Oct 23, 2020 | Updated: 09:48 PM EDT

Crunching the Numbers on Student Loans

Apr 24, 2020 11:04 PM EDT

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Crunching the Numbers on Student Loans
(Photo : Crunching the Numbers on Student Loans)

The majority of students that attend college take out at least some loans to help pay for their education. If you have ever felt alone when looking at your school expenses, you should know you have good company.

Who Are They For?

A majority of students will take out loans at some point during their education path. The average amount of debt an individual graduates with is $30,000, paying each month between $200-300. A fraction of those are in default or are at least 90 days delinquent. While the majority of people who attend college will take on at least some student debt, those who are not, are funding their college a variety of different ways. They may be the benefit of family income that allows them to pay for college out of pocket or through targeted savings, or they may have scholarships, either merit or income-based, that covers costs. 

Of course, it is not an all or nothing proposition. Most people will pay for college through a combination of methods, with technology helping to fast track a solution. They or their parents may be able to help somewhat, they may qualify for some grants and scholarships, they may work during the school year to offset some costs, then use loans to fill in the gaps. Keeping the amount you borrow manageable is possible with planning.

Avoiding Delinquencies

The delinquency rate of student loans is concerning. When you have spent time and energy on your education, you hope that it will pay off in the long run. You can minimize your odds of becoming delinquent in a few ways. First, choose your major wisely. It is an unfortunate fact that many liberal arts majors are either unemployed or not working in their anticipated field. This is a much higher number than with other majors, with STEM majors having a limited unemployment rate.

One of the best ways to ensure that you stay current on your payments is to, of course, stay employed, but you can avoid delinquency is by refinancing your student loans. Refinancing saves you money by lowering your interest rate. As long as your credit is in decent shape, you should have no trouble refinancing. If the amount makes it challenging to make ends meet each month, look into refinancing immediately. You are always in better shape if you can avoid getting behind on your bills and pay back over time.

Continuing Your Education

Many people find they want to return to school and continue their education after a few years in the workforce. If you have already taken out student loans and need to take out more to continue your education, you may want to consider consolidating everything when you are finished. Pay your bills on time and don't take on a great deal of new debt while earning your graduate degree. By the time you have several years of experience in your field and earn a graduate degree, you will probably qualify for an excellent interest rate. Rolling all of your undergraduate and graduate debt into one, lower interest rate note is a great way to save money and pay off more quickly.

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