Make Ends Meet: A look at college debt
LOUISVILLE, Ky. (WAVE) - Student debt and student loans are not new, but student debt relief is something we have never seen before.
Student loan debt relief has brought both cheers and jeers. Students who qualify are thrilled, but those who still have the dream of higher education know relief comes with a high price tag.
Any student must think hard, long, and smart as they work for their degree.
Jennifer Finetti, Director of Outreach & Advocacy for ScholarshipOwl, helps students and parents navigate through what can be high dollar signs.
“Many students take out loans every year for college,” Finetti said.
According to the Department of Education, nearly one-third of borrowers have debt but no degree.
Almost 16% of borrowers are in default of their student loans, which often results in garnishment of their wages, which then affects their credit score.
Finetti said borrowing money should be your last resort.
“I always suggest to students that they avoid taking out student loans if they can completely,” Finetti said.
She suggested when someone is planning for their post-secondary degree to think about its cost first.
It’s exciting to think about moving away from home or following their friends to wherever they may be going, but when the bills start rolling in, the excitement can turn to panic.
“Everyone needs to be looking for a college that is affordable for them,” Finetti said.
It may not sound glamourous or exciting, but consider starting at a community college or technical school. It is the education that a person is looking for, not the location. Staying home may not be exciting, but it can be frugal.
“In many states, community college is free, or if it’s not free, its very low cost, so the first two years can be easily paid for by most students and most families,” Finetti said. “If you go to an in-state public university, you’re going to usually get a more affordable option versus if you go to private or out of state school.”
Fill out the FAFSA, that is a ticket to financial aid. Search for grants and scholarships which do not have to be repaid.
Also, check to see if there are qualifications for work-study or possibly get a part-time job.
“Looking for options that are more affordable is the first step,” Finetti said. “Students that can graduate debt free are gonna be much happier.”
There are times someone may need help to reach their dream and they need to take out a loan.
For loans taken out before July 1 of this year, people may qualify for President Biden’s student loan debt relief plan.
“For students that took out a loan after July 1st of this year, those loans will not be eligible for forgiveness,” Finetti said.
Loans taken out after July 1 of this year may, however, qualify for the Department of Education’s new income-driven repayment plan. This new plan slashed monthly payments.
“The new income based repayment plan will be an option available that will allow students to pay no more than 5% of their discretionary income rather than 10%, which is what the current standard is,” Finetti said.
The average annual student loan payment will be lowered for both current and future borrowers.
Remember, some employers will pay for school while a person works. Some high-need fields of study offer money to go into that skill set so they will pay for a person’s college degree.
Also investigate what the military may pay if serving our country.
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