More and more people are leaving college with increasing amounts of debt. While government programs allowing an increasing number of both young and old to attend college are growing, many of these programs continue to involve subsidized or unsubsidized federal loans (such as Stafford Loans).
At 18 or 19 years old (the typical age of a first year college student), a student loan may be the first debt a young person incurs. Students are encouraged to think about their future jobs, and how their student loan debt will impact their working budget, but most students at this age do not have the knowledge or experience to be able to effectively evaluate their budget needs.
Students who attend private college can end up with even more debt, and not all of it federal. Parents are encouraged to apply for private loans and expected to help pay for their child’s college costs. Frequently, parents and students might co-sign on these loans together.
After several years of undergraduate education, followed by a graduate degree, a young adult can easily find themselves with up to $50,000 in college loan debt, from a variety of funding sources.
And that is when the young adult, just starting out in their career, will be required to begin paying on their student loan bill. A student with $50,000 can easily expect to be billed $400-$600 in student loan payments. These student loan payments can be confusing, as different amounts are usually owed to several different lenders. Interest begins to accrue. If the young adult gets behind on their student loan bill, the situation can become even more overwhelming as the debt is turned over to creditors or purchased by other third parties. Bills, phone calls, and other debt collection attempts can occur.
What many overwhelmed young adults do when this happens is to ignore the problem. Unfortunately this can lead to much more drastic collection attempts regarding the student loan bill, up to and including garnishment of up to twenty five percent of one’s wages. This is a frightening position that can be devastating to any young adult, all for what they gave little thought to as a new college enrollee.
The good news is, there are ways of handling a student loan bill without losing up to twenty five percent of one’s wages or being hounded by the government or third party debt collectors. The federal database of student loans (www.nslds.ed.gov) can show a person exactly how much they owe in federal loans of all types. It breaks loans down by date, type, and status, and can be a starting point for calculating debt and payoff options.
Consolidating a student loan is a common next step. Once a person knows how much they owe, and combines their multiple debts into one monthly (usually lower) payment, the overwhelming issue become far more manageable.
Having a student loan can be frustrating and challenging, but it does not have to be. There are ways to deal with this bill, and with a little time and patience, anyone can do it.
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