A series of independent reports have revealed that the number of student loan defaults is rising at a pace faster than the national consumer credit card debt level.
The cost of college education is also increasing more than the medical costs in the US. This kind of negative statistics about the Generation Y burying themselves in student loan debt has jolted the Americans out of their sense of respite. According to the recent data of the US Department of Education, the sharp rise in college debt in the US is heading towards the direction of massive foreclosure crisis. Despite the student debt consolidation services trying their level best to assist students to come out of their debt burden, yet there is no such evident improvement in the US economy.
As per some reports, it has been studied that the national default rate on the federal student loans is 7% for all those student borrowers who have started their repayment procedure in 2008. This default rate is comparable to the default rate on credit cards that is 8.8% and mortgage loans are 9%. In fact in the initial part of 2010, it had been calculated that the total amount on student loan defaults have been $876 billion that has actually exceeded the amount that consumers owe on their credit cards.
What do financial experts advice about financing your college education?
The financial experts in the US are least worried about the rise in the student loan default rate. They are of the opinion that the student borrowers just can't ignore the huge amount of student loan debt level with such a huge amount of educational loans. Here are some dos and don'ts that experts recommend to those who have legally financed their college education.
• Do seek federal aid: If you've accumulated a huge amount of federal educational loans, make sure you apply for federal student debt consolidation loans. There are multiple benefits of such loans that help the student borrowers to repay their federal educational loans in easy monthly payments.
• Do exhaust all your scholarship entries: There are a lot of scholarship entries that are taken by most US students. But millions of dollars of money goes unclaimed by the students every year. Exhaust all your scholarship entries to get easy access to money.
• Don't rely much on private student loans: Most financial experts recommend student borrowers to avoid the private student loans. They carry high interest rates that are not fixed like the federal educational loans. Therefore, you tend to pay a lot of amount on rising rates which is extremely difficult.
What do the experts say about personal finance management for students buried in debt?
It has been seen that two-thirds of the US college students carry a sizeable amount of debt with an average of $24,000. The increase in the student loan debt level is hurting the credit score of the students and jeopardizing their future job prospects. In order to make sure that all graduate students secure good jobs, experts have given some tips on personal finance management.
• Use a student budgeting calculator: Financial experts are of the opinion that students can only manage their student loans and make sure that they do not default on them by making a budget as per their needs. A budgeting calculator can help you make such a budget and follow it. You can get such calculators online.
• Prepare a new budget every year: If you want to get positive results so that you do not incur huge amount of student loans, you can prepare a new budget every year. Following the same budget every year will not let you get much positive results. Therefore, it is more advisable that you evaluate a budget every year and make certain changes to it.
• Make the minimum monthly payments: If you've taken multiple educational loans, make sure you continue making the monthly payments on the loans or else you can dig yourself into serious financial trouble. Experts, therefore, advice people to protect your credit score by making the monthly installments.
In the end of 2010, the student loan debt level has nearly reached $880 billion. This number is seen to grown by $2800 per second. The lack of employment opportunities in the US is also boosting the number of American students who are defaulting on their student loans. The Fed is taking steps to increase the job opportunities so that the student loan debt level is soon brought under control.