Student debt has quickly become one of the nation’s quickest growing epidemics.
While a college education was once considered an optional part of life, in today’s day and age, it is nearly a requirement when looking to join the workforce. Although colleges and universities are credited with broadening the knowledge of today’s youth, there is a down side to furthering education that can prevent many from doing the things in life that they get enjoyment out of, or even just making ends meet.
With around 70 percent of graduates leaving their four-year schools with some form of student debt, the class of 2015 alone has an average burden of nearly $35,000. The new number for last year’s grads is up $5,000 from just two years prior, and with costs of tuition constantly on the rise, it’s likely that students will see that number top $40,000 by 2017.
As of right now, the United States has used a total of $1.23 trillion in student loans, spread across 43.3 million borrowers. Currently, among those student loan holders, 11.6 percent, or roughly 5 million borrowers are delinquent on repayment of said loans.
Although the standard repayment plan for student loans is designed to have borrowers repaid by the end of a 10-year span, research from 2014 shows that it can take most 4-year degree holders nearly 21 years to pay back all of their student debt. Plus, with the average loan having an interest rate of five percent, borrowers, if payed back in the allotted 10-year span of time, will have payed $44,547 which is nearly $10,000 more than their original loan.
Pretty scary, life-controlling, stuff.
Especially for someone who is 18 to 24 years old and has never really dealt in finances. With the average salary for a 2014 graduate being $45,478, and nearly $4,500 of that going directly to student debt annually, it can be understandable how many grads can fall behind on their payments.
Now, imagine if there was something preventing you from doing the things you love in life. Something that will loom over you for years to come and basically limit the way you live your life. Sounds like something that you’d want to do everything in your power to avoid, right?
Well what if that same “something” was the bill for your college education?
If the student is lucky enough to land a job in their field and live in their own place, the bills associated with living as well as their student loans are more than enough to limit their monthly finances. Thus sending them in a tailspin of living paycheck to paycheck for the foreseeable future, allowing little room for any sort of leisurely activities.
2010 graduate, and Sundance Vacations employee, Jessie Suren, has found that although she has a crippling amount of student debt, she doesn’t let that limit her when it comes to doing the things that she wants to do.
“I can honestly see how some people would say they can’t do anything,” Suren said. “They think they can’t travel or do anything fun because they have student loans. I’ve read these extreme stories where people payed off their student debt in three or four years, but they basically ate Ramen noodles for those years and never left their house.
“There is no promise that there is going to be a tomorrow and I’m not going to let these loans take over my life in that kind of way, to the point that I can’t enjoy my friends, family and my time. You could die tomorrow, and I’d hate to die trying to pay off some ridiculous debt. For me, I’ve made the choice that I’m going to have a life as well.”
Suren was recently featured in a story written by Consumer Reports which details the struggles of graduates who suffer from the student-debt crisis. She took part in numerous radio interviews as well as some filming of what her average day looks like to help illustrate how she copes with a heavy amount of debt.
To date, Suren has managed to pay back an estimated $41,000 of her student debt in just six years of her being removed from college, but still owes a remainder of over $90,000 from her four years at La Salle University in Philadelphia, Pennsylvania. The former undergrad found that her four-year stay at college cost her a total of $161,000, but thanks to some grants and scholarships, she only had to finance a little over $70,000.
Despite her large monthly payments and looming debt for years to come, Suren scrimped and saved for months so that she could take a dream vacation, which turned into more of a travel adventure. Her net savings was at the time of departure was $5,000, she purchased a one-way ticket to Guatemala and had no specific plan in mind upon her arrival. During her stay, she backpacked through Central America and stayed in hostels along the way, helping to teach the English language at local schools throughout her six-month journey.
Suren, who did not hesitate to explain multiple ways her trip was amazing, let me know that those types of experiences are irreplaceable.
“I wouldn’t change that adventure for anything,” she said reassuringly. “That was probably the best experience of my life. It’s pretty crazy to say that, but there is nothing like it and there won’t be anything that can replace it.”
Near the end of 2015, nearly 3.3 million borrowers had defaulted on their student loans, estimated at a total of $50.8 billion. Suren, who is still currently $90,000 in debt, said that even though many college graduates have decided to quit paying back their loans, she will not add to that number.
“I’ve luckily not defaulted or been delinquent on my loan, but I know a lot of students have been,” she said. “Some of the people out there just decided to give up, but I can’t do that. My loans are in both my aunt and mother’s names as well as mine. I would never let that negatively impact them, I have to pay and I would never let that affect their credit.”
When asked about whether or not she regrets her college years, Suren was on the fence between a yes or no answer. She explained that while she would easily give back the debt portion of her schooling, but the experiences and friends that she had and met along the way is something that will stick with her into the future.
