Category: Student Loan Debt

Getting a college education is one of the American dreams, right? It will help you achieve your career goals and provide you with “financial security”.
A college education can be invaluable but first you have to fund your education and most people are doing it by taking on debt in the form of student loans.

Student loan debt in the U.S. has reached $1.6 trillion

That’s insane! The student loan crisis in this country has become way too serious to ignore.

The Disheartening Stats on the Student Loan Crisis

• National student loan debt has WAY exceeded credit card debt – by over $1.6 trillion! (1)
• There are currently about 44 million loan borrowers in this country. (2)
• Students, on average, accumulate about $35,000 in student loan debt by the time they graduate. (3)
• As of 2018, roughly 1 out of 10 people with student loans were late (or completely missed) their payments. That’s the highest 90+-day delinquency rate of all household debt – outranking auto loans, credit card debt and mortgages! (4)
• Student loan debt has seen almost 157% growth since the Great Recession and is the fastest-growing portion of the total household debt in the U.S. (5)

As you can see, the student loan crisis has reached alarming levels. It is delaying many Americans from investing into their retirement dream and it’s killing the dream of college providing you with financial security. That’s NOT ok.

It’s time to get intentional and take control of our financial future!

How to prepare your kids to go to college without student loans:

I know this is a tough one. As a parent of twins, I want the absolute best for them and I’m sure you do too. But, have you bought into the trap of believing the absolute best means college and not just college, but the best college they can get into, regardless of whether you or they can afford it?

My husband and I began saving for our kids college education when they were babies. We chose a 529 plan and I highly recommend them ONLY IF you can afford to save for your own retirement and have extra to put away into a college savings plan for your kids.

But, the majority of families can’t afford to save extra for their kids college. If you fall into this category, please don’t think the only solution is to get “help” from student loans. Trust me, there are thousands of students who have obtained their degree without going into debt to get it. Here are a few practical steps you can take to help them get ready far in advance.

Sit down and create a budget with your child with their dream career beginning salary and subtract all the expenses they will incur.

Have fun with this. It’s not intended to depress them but to give them a realistic view of how much money they will be bringing in and how much will be going out each month. Do the budget with student loan debt and without so they can see how much “damage” student loan debt can make on their bottom line. Don’t overthink this or get lost in the weeds. Just do a rough estimate of anticipated expenses. Your child will get the idea very quickly as they see how fast the “amazing” salary goes. Click here to show them (and you) how monthly debt payments are calculated.
If you need help with creating a budget, Dave Ramsey has very helpful forms for you to utilize. You can access them here.

Talk to your child about their career goals. Not all degrees are created equal (sorry but it’s the truth).

Do they want to go to college? What do they want to do? What you study matters! A student’s major can actually have a bigger impact on lifetime earnings than simply going to college, according to Georgetown University for Education and the Workforce.

Note that the lowest-paying majors are in education, arts, and social work fields.

You may think we’re horrible parents, but we told our daughter,who at the time thought she might want to major in social work, that she would be going to a local in-state public school if that was the choice she wanted to make. We had no problems with her choice in major and actually thought it was very philanthropic and caring to choose that career path; BUT, social workers don’t make a lot of money. And, let’s face it, they’re not going to be picky on where our child got their degree from. They just want someone skilled and willing to do the job.

Find an AFFORDABLE College!

Now that you’ve sat down with your child and reviewed their goals and created a budget, it’s time to research potential schools. Public in-state schools are your best bet for affordability. If they live at home, that saves more money. I know we all dream of our kids going to an Ivy League university (me too), but I truly believe it’s more about work ethic and what you do with your degree AFTER you graduate than what the name on the piece of paper reads. When you go to a doctor, do you find them by searching on a listing of where they went to college, or from word of mouth from others on how good they are. I can tell you that I’ve never asked a doctor where they went to school before getting a checkup. Ok, maybe one time when my son had to have a heart procedure I may have glanced at the diplomas on his wall. But, the fact that he was head of the pediatric cardiology dept. was what really sold me – what did he do with his degree? He worked hard and moved his way on up to the top.

What you do with your degree matters more than the name of the college on the diploma.

Financial Jackson

Encourage your kids to work hard. Hard work pays off.

I can’t emphasize this enough. Work hard and don’t give up. You, as parents, set the example here. Enough said.

Help your kids find scholarships.

Scholarships are a key part of graduating debt-free, and there are hundreds of them available to students and lots of them aren’t academic focused. For help in this area, I encourage you to look on Anthony Oneal’s website.
In fact, he has a new book out called “Debt Free Degree“. I highly recommend it. Anthony has a passion for helping people avoid college loan debt.

But what if it’s you that has student loan debt?

So, you didn’t get this advice in time and you are now faced with student loan debt. What can you do? Dave Ramsey is a knowledgeable resource for all things financial. He started on a radio station back in 1992, sharing practical answers for life’s tough money questions. Today, his show reaches 15 million+ weekly listeners. His techniques to help people get out and stay out of debt is proven successful and I can only hope I can help him in his revolution! Click here to read how you can pay off student loans quickly.
Don’t wait!! Click here now! Get started paying off your student debt burden TODAY! Let’s go! You can do this!

Monthly student loan payments usually range between 5-15% of graduate’s income after they enter the workforce. (1) Ouch.

The amount of the monthly payment varies based on the amount borrowed and the interest rate. Average interest rate really depends on the type of loan and the first disbursement date of the loan (the date the borrower can start getting the loan money). Interest rates range from 5.05-7.06%. (2)

For example, if a student borrowed $45,000 over their 4 years with a 6% interest rate, they’d have to make 10 years of monthly payments at $500 per month. The recommended annual salary for making “manageable” payments at that rate is roughly $75,000. (3)

So what happens if those payments didn’t exist?? What could that money do to work for you and towards your dreams of financial security? The typical loan payment is between $200 and $300 per month. If a 21 year old graduate started investing $250 per month with a 10% return instead of putting that money toward a payment, they’d have $2,612,924 by the time they retire at age 67!