It is probably not surprising to most but student loan debt has now surpassed the $1 Trillion dollar mark. Total education loan debt now exceeds total credit card debt by more than $150 Billion dollars. The good news is that the average student loan debt incurred by a borrower is only hovering around $26,000. Even though this amount of individual debt may not sound great, it is surely a better scenario than this crazy insane student loan nightmare. The following infographic (provided by the good people at debt.org) shares a lot of statistics and information about student loan debt (click on the picture if you want to see it in a larger format). Enjoy!

Today’s guest article comes from Craig P. Anderson.

It is hard to avoid negative stories today about student loans. Interest rates doubling! One trillion dollars worth of debt! Students with six figure loan debts can’t make payments! While these all make great headlines, the larger truth is that, used wisely, student loans can be a valuable part of your plan for paying for college.

In this post I’d like to look deeper into three “fear factor” statistics that are the focus of many media articles: Average Student Loan Debt, Total Student Loan Debt and Delinquent Student Loan Payments.

Average Student Loan Debt

Average student loan debt is around $26,000 for students graduating with a Bachelors degree. While averages are often helpful in gaining perspective, for student loans it distorts your perspective. In this case, the average is skewed higher by the small number of students with significant levels of debt. In this case, using the median student loan debt is far more instructive.  What that shows you is that most students at traditional schools have a manageable debt load of $7,960 for 4 year public schools and $17,040 at 4 year private institutions. Those are far less scary and far more manageable numbers.  This equates to a $92 monthly payment for the 4 year public graduate and a $197 monthly payment for the 4 year private graduate. Those numbers are far less intimidating than the $300 monthly payment the average would lead you to believe.

To make this point even more clear look at the chart below from a recent New York Fed Treasury Report. This shows that almost 70% of borrowers owe less than the national average of $26,000 and most of those students owe less than $10,000. Only 12.7% of borrowers fall into the horror story category we hear so much about, representing debt levels of $50,000 or more.  So yes, there are students who have borrowed far too many student loans, but most students are making wise decisions.

Total Student Loan Debt

Ever since the Consumer Financial Protection Bureau confirmed that total student loan debt exceeded $1 trillion dollars we have heard more about a student loan “bubble”. But let’s dig deeper into that number. The chart below from the College Board’s “Trends in Student Aid Report” shows a 95% increase in the number of borrowers from 5.4 million in 2001-02 to 10.4 million in 2011-2012. But during that same timeframe, the average amount borrowed has only increased 8% from $7,627 to $8,230. So students are not necessarily borrowing more, there are simply far more students borrowing for college. So while $1 trillion dollars is certainly a large number, it is the logical outcome of growing college enrollment financed by a loan with a minimum 10 year repayment period.

Delinquent Student Loan Payments

Of the three items discussed, this is the one that should concern you the most. What the chart shows is that more students than ever are delinquent on their student loan payments. For borrowers in repayment, 31.1% were delinquent in 2012, up from 24.5% in 2008 and 20.1% in 2004.

This problem is reflective of our current economic environment. Recent college graduates have experienced high rates of unemployment as a result of the recession. But, there is good news; those rates have begun to fall. According to the  National Association of Colleges and Employers: “ In September 2012, the unemployment rate for new college graduates—defined as college graduates ages 20 to 24—fell to 6.3 percent from 8.3 percent in September 2011 and 9.4 percent in September 2010.” As employment rates rise, college graduates will be in a better position to make their student loan payments. Additionally, for graduates who have problems making student loan payments, there are a variety of repayment programs that help reduce the size of a student’s federal loan payments. While the Department of Education does not provide usage statistics, it is generally assumed these programs are underutilized. You can find more information here.

Students should not be afraid to go to college simply because of a fear of student loan debt. As I have shown, most students are not overburdened by debt and the increase in total debt has been driven by more students going to college as much as anything else. The most legitimate fear is having an inability to make student loan payments. Students can manage this by being conservative in their borrowing and leveraging repayment options offered by the Department of Education. A reasonable amount of student loan debt can be part of any college financing strategy.

About the Author:

Today’s guest article comes from Craig P Anderson, who has been working in the Higher Education Finance Industry for over 20 years. He is a Student Loan Expert and has worked for a variety of student loan providers including Chase and Sallie Mae. He also worked in the Financial Aid Offices of the University of Florida and St. Petersburg College and has served on several industry boards. You can read more from him at www.CommonSenseStudentLoans.com or follow him on Twitter @CraigPAnderson .

