Student Loan Debt: Knowing Everything There Is To Know About Financing College
The total of student loan debt owed to date is over $1 trillion. A large part of that debt is funded by the federal government. Loans not granted by the Fed are given out by private lenders. Many college hopefuls seek other means of funding their post-secondary education including scholarships, savings accounts, and college accounts set up by relatives. As the cost of college goes up and the competition to get funded gets stiffer, prospective students must get creative in terms of financing. There are, though, some ways to get to college that you may not know of.
Student loan lender Sallie Mae recently gave out its annual survey asking 18- to 24-year-old undergraduates and their families how they pay for college. These surveys help Sallie Mae better understand how college students are financing their education. Come to find out, there were some surprising facts that came out of the report. Consider the following when you or someone you know is trying to figure out how you will pay for college:
1. Having a high income doesn't mean you or your child won't be awarded scholarship money. You may think that scholarship money always goes to those who "need it"but that's not always true. Scholarship recipients whose parents brought in less than $35,000 per year received $7,237 in scholarship money while those whose parents made over $100,000 a year received $10,213? It just goes to show that just because your parents make a lot of money doesn't mean you don't have a chance of getting your college tuition paid for with scholarship money. The more you are awarded, the less student loan debt you will have when you graduate.
2. Low-income families are more financially prepared to send their kids to college than high-income families. That's right, Sallie Mae's findings from the survey report that although we are in a post-recession economy, families that are making $35,000 or less per year are more apt to have a plan to fund their child's college education prior to enrolling. In fact, as between 2010 and 2013, parents who were making less were actually paying more of their children's college tuition than high-income families. Albeit, families of all income level still sought student loan help by way of loans.
3. The gap is closing when it comes to how much high-income and lo-income families spend on college tuition for their children. Perhaps this is because fewer high-income families are planning for college while more low-income families are thinking ahead. In fact, the survey done by Sallie Mae reported that in 2010, the average amount paid for college by high-income families was $31, 245 while in 2013 that income bracket spent $23, 913. In the meantime, the average amount of money paid by low-income families rose 3.6% to $18,034.
4. Business majors fair better when it comes to investing in their education. The surveys showed that those who chose to major in Business were smarter about the financial choices they made during school. Sixty-three percent reported that they lived at home and were more flexible when adjusting to the economic times. More than any other major, Business students were willing to switch majors to make themselves more marketable after graduation. These particular scholars saves an average of $2600 per year on school costs as well as making about $9,400 more than their other majors with starting salaries.
5. Student loan debt is deterring parents, but not students. Many graduate borrowers and their parents are putting off major financial milestones like buying a home, contributing to retirement funds, and even getting married in hopes of paying off education loans and finding some student loan relief. While 17% of borrowers surveyed reported that they were 90 days delinquent on their student loans, parents said they are contributing less to their children's college costs. Students, on the other hand, are using more of their own money to pay for post-secondary education; specifically 29% of their own savings.
In the meantime, borrowers are looking at all of their options to work out a plan to repay their student loan. Student loan debt consolidation has become a widely used option for lower monthly payments and applying for loan forgiveness programs. The Department of Education is working to get borrowers out of default and into affordable payment programs.
Student loan lender Sallie Mae recently gave out its annual survey asking 18- to 24-year-old undergraduates and their families how they pay for college. These surveys help Sallie Mae better understand how college students are financing their education. Come to find out, there were some surprising facts that came out of the report. Consider the following when you or someone you know is trying to figure out how you will pay for college:
1. Having a high income doesn't mean you or your child won't be awarded scholarship money. You may think that scholarship money always goes to those who "need it"but that's not always true. Scholarship recipients whose parents brought in less than $35,000 per year received $7,237 in scholarship money while those whose parents made over $100,000 a year received $10,213? It just goes to show that just because your parents make a lot of money doesn't mean you don't have a chance of getting your college tuition paid for with scholarship money. The more you are awarded, the less student loan debt you will have when you graduate.
2. Low-income families are more financially prepared to send their kids to college than high-income families. That's right, Sallie Mae's findings from the survey report that although we are in a post-recession economy, families that are making $35,000 or less per year are more apt to have a plan to fund their child's college education prior to enrolling. In fact, as between 2010 and 2013, parents who were making less were actually paying more of their children's college tuition than high-income families. Albeit, families of all income level still sought student loan help by way of loans.
3. The gap is closing when it comes to how much high-income and lo-income families spend on college tuition for their children. Perhaps this is because fewer high-income families are planning for college while more low-income families are thinking ahead. In fact, the survey done by Sallie Mae reported that in 2010, the average amount paid for college by high-income families was $31, 245 while in 2013 that income bracket spent $23, 913. In the meantime, the average amount of money paid by low-income families rose 3.6% to $18,034.
4. Business majors fair better when it comes to investing in their education. The surveys showed that those who chose to major in Business were smarter about the financial choices they made during school. Sixty-three percent reported that they lived at home and were more flexible when adjusting to the economic times. More than any other major, Business students were willing to switch majors to make themselves more marketable after graduation. These particular scholars saves an average of $2600 per year on school costs as well as making about $9,400 more than their other majors with starting salaries.
5. Student loan debt is deterring parents, but not students. Many graduate borrowers and their parents are putting off major financial milestones like buying a home, contributing to retirement funds, and even getting married in hopes of paying off education loans and finding some student loan relief. While 17% of borrowers surveyed reported that they were 90 days delinquent on their student loans, parents said they are contributing less to their children's college costs. Students, on the other hand, are using more of their own money to pay for post-secondary education; specifically 29% of their own savings.
In the meantime, borrowers are looking at all of their options to work out a plan to repay their student loan. Student loan debt consolidation has become a widely used option for lower monthly payments and applying for loan forgiveness programs. The Department of Education is working to get borrowers out of default and into affordable payment programs.
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