It's a fact. Student loan debt had now exceeded credit card debt in America. According to the Detroit Free Press student debt totals a whopping $850 billion while credit card debt reached a $827.8 billion in the month of July 2010 (1). A report on the United Press International, Inc. website suggested that the increase in student loan debt is due to the current economic downturn that has forced many students back to school and more specifically, back to the Financial Aid office for borrowing. According to the report, "student borrowing rose 25%, while "concurrently, the recession has weighed heavily on consumer spending" (1).
Watching Student Loan Debt Numbers Rise
Mark Kantrowitz, publisher of the FinAid.org website, a website that offers smart financial guidance for student loan debt, has created a Student Loan Debt Clock that tracks the increasing number of student debt in the U.S. second by second. Kantrowitz says that student loan debt is increasing an estimated "$2,853.88 per second" (2). That rate is pretty high, but is necessarily an all-around bad thing?
Investing in Education
Debt carries a negative connotation and according to many financial advisers, is a great thing to avoid. But when it comes to debt, taking out loans to fund an education is considered a "good debt" in many cases. Like taking out a mortgage to buy a house or a small business loan to start up your long dreamed of company, education is considered a great investment into your future (3). But Liz Puliiam Weston, online financial columnist and author of Easy Money: How to Simplify Your Finances and Get What You Want Out of Life , warns that students need to be realistic about entry level jobs and how much they will really be able to start paying off after their six months' grace period has passed and it is time to start to making that monthly payment (3).
Weston suggests to start making a plan now, and if you are still borrowing to adjust accordingly for your major. "Beginning pay for psychology majors is about $26,000, while English majors are getting about $28,000. At those pay levels, you're better off borrowing no more than about $18,000 over your college career," Weston says (3). There is absolutely nothing wrong with these majors, but realistic thinking about your probable income and ability to repay loan debt must be taken into consideration. Weston suggests that students visit The National Association of Colleges and Employers in order to get a good idea of what their likely pay will be after they move on from their alma mater and into the "real world" (3).
How Much Do I Owe on my Student Loan?
The National Student Loan Data System for Students (NSLDS) is a invaluable resource to find just how much you own in student loans. You will need some information to access your loan chart, including: your social security number, the last two letters of your last name, your date of birth, and your PIN. Your PIN is the number you should have received from the Department of Education if you registered for FAFSA, or Free Application for Federal Student Aid (4).
If you can't find your PIN in all the paperwork, try the government Pin Website, where you can retrieve it or create a new one (4). Once you have located your PIN and entered all required information, the National Student Loan Debt System for Students will provide you with information about all of the loans taken out in your undergraduate career. The chart shows Type of Loan, Loan Amount, Loan Date, Disbursed Amount, Canceled Amount, Outstanding Principal, and Outstanding Interest. Now if some of these technical terms confuse you, don't worry! The NSLDS offers a Glossary in order to demystify your loan statement (4).
Make a Student Debt Repayment Plan
With your chart in front of you, you can now start to make a plan for reasonable repayment of your loans so that you won't be stuck with an outstanding debt and a harmful defaulted loan. Reyna Gobel, M.B.A. and M.J., a financial freelance journalist that writes for investopedia.com and Yahoo! Finance has written a book to help you make that plan. Graduation Debt: How to Manage Student Loans and Live Your Life is an invaluable resource written specifically for handling your graduation debt in current economic times. Gobel offers advice on consolidating student loans, charting out your student debt repayment plan, budgeting, understanding FICO scores, and more!
So, student loan debt might have surpassed credit card debt in America but that does not mean it has to beat you in the race to repay its steep demands. Taking control, and taking control today, can empower you to take the lead on your repayments, make them on time, and to plan accordingly. Don't get stuck having your debt control you, start planning today.
Reference:
- "Student Debt Surpasses Credit Card Debt - UPI.com." Latest News, Latest News Headlines, News Articles, News Video, News Photos - UPI.com. 10 Sept. 2010. Web. 10 Sept. 2010. .
- Kantrowitz, Mark. "FinAid | Loans | Student Loan Debt Clock." FinAid! Financial Aid, College Scholarships and Student Loans. Web. 11 Sept. 2010.
- Weston, Liz Pulliam. "How Much College Debt Is Too Much? - MSN Money." Commentary Index - MSN Money. 2008. Web. 11 Sept. 2010.
- Gobel, Reyna M.B.A., M.J. Graduation Debt: How to Manage Student Loans and Live Your Life. New Jersey: Wiley Publishing, 2010.
Rachel Lombardo - I am a recent graduate of Louisiana State University with two B.A. degrees in History and International Studies. I enjoy reading, writing, ...
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