Student Loan Debt

By: EconomyWatch Content   Date: 30 December 2009

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Student loan debt is rising every year, with college costs spiraling at a much faster pace than inflation. Some fast facts about student loan debt in the US are:

  • According to the National Center for Education Statistics, the number of undergraduate students attending four-year schools in 2007 was 8,986,150. The enrolment in four-year colleges for undergraduate courses is expected to increase by 12% from 2007 to 2018, while enrolment growth in two-year colleges is likely to be 13%.

  • According to data from the College Board, approximately 60% of the bachelor’s degree recipients took student loan debt in 2000-01 and 2006-07. There was an 18% rise in the average debt between these two years. Average debt for every recipient of the bachelor’s degree rose from $10,600 in 2001 to $12,400 in 2007.

  • Based on data from the College Board, the uptake of nonfederal student loans has increased rapidly since 1997-98, when they comprised 7% of the overall education loans. These loans accounted for 23% of the education loans in 2005-06. The growth in these loans slowed in 2006-07 and the volume of private loans taken out in 2007-08 declined marginally in inflation-adjusted dollars. However, it still accounted for 23% of the total loan volume. 

How to Reduce Student Loan Debt?

After completing graduation, you need to start repaying your student loan debt. Although there are several ways of reducing your debt burden, the most common method is to consolidate your student loans. The key benefits of opting for student loan debt consolidation are:

  • Reduces interest rates and subsequently monthly payments and the overall debt.

  • Reduces the number of creditors, making it easier to keep track of your payments. This also means that you have to deal with only one creditor when your payment is getting delayed or you need to renegotiate your loan due to some reason.

 

Before consolidating, determine if it is worth consolidating by using the Department of Education's loan calculator to figure out your consolidated rate. Additionally, it is best to keep private and federal student loan consolidation programs separate.


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