IRVINE, CA / ACCESSWIRE / October 29, 2018 /
After a Bloomberg piece on Student Loan Debt Financial Preparation Services helps break down the numbers for recent college graduates.
There is a noticeable change in the mindset of many Americans these days when it comes to securing a college education. The number of individuals who want to finish college is growing despite the fact that securing that kind of education is quite costly.
Enhancing one's knowledge and skill comes with a hefty price tag. For the academic year 2017-2018, the average cost of an in-state public college is at $25,290 while a private college is about $50,900. If a student does not have a college fund in place, the next best option is to secure a student loan.
The term student loan often sends a chilling message to some. Why? Because many people nowadays are finding themselves in deep crisis over how to actually pay for that expense.
Rising Interest Rates, Increasing Tuition Fees
Securing a student loan is a double whammy. There is a rising interest rate in one hand, then there is the increasing tuition fee on the other.
The past two years saw a steady increase in the student loan interest rate. Back in 2016, a graduate/professional unsubsidized loans were at 5.3 percent. However, this figure is now at 6.6 percent this 2018. The same is also true for undergraduate direct unsubsidized loans and undergraduate direct unsubsidized loans. For the former, the figures stand at 3.8 percent in 2016 and have increased to 5.0 percent for 2018. The latter, on the other hand, also had a 3.8 percent interest rate in 2016 and it has also increased to 5.0 percent this 2018.
A student with an interest-based plan will see the costs go up. This means their debt will steadily increase before they are even finished earning their degree.
Beyond Personal Economics
With many students finding themselves in deep debts, many find themselves working at paid jobs while still they are enrolled just to begin paying off their loans. In fact, about 85 percent of students who are currently enrolled are spending more time at work than in the library. Instead of focusing on their education, they have their hands full with some other responsibilities.
In the event the students earn the degree, there is still no guarantee that they can find the job that will permit them to pay off their debt. You add to this equation those who dropped out of college who will surely struggle to look for work with enough salary to pay off their student loans.
Beyond an individual's personal economic concern, there is a bigger picture to attend to.
The young adults will be forced to make certain concessions that will impact the economy. One of this is a delay in household formation, which caused a decline in home ownership. Sixteen percent of those between the age of 25 and 35 years old are still living with their parents in 2017. Ten years before that, the figure was 4 percent less.
This situation is crimping the demand for other services and goods. Numerous apartments and houses are not being bought. The same is true to appliances or even the need for Wi-Fi. This will have an overall significant impact on the economy.
If you have further questions regarding student loans reach out to Financial Preparation Services for assistance by visiting their website
SOURCE: Financial Preparation Services