Student loan debt has become increasingly problematic in recent years. In fact, as many as 50%
of college students have loan debts of $10,000 or higher, with about two thirds of graduates have
some form of student loan debt. And the reasons are quite clear: Public schools cost an average
of about $13,000 a year these days, and private colleges have an average cost of $28,000.
Medical schools are the worst, with medical college graduates having an average of $100,000 of
student loan debt by the time they've graduated. And the costs of education are rising much
faster than federal assistance programs are.
As costs continue to rise, many new college students have to take on multiple student loans,
access federally funded student loan programs, get private loans, apply for scholarships and
grants, plus arrange for work-study programs just to get through college. All of these combined
create large amounts of student debts that can be problematic in the future.
College students who are able to get grants and scholarships have a bit of an advantage. The
more of these you can get, the less debt you'll have to take on in the form of student loans. If
you're able to work through college this will help reduce student loan burdens as well. In most
cases however, there is at least some student loan debt that's acquired while you're attending
college.
Federally funded student loan programs are available to almost everyone, and these tend to
have much lower interest rates than private student loan services do. So if you must take on
some student loan debt, try to get as much of it as you can through a federally funded program
such as the Stafford Loan program, or military and ROTC plans.
The Stafford Loan program has a maximum borrowing limit for undergraduates of $23,000. If you
need more than that to complete your education, you'll have to look at other funding options like
private lending sources.
Common private loans available for student financial aid include the Citibank student loans and
the Sallie Mae Signature student loans. Remember that private loans usually carry higher
interest rates though, so your finances will be strained further after graduation if a lot of your
student loan debt is from private funding sources.
Unfortunately many college students drop out after just one or two years, because the cost of
schooling is not something they're able to keep up with. This creates a double disadvantage
though: They're still swimming in student loan debt, yet they haven't gotten the degree which
would help them get a better job.
And it's not uncommon for college students to have so much debt accumulated - whether they
graduated or not - that it will take fifteen to twenty years before they'll have it paid off.
So before taking on any kind of student loan debt, ask yourself a few questions:
1. How much debt do you absolutely have to take on to make it through college?
2. How much will the monthly repayments on the total debt be?
3. Will your career choice pay enough - particularly in the first few years - to support you and pay
off your student loan debts too?
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