Knowing everything there is to know about paying for college before taking on student loan debt
Over $1 trillion has been borrowed in student loan debt as of today. The federal government contributes significantly to that debt. Private lenders provide loans that are not provided by the Fed. Many people who want to go to college look for alternative ways to pay for their post-secondary education, such as scholarships, savings accounts, and college accounts set up by family members. Prospective students must think outside the box when it comes to financing their education as the cost of college rises and the competition for financial aid increases. However, there are some methods of transportation to college that you might not be aware of.
Sallie Mae, a provider of student loans, recently conducted its annual survey, which asks undergraduates between the ages of 18 and 24 as well as their families how they pay for college. Sallie Mae can learn more about how college students are paying for their education thanks to these surveys. As it turned out, the report contained some unexpected information. When you or someone you know is trying to determine how to pay for college, take into account the following:
1. High income doesn’t guarantee that you or your child won’t receive scholarship funding. Despite what you may believe, not all scholarship money is given to those who truly “need” it. Scholarship recipients whose parents earned less than $35,000 annually received $7,237, while those whose parents earned more than $100,000 annually received $10,213? This only serves to demonstrate that just because your parents are wealthy, it doesn’t mean you won’t be able to use scholarships to pay for your college expenses. The more you receive, the less debt you’ll have from student loans when you graduate.
2. Families with lower incomes are better equipped than those with higher incomes to pay for their children’s college education. That’s correct, according to Sallie Mae’s survey results, families who earn $35,000 or less annually are more likely to have a plan in place to pay for their child’s college education before they enroll, even though the economy has recovered from the recession. In actuality, lower-income parents paid a greater portion of their children’s college tuition than higher-income families between 2010 and 2013. Even so, families of all income levels continued to look for loans to help them with their student debt.
3. The difference between high- and low-income families’ college tuition expenditures for their children is narrowing. This may be due to the fact that more low-income families are making college plans than high-income families, who are planning less frequently. As a matter of fact, according to a Sallie Mae survey, high-income families spent an average of $31, 245 on college in 2010 while only spending $23, 913 in 2013. In the interim, low-income families paid an average of $18,034, an increase of 3.6%.
4. When it comes to making educational investments, business majors perform better. According to surveys, people who declared a business major made wiser financial decisions while in college. Sixty-three percent claimed to be more adaptable to changing economic conditions and to living at home. More than any other major, business students were open to changing their majors in order to increase their employability after graduation. These particular students earn about $9,400 more than their counterparts in other majors with starting salaries while saving an average of $2600 annually on education expenses.
5. Parents are put off by student loan debt, but not students. In order to pay off education loans and obtain some student loan relief, many graduate borrowers and their parents are delaying major financial milestones like home ownership, retirement fund contributions, and even getting married. Parents said they are contributing less to their children’s college expenses, even though 17% of borrowers in the survey said they were 90 days late on their student loans. Contrarily, students are spending a greater percentage of their own funds—29% of their own savings—to pay for post-secondary education.
In the interim, borrowers are considering all of their options to come up with a strategy to pay back their student loans. Consolidating student loan debt has become a popular choice for lower monthly payments and applying for loan forgiveness programs. The Department of Education is working to get debtors into manageable payment plans and out of default.
