Education is fundamentally, intrinsically wonderful. We learn and teach our children not only to pass along skills but also to cultivate an appreciation for nature, for our history, for art and for critical thinking. Unfortunately, in our collective zeal to “get kids educated,” our society has pushed an entire generation of students to obtain college degrees and other advanced degrees without strategically considering the cost of that education and the likely return on the investment. As a result, the ever-rising costs of college have burdened increasing numbers of young adults with five- or six-figure student loan debts before they even graduate into the workforce.
According to reports from the Federal Reserve, in 2011, the average borrower owed $23,300 in student loan repayments. One in ten owe more than $54,000, and one in three owe more than $100,000. To make payments affordable for those who have just graduated, student loan repayment plans may stretch 10, 15, or even 25 years into the future – creating an ongoing drain on the young person’s resources and stymieing attempts to save for children, a house or retirement.
To manage your student loan debt after graduation:
- Learn all you can about repayment options. Read your lender’s website and other materials, or call to discuss your options. Federal loans offer income-based repayment options as well as deferral or forebearance options if you are still searching for a job or heading back to school. Understand how each repayment plan option affects your monthly payments and your overall balance, so you can make the best choice for you.
- Make return-to-school plans carefully. Many students go to graduate school in order to defer student loan payments, but you may emerge with more debt than you entered with – and without job prospects. Look into graduate or research assistantships, scholarships, grants, or even adjunct teaching positions to help you pay for graduate school without taking on more debt.
- Avoid default if at all possible. Federal loans and most private lenders offer alternatives if you cannot currently make payments. The moment you realize that you’re not going to be able to meet your current payment obligations, contact your lender. If your student loans go into default, you face the headaches of dealing with collections – and you will likely end up paying more in the long run than you would if you sought a deferral, forebearance, or a complete discharge of your student loans.
Although your student loan terms can feel overwhelming, you do have rights as a borrower. An attorney can help you understand these rights and protect them. Call our experienced Arkansas estate planning team today for a free and confidential strategic consultation: 501-221-7776.