“I always joke with my friends from college that they can never leave,” Suren said laughing. “My closest friends are the girls that I met in college and I tell them that I’ve basically payed $15,000 for each of them. That’s basically all that I got from college. I’ve never really used my degree, none of the jobs I’ve had so far have had anything to do with, or required, a degree. So basically it’s just a piece of paper and my friends that I got from college.”
Suren credits her positive attitude for being able to forge ahead in her life despite the setbacks she has faced. The La Salle graduate said that both positivity and being willing to be flexible with her budget and lifestyle help ensure she will be able to travel into the future.
“You have to make sacrifices,” Suren said. “I shop at the Salvation Army, I don’t buy a lot of fancy new clothes and I don’t go out to eat that often, and if I do it’s generally Chik-fil-A or something like that. You have to pick one thing that’s important to you.
“I think that those people who say they can’t travel because of student loans are probably spending a lot of money on something else. Maybe they like to go shopping or they spend a lot of money on going out and things like that. Perhaps those are priorities for them, but for me, traveling is definitely a priority. I can’t get through the year if I don’t take some sort of vacation and I’d rather an experience like that than going out every Friday or Saturday to a bar. If you can discipline yourself, I don’t think there is any reason why you can’t pay your student loans and travel.”
With so many graduates repaying loans, 43.3 million to be exact, Suren wanted to point out that even though you may think a financial burden can prevent you from doing the things you love, like traveling, money actually has very little to do with it.
“You don’t need to be rich to travel,” Suren said. “Those student loans really aren’t going anywhere, unless you plan on working some crazy schedule to help pay them off. Why put off something that you may hope to do, when you could do it right now. If travel is something that you value and you want to do it, there are ways to make it work.”
Ways to help
There are a few ways for graduates suffering from a large amount of student debt to get out from under it. Options for refinancing or deferment may provide immediate relief, but will end up lengthening your loan and upping your total repayment amount. Other options include adding additional income in order to repay your debt faster.
If you find yourself in a situation where a reduction of monthly payments could be beneficial to you, consider refinancing all of your loans to a lower interest rate or longer term. Again, this will force you to end up paying a lot more, but could help get you through a year or two until you can begin to pay a little more than the minimum payment on your monthly bill.
With a number of options out there for refinancing and consolidation of your loans, you’ll need to do some research to ensure you are working with a trusted lender. A good place to start when looking to refinance is a bank or local lending institution that you may already have an account with or have had dealings with in the past, such as a car loan.
Furthermore, if you are looking to pay off your student debt, but aren’t sure where to start, consider using a method known as, “debt avalanche”.
The idea is that you list your student loans in order of highest to lowest in terms of interest rates. Then, focus on the one with the highest interest rate and pay the minimum on the rest of them in attempt to knock them out one at a time. As you go along and eliminate your debt, you’ll be able to take that payment amount, plus the extra you were paying, and apply it to your next targeted loan. You would repeat that process until your debt was eliminated.
Other ways to help relieve the pressure would be to add an additional income to your monthly cache of money. Taking a gig that allows you to work select events or a part-time job that has hours that work for you could easily add $100 to your weekly income, which equates to $400 more dollars a month that you could be putting towards your debt. Although it will eat up some of your free time, it’s something you can easily eliminate if it becomes too much of a burden.
If you need help with your own budget and could use some counselling on the subject, there is nothing wrong with reaching out for help. There’s no shame in looking for help in a subject that you may not be as well versed in as someone else. The National Foundation for Credit Counseling provides a free counseling service. Founded in 1951, they are the nation’s largest nonprofit financial counseling organization and are available to help with everything from student debt to mortgages. You can find their website here: https://www.nfcc.org/
The United States government has also recently launched a program to help students with a debt over their heads. There are a few programs that will limit the payment of your loans based on income as well as methods you can use to put a hold on payments. Keep in mind that these methods will again increase the length of your loan and end up causing you to pay back more than originally borrowed. Their new website can be found here: StudentLoans.gov/Repay
As with anything, before you decided to borrow any amount of money you should be doing a tremendous amount of research.
Check out this loan repayment calculator from Mapping Your Future that can help you see what your loans will be to repay per month as well as how much interest you will end up paying over the life of your loan. Furthermore, the calculator will show you what your minimum salary would have to be in order for you to comfortably make the monthly payments. Quite the useful tool.
There are also a number of videos that can help you get an idea of the requirements and answer some of your questions about student loans, such as this one put out by the government that detail some of the “Myths About Financial Aid”.
Student debt doesn’t have to run your life. There are a number of resources to help get you on track to pay it back and eliminate the debt in order to get your life back, allowing to do the things that you love to do. Just as Suren said, “there are ways to make it work.”
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