In a recent survey conducted by MMI, we found that student loan debt was the least prevalent type of debt among respondents, with only 51 percent stating that they currently have such debt. (The most common debt, at 71 percent, was credit card debt.) However, when asking consumers how worried they were about their debts, student loan debt received the highest/scariest marks, with nearly one-third of student loan debtors “extremely worried” about their debt.
Why are people so worried about student loan debt? Why wouldn’t they be?
I mean, let’s look at the basics:
- You need a college education. Yes, that’s a generalization, but a fairly accurate one. On average, college graduates earn about 50 percent more than similarly aged young adults with only a high school diploma. So, it’s not required, but it makes an enormous difference.
- College is expensive. And it’s getting more expensive all the time. The cost of a four year public university education increased 15% between 2008 and 2010. That’s only two years!
- Most people can’t afford college. About 60 percent of college students have to borrow some amount of money. For the class of 2012, the average bill, due on graduation, was $29,400. For the class of 2011 it was $26,600.
- College is an investment and a gamble. For those who do find jobs, a college degree puts them in a better earning position, but getting a job’s not exactly a guarantee. Two out of five student loan borrowers will become delinquent at some point in the first five years after their loans come due. And why are these early years such a struggle? Nearly half of all student loan borrowers between the ages of 25 and 34 are either unemployed or under-employed.
So college is essentially a life requirement, but one that costs more money than you can afford and doesn’t actually guarantee employment or even basic financial solvency.
So yeah. It’s scary.
What’s the key to dealing with student loan debt? Meeting it head-on. There are plans and programs available for qualified borrowers – probably more than you’d think – but the key is to be pro-active and develop a solution to student loan debt before it becomes a problem. Before you even graduate you should be thinking about what you need to do put your debt in check.
If you’re not sure where to start, we offer Student Loan Counseling. Our trained counselors can help you find the best repayment plan for your situation. If you’re currently in default we can help begin the process of rehabilitating your loan.
Student loan debt is scary because it’s a huge burden to carry with you, especially when you’re just starting out, trying to find your way personally and professionally. If you’re struggling, reach out for help. Like all scary things that bump in the night, a little illumination makes all the difference.