A recent report released by the Department of Education shows that student loan default rates have fallen slightly for the first time in seven years, but still remain uncomfortably high at approximately 14 percent. That means that one out of every seven student loan borrowers will default on their loans within three years of graduation.
One possible reason for that massive default rate? Over the past decade total student loan debt has ballooned to nearly $1.2 trillion. That’s an 84 percent increase since 2008.
The cost of attending college keeps going up, and it can keep going up, because the demand is there. Enrollment rates increase every year and are projected to do so for the foreseeable future. The National Center for Education Statistics released a study earlier this year forecasting a 14 percent growth in enrollment by 2022. And that’s despite the fact that the population of 18 to 24 year olds is actually expected to decrease by 4 percent during that period.
So college is more expensive, but that doesn’t exactly tell the whole story. Earlier this year, the Brookings Institute released a report showing that the increase in average income for college graduates has risen in step with student loan debt. In other words, from an economic perspective, graduates today should be just as able to pay back their loans as graduates were 20 years ago. College costs more, but college graduates earn more, so it should all wash out. But it doesn’t – why not?
The gap appears to form in the years immediately following graduation. In 1994, the unemployment rate for recent graduates was approximately 5 percent. Today that unemployment rate stands at 8.5 percent. At the same time, the number of underemployed recent graduates has risen from 10 percent to 16.8 percent in that span. Today’s college graduates may eventually end up out-earning their counterparts from 20 years ago, but finding suitable work is harder now than it’s ever been.
That’s why student loan education is so critical for recent grads. It’s absolutely crucial that young student borrowers understand their rights and their options, especially in those difficult early years, when they find themselves struggling to simply make ends meet.
Missed payments, delinquent accounts, and defaulted loans can absolutely derail the long-term goals and aspirations of new graduates. New student loan borrowers need to get out in front of their student loan debt before it becomes a problem.
MMI’s student loan counseling provides borrowers with education, analysis, and real action steps. Each borrower leaves their counseling session with a complete understanding of their available options, what those options require, and what steps make the most sense for their unique situation. From specialized payment plans to forgiveness programs to deferment, forbearance, and consolidation, every option is examined.
Because student loan debt isn’t the only financial concern that student loan borrowers face, MMI’s student loan counseling takes a holistic approach to personal finance, focusing not only on student loan debt but also on building a sustainable monthly budget.
A college education is all about opportunity. It’s about expanding your potential, personally and professionally. Don’t let mismanaged student loan debt ruin that potential. If you have student loan debt and need help, call 888.922.9723 to contact a student loan counselor today.