The biggest credit news this week is all about student loan interest rates and debt as thousands of Americans graduate college and face the reality of their student loan payments.
Once the six-month grace period that most student loan borrowers have expires, they’re faced with a choice of how to start paying back the debt they’ve accrued. For many, their starting salaries make it difficult for them to afford their student loan payments. Luckily for federal student loan borrowers, there are some programs that can help ease the burden.
Gerri Detweiler, our Director of Consumer Education, walks through the four main programs — deferment, forbearance, income-based repayment and income-contingent repayment — and what the qualification requirements are for all of them.
With the battle over student loan interest rates still being waged in Washington, D.C., it’s no wonder that students are trying to prepare for the worst-case scenario — a doubling of the interest rate on Stafford subsidizes loans.
DailyFinance’s major tip for dealing with the rate change is to focus on the things you can control — the amount of debt you accrue while in school. Try to find cheaper housing options and cut food costs and other expenses to make your total balance when you exit school even just a tiny bit smaller.
When it comes to the stark reality of just how much millennials are being impacted by student loans, the numbers from FICO’s Banking Analytics Blog paint a pretty astounding picture.
The amount of student loan debt this age group took on ballooned to $11,444, up from $6,490 just five years earlier, representing an increase of 76.3 percent. Meanwhile, all other kinds of balances — including credit cards, mortgages and car loans – dipped appreciably. For instance, auto financing experienced the smallest drop, falling just 14.9 percent to $4,226, while credit card debt dropped by slightly less than $1,000 to just $2,087. Mortgage balances also dropped 38.1 percent to $14,100 (though this was likely due to the lack of financial freedom many younger people experienced during this time).