If you are like most students, you have had to borrow money to complete your college education. Tuition has risen too much to allow most people to be able to pay for college on a cash basis, so many students turn to loans to make up the difference.

According to American Student Assistance, about 60 percent of all college students borrow money annually and about 37 million students have outstanding balances on their loans. There is currently around $1 trillion in outstanding student debt, making it one of the largest single sources of debt in the nation.

You may not be able to help borrowing money to pay for school, but you do have control over how quickly you pay back your student loans. The amount may seem insurmountable, especially if you have been to graduate school; according to Smart Money, the average graduate student debt is $43,524. However, you may have options to reduce or eliminate your school debt if you choose to work in certain jobs in your field that are considered “high need.”

Loan Forgiveness vs. Tuition Reimbursement

There are two common ways to reduce your student loan debt load: loan forgiveness and tuition reimbursement. Loan forgiveness means that a portion or all of your student loan debt is “forgiven” or erased when you complete a certain period of time working in a job that has been earmarked in a critical-need field. There are loan forgiveness programs in the fields of nursing, social work and education and tuition reimbursement programs in almost any field imaginable.

Loan Forgiveness Programs

Your eligibility for student loan forgiveness will depend on what type of loan you have and the field in which you work.

Federal Stafford Loans are repayable through certain volunteer work or public service, your time in the military and practice in the medical field. You can receive up to $4,725 in loan forgiveness for a Stafford Loan for volunteering with AmeriCorps or Volunteers in Service to America, or VISTA. If you join the Army National Guard, you can receive up to $10,000 toward your student loan. Law school students may also earn Stafford Loan forgiveness if they work for a non-profit agency or in a position of public interest such as public defender or prosecutor.

For those with Perkins Loans, you can eliminate 15 percent of your Perkins Loan balance each year that you serve with the Peace Corps. You can also eliminate your loans through teaching. If you are a primary or secondary teacher in a low-income community, you will receive 15 percent forgiveness each for the first and second years you teach, 20 percent for the third year and fourth year, and 30 percent for the fifth year, completely eliminating your debt for five years of service.

You can also have your Perkins and Stafford loans forgiven if you teach subjects such as math, science or special education in qualifying schools.

Many states also have loan forgiveness programs for doctors and nurses who work in under-served areas. Each state’s program is slightly different but all depend on your willingness to work in an area identified as high-need for a specified period of time.

Federal agencies offer up to $10,000 per year to a maximum of $60,000 through the Federal Student Loan Repayment Program. These jobs require you to work in nursing, government, law enforcement, fire safety or social work or to work for certain designated non-profit organizations.

Tuition Reimbursement Programs

While medical, educational and social work degree holders have many loan forgiveness options, there are few available for those in business or finance. While you may be able to get student loan forgiveness by working for a non-profit or a government agency, there may be an easier way to pay off your debt and still earn a good salary in your field.

It is possible that your employer has a tuition reimbursement program of which you can take advantage if you choose to continue your education. Most tuition reimbursement programs are designed for those who want to pursue graduate degrees. While you are working for the company, the employer agrees to reimburse your tuition up to a certain amount for every semester you successfully complete in your graduate program. This is a great way for those who want to pursue an MBA to earn this degree, which is traditionally quite costly, or for prospective legal students to pay for law school. Some employers have limits on this repayment, however, and some require you to work for a certain number of years or repay the tuition reimbursement.

There are many programs than can help you repay your student loans and reach your goal of being debt-free more quickly. More information about loan forgiveness and popular loan forgiveness programs is available through the U.S. Department of Education’s Office of Federal Student Aid. You can also find out more by visiting your college’s financial aid department, your employer’s human resources department, or the web site for your particular type of loan.

Taking out loans for school is the only option for many students to pay for school. However, signing up for a loan forgiveness program may be the best way to gain work experience and decrease student loan debt. When you sign up for a loan forgiveness program, don’t forget to check your credit to make sure any debt that you forgave doesn’t negatively impact your credit score. www.KelCreditRepair.com is a popular site for getting credit advice where you can get free assistance on credit repair letters, and tips on how to improve your credit score.

With the exorbitant cost of secondary education continuing to move higher and higher, many students have no choice but to take on significant loan obligations in order to finance their education.  Unfortunately, student loans can leave graduates economically crippled for many years – but only if they are improperly managed. If you do need to borrow to underwrite your education, it’s important that you have a repayment plan in place long before you even start the repayment process.

Your repayment planning should go above and beyond the simple anticipation that you’ll be able to get a job and somehow be able to make your loan payments.  Given the amount of financial obligation the typical student has — which generally adds up to 10s of thousands of dollars — it’s essential to think about ALL of your potential options in order to handle your post-graduation obligations.

