Student loan debt in America has risen from $260 billion in 2004 to $1.2 trillion in 2014 due to the 2.9% rise of tuition according to College Board.
Debt.org recently covered how loans have impacted many students across the nation after they have graduated. Recent studies have shown that 70% of college graduates leave their respective school with a student debt. Before the average amount a student owed was $18.650, but has since risen to $33,000.
Also, a reason why it has impacted young students is they rely on their peers for information and it can be misinformation that is passed around. An example can be peers telling students that loan debt is good credit, which it isn’t. Another misconception is students saying they will apply for bankruptcy. Federal and private loans are not forgiven by bankruptcy. Students have to check out information and ask questions before applying for loans.
New Mexico State senior, majoring in advertising and marketing, Matthew Le Vey, 23, can relate to the recent rise of the average amount graduates owe. Le Vey says he is in debt around $20,000 and expects to owe more because he has about a year and a half left of school before graduating.
“I do believe I will have to take out more loans to finish school,” Le Vey expresses. He also says that his mistake was not applying for scholarships while in high school, which he regrets now. Le Vey’s older sister also has student loans so he understands how loans work and how important it is to pay them off after graduating. Le Vey’s interview can be watched here.
With the small rise of tuition student borrowing has dropped nine percent, with half of students’ school being paid for with scholarships and grants. High school advisors help students during their senior year to apply for scholarships. Students that graduate from a high school in New Mexico, are granted the New Mexico Lottery Scholarship that helps pay for their tuition as long as they’re a full time student attending a college in New Mexico.
New Mexico State junior, Savanah Hernandez, 18, understands the importance of scholarships and has applied for scholarships which has helped her pay for school, but still needs a loan for $3,00 each semester. She says her dad has motivated her to apply for scholarships.
“My dad definitely puts pressure on me to get scholarships because he doesn’t want to pay for it,” said Hernandez. Hernandez has about 2 years left of school before she graduates and hopes she can find more scholarships to pay for the rest of college. She also explains she doesn’t work so it’s hard for her to help her parents pay off her loans because she is a full time student.
According to a study released by TransUnion in 2014, shows that student loans make up for 36.8 percent of debt between the ages of 20-29. It has impacted graduates from starting up a new business plus marriages are down 12% from the previous generation. After graduating, students have six months before their first payment is due on their loan. Months before he graduates, Le Vey is already thinking about paying off his loans as soon as he graduates. He explains that he doesn’t want to be in his early 40’s and still paying his loans off.
“By the time I have children, I want to have my school loans paid off so I can focus on helping my children with their own education,” Le Vey said. With so much money owed because of loans, economists predict that it will have a great affect on students buying a home, their choice of job, decision on getting married and having kids. The number of people over the age of 60 that owe money to their student loans tripled to 2.1 million. This groups debt jumped tremendously from $8 billion to $43 billion with at least five percent of this group has their loan payment taken our of their social security check.
The only solution that students can do before applying for their student loan is applying for FAFSA the “Free Application for Student Aid.” It provides students with grants, loans and work-study opportunities. The application determines if you’re eligible for financial aid. Determination if students receive financial aid is if their parents don’t make enough money to help their children pay for school.
About 54% of students live at home while attending school and 80% attend an in-state institution to save some money. The only positive about students graduating is there is more opportunities to get a job with the degree than there is for those who do not have one. They also can expect to make $800,000 more in their lifetime than those who did not receive a degree. At the end of the day student loans is a sacrifice students will have to make to pay if they don’t have any other source to pay for school. Le Vey is determined to finish what he started at any cost.
“I will definitely finish school no matter if I have to loans to pay off,” he said.