The Average Student Loan Debt is Increasing at a Rapid Pace

by Jes

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More people are enrolling in schools, the price for admission is increasing, and a larger percentage of students are relying on student loans to finance their education.

While enrollment has already increased dramatically in the last five years, it is expected that by 2018, enrollment in four-year programs will increase another twelve percent, and enrollment in two-year programs will increase by another thirteen percent.  As of now, there are already almost nine million students enrolled in four-year programs.  This means that there will be over ten million within ten more years.

The average price for one semester of tuition is constantly increasing as well.  Right now, the average cost for one year of tuition at a private university is $26,273, which is 4.4 percent higher than last year.  The average cost of tuition at a public school is $7020, which is an increase of 6.5 percent from last year.  Even the rates for two-year universities have increased 7.3 percent from last year to $2,544 a year.

A much larger percentage of enrolled students are relying on student loan debt to manage these costs as well.  Last year, a staggering 60% of college students were using student loans.  In addition, more shocking is the increase in overall debt balances that the average student is carrying.  The average debt for all borrowers is up 18 percent to $22,700 from $19,300.

Federal loans and Federal student loan consolidation are not as readily available as they once were either.  The problem is that the pool of people needed loans has increased at a much faster pace than the pool of funds available for loans.  Compounding the effect of all of this is that federal lending has tightened up, due to the financial crisis.  Federal Loan programs have not only tightened their lending guidelines, but also have an even smaller pool of funds to lend.

As a result, many borrowers are resorting to credit card debt as a supplement.  In 2008, an unbelievable eighty four percent of undergraduate students had at least one credit card.  This was an increase of seventy six percent from 2004!  The average number of credit cards held has risen to 4.6 per student, and even more shocking, over half of all students have more than four individual credit cards.

Student loan debt has risen to record levels in the last few years.  However, do not expect to see those levels decrease.  In fact, all numbers point to the fact that the overall level of student debt will not only continue to rise, but so will overall student debt.

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Help if Your Student Loan is in Default

by Jes

Student Loan Debt AdviceStruggling with student loan debt can be one of the most stressful situations to be in for someone after college. Especially in today’s economy, it is difficult to find a job that will lead to an actual successful career right out of college. Because of this, it is taking longer and longer for people to find themselves in a comfortable enough place, financially to be able to easily maintain the payments.
The direct effect of this is that defaults on student loans are higher than they have been since 2000. Defaulting on a student loan wreaks havoc on more than just someone’s credit, but also on their personal lives. Defaulted loans are forwarded to collection, and the phone calls begin. Further down the line, these collections are taken to court and become judgments. With the judgments comes the wage garnishment, which can make every part of living hard, especially for someone new to the workforce who has not yet found a stable career.
The issue at the center of this is the question of payment deferment. Each borrower is only allowed limited time to defer the payments. After that, the only option is to obtain forbearance, which is not available to everyone. These, coupled with the fact that a borrower cannot include Federal student loan in a bankruptcy, leave borrowers with very few options.
At the height of the lending boom a few years ago, the options for student loan consolidation were quite numerous. Private lenders were able to take over the debt and still receive the protections that come along with holding a federal debt. New student loan lenders popped up every day. However, with the cash of the mortgage market came the crash of most financial markets, including the private school loan consolidation market. Even the Federal Perkins Loan consolidation was scaled back in the wake of the financial crisis.

This has left borrowers in a crisis. The options that were once there have, for the most part, gone the way of the dodo. Nevertheless, there are still options.

A loan consolidation can typically not occur if the student loan is already in default and with a collection agency. But, it is extremely difficult to get a student loan out of default status, especially if it has already made to collections or to a judgment. There is someone there to help, though.
Each state has an appointed position called a student aide ombudsman. The job of this position is to fight for the rights of borrowers. They will help to get a borrower’s loan out of default status so that the borrower can go through with a student loan debt consolidation and start making regular payments.

For someone struggling with student loan debt, things are difficult. In addition, while there are not as many options as there once were, there is still a way out of the hole.

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