What does student debt look like in America? The numbers speak for themselves.
In 2017, the Pew Research Center published a brief based on data from the Federal Reserve Board (1). It revealed:
• Americans owed more than $1.3 trillion in student loans by June 2017, more than two and a half times what they owed a decade earlier.
• The median borrower with outstanding student loan debt for his/her education owed approximately $17,000 in 2016.
• Higher educational attainment could mean more money owed – the median amount for those with a postgraduate degree, for example, is approximately $45,000.
With these kinds of figures, it’s important for families to start planning early on. As a part of that, parents and students should sit down together, discuss their goals when it comes to higher education and develop a smart strategy for evaluating expenses and handling debt. It may be wise to partner with a financial professional who can provide additional guidance and help answer important questions, including:
What is the true cost of college? – Families should estimate the cumulative cost of education for schools on their children’s bucket list and evaluate what financial resources they have available to pay for tuition.
How can loans help? – Families should take stock of the loan options available and identify what will work best given their financial circumstances and needs.
What scholarships and grants are available? – Students should be proactive about exploring scholarship and grant opportunities and work with a guidance counselor to understand the criteria for applying.
What options do I have besides loans? – Students have many options beyond debt including working while in school, looking for lower cost schools, living off campus to save money on housing costs, and enlisting the help of family and friends that may want to support their educational efforts.
How do I get rid of debt when I have it? – Students with debt should have a strategy for paying back money quickly. Budgeting and refinancing can help graduates manage their payments month-to-month.
As a starting point, families can visit Thrivent’s website for free tools and information on how they can work with their student to plan, pay for, and even retire student debt balances as quickly as possible. In addition, Thrivent’s GradPath platform supports students in enlisting the help of their family, friends and community to help crowdfund their education instead of accruing more debt.
As with any major financial decision, investing in higher education requires forethought and planning. Children and parents should navigate the journey together, and be open to seeking help when they need it to make sure they are on the best path to being wise with money.
(1) Pew Research Center Fact Tank – 5 facts about student loans
This article was prepared by Thrivent Financial for use by TriCounty Area representative John Lauer. He has an office at 3821 Main Street, in Morgantown, and can also be reached at 610-286-5986.