Here are 5 student loan debt repayment strategies worth considering:

1. Consolidating Multiple Loans – Many students take out loans from multiple sources, consisting of government student loan programs, lines of credit and loans from banks and other traditional lending institutions. Handling specific payments can be time-consuming, complicated and pricey, so if you have more than one loan to settle, consolidation can simplify the process. With loan consolidation, you essentially get another loan, wrapping all of your existing loan obligations into a single loan. You’ll be accountable to just a single lender, pay a lower overall effective interest rate, not to mention less time and hassle required to deal with just a single lender.
2. Invest in Appreciable Assets  – As counter-intuitive as it might sound, investing in appreciable assets with a portion of your student loan funding might be another strategy to consider.  Most students wouldn’t even consider utilizing a portion of their loan funding to invest, but if you have the capacity, you can come out ahead when you finish school by using some of your student loan money to invest in hard assets, like real estate, that are likely to appreciate in value while you’re in school.  Buying a rental home and then living in the house as you go to school is an approach worth considering.  More than likely, you will need to enlist the help of your parents (and their income and credit rating) to seriously consider this as an option. As far-fetched as it might sound, it is a strategy that’s been used very effectively to provide housing stability, financial benefits as well as fixed housing expenses for certain students.
3. Get Familiar with Your Repayment Options – There are four different types of repayment schedules for student borrowers:  standard, extended, graduated and income-dependent. A standard repayment schedule requires fixed payment amounts over a specified time period. Graduated repayments start in lower amounts in the beginning of the schedule and graduate to higher payments over time. Extended repayment is similar to standard repayment, except that they are spread over a longer period, resulting in lower monthly payments but more total interest charges over the life of the loan.  Income-dependent repayment scheduling ties repayment amounts to your overall income and normally come with longer loan amortization durations.  What’s most important to understand about repayment options is that you may qualify to switch plans if you’re having a difficult time meeting your monthly payment obligations.  Talk to your lender directly about the requirements for modifying your repayment plan.
4. The Military Option – Joining the military, during school or after you graduate, is another legitimate option to consider.   Over and above the significant benefit that service to country has brought to countless individuals, military service will qualify you for payment postponements, deferments or, in certain instances, even debt forgiveness. The Consumer Financial Protection Bureau (CFPB) provides an outstanding resource guide for service members with student loans on how to lower your interest rates and manage your debt burden.
5. Deferment and Forbearance – As a final option, you might consider deferring your student loan repayments.  If deferment is the route that you choose, it’s important to remember that you’ll continue to incur finance charges while your loan payments are deferred; all a deferment does is purchase you time to get your financial act together.  As an absolute last resort, you may consider applying for loan forbearance status, but you’ll only qualify for forbearance if you meet specific income and loan obligation criteria.  More importantly, in the eyes of creditors, forbearance is very similar to declaring bankruptcy and will have a sharply negative impact on your credit rating and ability to borrow after you graduate.  Make sure that you only consider forbearance when all other options have been exhausted.

If you proactively manage your student loan obligations, you can save yourself a ton of money in finance charges, shield your credit rating from harm and preserve your ability to borrow in the near future.  Whether it’s a down payment on a house, a car or seed capital to start a new business, preserving your credit rating is critical to give you more financial options to choose from when opportunities present themselves in the near future.

Above all, keep in mind that your student loans are a financial investment in yourself and a financial investment in your future, and managing the repayment of those obligations is not to be taken lightly.

About the Author:

This is a guest contribution from Bill Hazelton, Managing Director of CreditCardAssist.com, an industry leading, pro-consumer financial advocacy site, offering tips, news, advice and recommendations on all things credit and finance-related.  You can also find Bill on Google+, Twitter and Facebook.

Attending college may be essential to finding a high-paying job, and students who are attending school are relying on loans to fund their college career. According to the Los Angeles Times, average 4-year student loan debt has risen from $17,200 to more than $27,000 upon graduation. While some students are staying current with their loans, the student-loan delinquency rate has risen just like all debt. To battle this ongoing debt crisis, a petition has been submitted with more than 670,000 signatures to convince Congress to pass legislation to forgive debt and bail out lenders. While the proponents of the Student Loan Forgiveness Act claim the legislation has the potential to benefit struggling graduates and stimulate the economy, opponents believe that this is not the right solution.

