Generation debt: more college graduates owe money after college
Whether you're currently in college or a recent graduate, you've probably got your mind on your finances, so much so it seems like you're majoring in debt.
More Americans are attending and leaving college in debt, according to reports released by the Democratic Policy Committee, the National Conference of Bankruptcy Judges (NCBJ) and the Project On Student Debt, who also say in 2004, two-thirds of four-year college graduates had student loan debt, up from less than one-third in 1993.
Reportedly, compared to a decade ago, more people are borrowing large amounts to pay for college than they ever have before, even after accounting for inflation. In 1993, 1.3 percent of graduating seniors with student loans owed at least $40,000 (in 2004 dollars). In 2004, 7.7 percent owed $40,000 or more.
Getting snared in debt while borrowing money for higher education is bad, but coupling it with credit card charges is worse, according to the NCBJ, which says that college students often are solicited by credit card companies during their registration.
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More than half of today's college freshmen owe over $1,500 in credit card debt, states a survey by an educational lending company. It also indicates that the balance will more than double by the time those students are seniors because interest charged for credit card debt typically is far higher than that for student loans.
And according to a report from the State Public Interest Research Group's Higher Education Project, students from lower income households are more likely to graduate from college with debt. In 1999-2000, 71 percent of students from households that make less than $20,000 graduated with debt.
It's that debt, says the committee, that causes students to delay buying a home or a car and to postpone marriage or starting a family. Experts agree that while a complete solution is not readily available, a little common sense can go a long way.
Don't abuse credit cards. Having some credit isn't bad in itself. Using it frivolously and not paying off the monthly balance is financially reckless.
Pay on your student loans: OK, something like this may seem obvious, but you can only be in forbearance or deferment for so long before the collected interest starts to get a little stifling. And not paying your loan while going into default isn't something you want to do. Plus, some of the payments are tax-deductible.
Get professional business advice: Financial planning before, during and after attending a college or university is crucial to your future (and mental well-being, for that matter).
COPYRIGHT 2006 Johnson Publishing Co.
COPYRIGHT 2006 Gale Group
