 10 years at the most.
Tip: If you are not able to make payments on your federal student loans you can apply for a forbearance or a deferment. A forbearance is valid for up to 12 months at a time and will help with any type of financial difficulties. A deferment is valid for up to six months at a time and will help with job loss, returning to school and financial issues. You have three years of time for both options.
- What if I don't make my monthly payment?
If you fail to make monthly payments on your loans for 270 days your loans will enter default with the federal government. After 360 days your loans will enter collections with the federal government. At this time the federal government may elect to seize your taxes or garnish your wages to collect this past due amount. Also, your credit score may suffer dropping up to 200 points.
- What is the average interest rate on federal student loans?
Undergraduates with unsubsidized federal student loans pay an average interest rate of 4.45% on their loans. That's 0.69 points higher than last year's rate for new borrowers.
- What is the average interest rate on private student loans?
Private student loans cost borrowers 3.3 - 5.2 points more than federal loans. The average variable rate is 7.81% and the average fixed rate is 9.66%.
Variable and Fixed Interest Rates: Remember that Direct Subsidized, Unsubsidized loans for undergraduates and graduates and PLUS loans for parents are fixed interest rates. They vary for each year that you receive the loans, but once granted they remain fixed. Many private student loans have variable rates. Make sure that you know which one your loans fall under.
- How many students need private student loans?
The rising cost of tuition has caused many borrowers to turn to private student loans. As many as 1.4 million students now use private student loans. They often do so to make up the difference in what federal loans would not cover.
College Costs
Tip: As you prepare for your undergraduate/graduate career after completing FAFSA, you will get an idea of the type of aid you are eligible for. Once you know this you can then figure out how that will cover the time in the program. This way going in you know roughly how much debt you will incur. You can start to consider options for repayment and other ways to cover school related expenses.
- What is the average cost of an in-state public college?
Staying in state can help you keep costs down. However, it still costs an average of $24,610 to go to college in state.
- What is the average cost of tuition at an in-state public college?
Tuition at a public 4-year, in-state college costs an average of $9,970. If you are thinking of heading out of state for a public college, expect to pay almost 3 times as much for tuition.
- What is the average cost of room and board at an in-state public college?
Room and board at an in-state college costs more than tuition. Expect to spend at least $10,800 on room and board.
- What is the average cost of a private college?
Private colleges are known for their higher cost. Today, expect to pay an average of $49,320 for private college life.
- What is the average cost of tuition at a private college?
Private colleges charge an average of $34,740 for tuition alone.
- What is the average cost of room and board at a private college?
At $12,210, room and board at a private college is around $2,000 more than an in-state public college. This is a 3% increase over last year's average room and board.
The Bottom Line
Student loans can be a blessing and a curse. Before you take one on, consider your options. Look at the long-term implications. If you already have student loans, explore your repayment options. You may even be eligible for loan forgiveness. Knowing your options can help you get out of student loan debt faster.
More from CreditDonkey:
Student Loans
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