The Student Loan Debt Crisis Continues to Get Worse

After the housing market bubble burst in 2007, more unemployed professionals enrolled in school, applying for school loans to fund their degree programs. With more admissions came higher tuition costs and more student loan debt. While a college degree is believed to make a graduate more employable, the perfect storm hit when graduates’ loan payments became due and they were not employed. These borrowers had no choice but to default on their loans six months after graduating when the repayment cycle started. Presently, about 40% of all of the loans owed in the United States are in deferral status. This affects not only the lenders, but also the economy as official delinquency rates continue to rise.

Is the Student Loan Forgiveness Act the Solution?

When the housing market crashed and airlines faced bankruptcy, the government bailed out lenders and airlines to prevent a great depression in the economy. Borrowers are petitioning Congress to forgive educational loans. The premise behind this pending legislation is that increasing the amount of income graduates have to invest and spend will boost the economy.

If the bill were to be passed, a student who has made payments that exceed 10 percent of their income for the last 10 years may qualify for forgiveness. This standard is called the 10-10 standard. After qualifying by this standard, students will automatically be forgiven for the remainder of the debt so that they can invest in housing and contribute to the economy in other ways.

What Do Opponents Have to Say About the Act?

While more than 1 million students have signed the petition, opponents believe that forgiving debt that has voluntarily accumulated is a bad precedent that may lead to forgiving other types of loans. The fairness of this legislation has been questioned and business owners and others are asking why students are the only borrowers that should benefit from loan forgiveness.

Although the population is divided, forgiving student loan debt is an effective way to spur the economy and to encourage growth. With rising interest rates and exorbitant fees for delinquency, a student can be stuck with student loan debt for decades. This means that more money is going to the lenders and less money is going into the economy. By passing the Student Loan Forgiveness Act, students who have demonstrated that they have every intention to repay their debt can have some of their balance erased, which will contribute to a stagnant economy that needs a serious jumpstart.

About the Author:

Today’s guest article comes from Stephen Marsh. He writes on law, finance, personal savings, bankruptcy and other similar concerns. Those with legal needs pertaining to bankruptcy should contact Orange County Bankruptcy Lawyer.

With the cost of education steadily rising, most college students find themselves in need of financial aid. Earning a college degree has never seemed more important, so many take the plunge into student debt by borrowing $50,000 or even more. Unfortunately, students who borrow are often unaware of the vast differences between federal and private student loans, and the impact that private student loans can have on their life for decades to come.

Federal Loans

Federal student loans, which are funded by the federal government, offer the benefits of low fixed interest rates and flexible repayment plans. These loans take into account the fact that most students do not have a steady income while they are in school, so the loans do not require repayment until after you graduate, leave school or switch to part-time status. The types of federal student loans available include Perkins Loans, Direct Subsidized Loans, Direct Unsubsidized Loans and Direct PLUS Loans.

Private Loans

Private student loans, on the other hand, are offered by private and local government lenders, including banks, state agencies, credit unions and schools. One of the largest lenders is the SLM Corporation (Student Loan Marketing), more commonly referred to as Sallie Mae. Although Sallie Mae at one time provided federally guaranteed student loans, the organization now offers only private loans.

In contrast to federal loans, many private loans come with a high variable interest rate that can increase over the life of the loan. Due to interest capitalization, a process where unpaid interest and loan fees are added to the outstanding principal balance of a loan, the amount of money you repay on a private student loan can be significantly more than the amount you borrowed. Another key difference is that payments for private student loans often must begin immediately, causing financial hardship for many full-time students.

A number of options are available to help those who have trouble repaying their federal student loans, including deferment, forbearance and forgiveness. Deferment and forbearance allow you to suspend repayment, while forgiveness cancels your loan debt due to disability, school closure, bankruptcy or public service. Most private student loans lack these repayment options. Unlike mortgage and credit card debt, private student loan debt cannot be discharged with bankruptcy. Private loans are also difficult to get waived due to financial hardship, disability or school closure, and there are no forgiveness programs available for public service.

A report released by the Consumer Financial Protection Bureau (CFPB) in 2012 served as a dramatic expose of the $150-billion private student loan industry. The majority of private student loans (42 percent) go to undergraduates at for-profit colleges who are steered to these loans by school administrators or contacted directly by lenders. The report also reveals that an estimated two-thirds of student borrowers don’t understand the difference federal and private student loans, and that many private loan borrowers did not exhaust their opportunities for federal loans before resorting to a private loan.

