Most students think that the American dream includes doing all the right things—going to college, getting a job, getting married, buying a house and having a couple of kids — but what they don’t realize is that one day they may wake up, 10 – 15 years after graduation, and still find themselves paying off college debt . The most expensive college in the U.S.—Sarah Lawrence College, NY—costs students a whopping $45,212 per year, not including the cost of room and board which can go as high as $15,000 a year. These figures may give you an idea of what to expect when applying to college and looking for financial aid options.
Even if you’re not thinking of Ivy League colleges or studying in NY, according to the CCAP’s data there are 173 schools in the US that cost $50,000 or more to attend. This limits the options for a student to either avoid a four year degree or apply for financial aid and student loans.
The good news: while some schools are staggeringly expensive, most of them have strong and reliable financial aid programs. In the case of Sarah Lawrence, about two thirds of the student population takes advantage of financial grants. This averages to more than half of the tuition cost.
College Debt Statistics
The Project on Student Debt, a venture of the Institute for College Access and Success compiled a report titled “Student Debt and the Class of 2012.” The report offers one of the most accurate analyses of student borrowing, nationally.
According to this report, 71% of students who graduated from college with a four year degree in 2012 had student loans that averaged around $29,400. Other important college debt statistics were:
- Two-thirds of the graduates of public colleges had borrowed an average debt of $25,500.
- Three-quarters of the graduates at private non-profit colleges had borrowed an average debt of $32,300.
- 88% of graduates at for-profit colleges had borrowed an average debt of $39,950.
- From 2008 to 2012, the average debt burden on students had gone up by 25%.
- In 2013 to 2014, almost one million community college students were not given federal student loans.
Keeping these statistics in mind, you need to understand the important of student loans and financial aid in your college education. Many students, as many as 71% would not be able to complete their college education without the help of these services.
How to Pay off College Debt
Paying off college debt can set the foundation for your future, which is why it is a very important part of every graduate’s life. But remember, student loans and college debt are just like any other loans and they must be paid. You can’t cancel your debt just because you didn’t get the job you wanted or because you didn’t get to finish your degree.
There are many important factors that you’ll need to keep in mind to pay off college debt. Here are the most important factors:
- Making Payments — your loan servicer needs to receive a payment from you based on your repayment plan. Each servicer will have their own payment procedure and you will be responsible for making timely payments.
- Loan Servicers — there are companies that handle the services on your federal student loan, such as billing. They will assist you with tasks related to your debt, which is why it is very important to stay in contact with your loan servicer. The US Department of Education assigns loan servicers to every student.
- Repayment Plans — students will have the choice of picking a repayment plan which will make paying college debt easier for them. Some of the plans are; standard repayment plan, extended repayment plan, income based repayment and pay as you earn repayment plan.
- Loan Consolidation — most experts would advise you to consolidate your loans. This will allow you to combine your loans to let you make one combined payment every month rather than multiple payments.
- Deferment or Forbearance — allows you to temporarily reduce or postpone your loan payments. This is only done in rare cases when you go back to school, join the military or are facing severe hardship.
- Cancellation, Discharge and Forgiveness — in some cases such as certain kinds of teaching jobs, deployment and military service, permanent disability or shutting down of the school you were studying at—you may be relieved from paying your student loan.
Tips and Tricks to Help You Pay Off College Debt Faster
As many of you must have realized, paying off student loans is no easy task, which is why following these tips and tricks may make it easier for you to become debt-free sooner than you think:
- Remember to deduct the interest on your student loan when filing your tax returns.
- Join an organization that aids loan forgiveness such as the Peace Corps, AmeriCorps or the Military service.
- Consolidate all your loans into one.
- Use any additional money—bonuses, presents and tax returns—to pay towards your college debt.
- Choose a fixed interest rate on long term loans to avoid higher interest rates in the future.
Even if you’re on a tight budget, try to pay off your student loans as early as possible. While it may be difficult in the start, but it will help you in future especially when you have a family to take care of.