According to The Buffalo News, American college graduates carrying the burden of educational loans have an average net worth of $8,700!
Now, those who have no such liability have a net worth of $64,700. This is seven times more than college graduates who are burdened by educational loans!
This debt-ridden situation is reflecting in the U.S economy where student loans have topped the index of the largest debts in the nation.
For such graduates, the party seems to be over. Cap and gown dumped in the closet to gather dust. Statistics by the Institute for College Access and Success show that in 2013, 71% of graduates had an average student loan debt of $29,700. This data gives just a glimpse of the current situation.
Soaring Tuition Fees Make Degrees Out-of-Reach
An article in EGP News, published in July of 2014, illustrated how numerous borrowers got stuck in a financial rut in their endeavor to get a college degree. While others are avoiding college all together because of intimidating student loan liabilities.
In one instance, a young woman who took out loans for two master’s degrees has an accumulated debt of $63,000. Years later, she is still making monthly payments to finish her loans. This experience is an eye-opener to her, and she has adopted a meticulous budgeting approach to pay off her debt.
A survey carried out by the real estate portal Redfin reveals that 16% of potential first-time home buyers hold back their purchase due to existing student loans. In addition to this, 33% delayed their home buying decision for one or two years due to student loan debt.
A Georgetown University research study shows that by 2018, six out of ten jobs will need a college degree. However, considering the upward trending in educational costs, borrowers are likely to have a mountain of debt if they take out educational loans during that time.
A Smart Solution
Borrowers reeling under tremendous financial stress, desperately seeking a way out, can opt for a student loan consolidation program. Many of these borrowers are either in delinquency or default status, and so their credit score is affected. Consolidating student loans can be beneficial for borrowers in both these categories.
People who need to reduce their monthly payments in order to manage their finances can apply for the Income Based Repayment (IBR) plan. With this program, monthly payments can come down significantly. Some borrowers may even qualify for $0 payments.
Under IBR, the borrowers’ gross adjusted income and family size are taken into consideration. If their income is low and family size is large, they may get the benefit of consolidating their student loans.
In order to understand the consolidation process in detail, borrowers can consult a student loan debt relief company. Such a company can guide borrowers to choose the most suitable repayment plan, and also help in their documentation or filing. In this way, they need not go through the hassles of a critical loan application process.
Consolidation is often the wisest decision a person can make for student loan debt relief.