For the first time in U.S. history, the total student loan debt accrued by college students is approaching $1 trillion. Student loan debt affects more than the finances of former students. Individuals who are harnessed to these loans are unable to participate in the economy. Many have a hard time making ends meet due to high monthly payments, let alone save for a house, car or family. Student loan debt can be multi-generation when parents are unable to provide financial support for their college-age children due to their own student loan burden.
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If you’re looking for financial aid for college and need to borrow money, be sure to apply for scholarships, grants and federal student loans first. When a private student loan is your only option, be sure to study the terms and conditions, and calculate what it will take to repay the loan and how much you will actual repay.

About the Author:

Today’s guest article comes from Mandy Fricke. She is the community manager for Georgetown University in Washington D.C. Nursing@Georgetown, a Master in Nursing program, as well as a contributor to the Nursing License Map. In her spare time, she enjoys traveling, reading, and yoga.

College students and their parents may have been following the “fiscal cliff” negotiations carefully prior to December 31 in order to discover exactly how tax cuts set to be enacted would affect their student loan prospects. While a last-minute deal was hammered out, the question of federal spending cuts and how they would affect student loans and financial aid has still not been fully answered.

Student Benefits of the American Taxpayer Relief Act of 2012

The package put together in the eleventh hour by Congress, known as the Taxpayer Relief Act, affects student financial aid immediately, according to The New York Times. Some provisions of this act include:

• Extension of the American Opportunity Tax Credit through 2017. This credit allows taxpayers to take up to $2,500 in income tax relief.

• The Tuition and Fees Deduction will continue through the end of 2013. This deduction allows taxpayers to claim up to $4,000 in tuition expenses.

• Permanent changes to the Coverdell Education Savings Accounts. The contribution limit has been increased from $2,000 to $5,000. Changes also include higher income restrictions and allowances for primary and secondary school expenses as well as college tuition.

• Most importantly, the 60-month limit for deducting up to $2,500 of student loan interest has been repealed. This means that if you pay on your student loan longer than five years, you can continue to deduct the interest up to $2,500.

Tax advantages are important to students and their families. According to US News, 47 percent of college students or their parents take advantage of these tax credits and deductions. Despite these benefits, however, there are also some pitfalls, and more may be on the horizon.

Disadvantages of the Act

While the American Taxpayer Relief Act pulled the country back from the “fiscal cliff,” the protections are only temporary. If nothing is settled by March 1, new restrictions will include across-the-board spending cuts. This would have a significant impact on student aid funding, with an 8.2 reduction planned. Work study jobs, Federal Supplemental Educational Opportunity Grants, and Pell Grants will all be reduced, limiting the number of students who can hope to benefit from these programs.

What Can I Do to Protect My College Financing?

One of the best ways to ensure that you have the money you need to go to college is to fill out your Free Application for Federal Student Aid, or FAFSA, in a timely manner. With spending cuts looming, those who get their applications in early will be the first to benefit from available funds, according to The Chicago Tribune.

After this year, the data retrieval tool available on the Department of Education’s FAFSA website should be working, allowing applicants to immediately download their tax return information for easier filing and less chance of error. The tool was not available for early filers this year due to the fiscal cliff negotiations.

Another way to approach the college loan/tax issue is to assume the worst-case scenario. If the tax cuts do go into effect, you may not be able to deduct student loan interest or tuition costs at the same rate as that of previous years. Planning ahead can help you avoid borrowing too much money and being faced with long-term payback problems.

You should also be aware that any deep cuts in federal spending may affect the amount of money available for student loans and how easy it is to access them. The best way to prepare for possible cuts in the future is to secure your college loan funding as soon as possible and to have several “irons in the fire.”

For example, if you were counting on a work study job to help you make it through your four years, be aware that cuts to this program may make it harder for you to find on-campus employment. Instead, plan to apply for a job outside of school and budget your time and money carefully to ensure you have funds for necessities. Explore other options such as grants and scholarships and keep your grades up to give you the best chance of earning them.

No matter what Congress decides to do, a college education is always within reach if you plan carefully, budget wisely, and never stop working toward your goals. If you have the money to go to school, a legal major is still a great choice. One of the more popular legal specialties is business law because coming out of college you can get a job with a law firm or go work in corporate America.

Tis the season for Financial Aid Award Letters to be making their way through the mail to high school seniors across the nation. Some families/students are well versed in how to navigate the various aspects of a financial aid package but for others this could be a challenging educational journey. CheapScholar.org provides some great resources for families that need guidance on deciphering their financial aid awards and the following infographic (created by Citizens Bank) is an informative visual tool to reference as well. Ultimately, the goal for a family is to have a solid understanding of what each college is offering in the form of financial assistance. That knowledge will bring them one step closer to making their final decision before “National College Enrollment Deposit Day“!