Stemming the student loan debt tide

Addressing borrowing for college strengthens Indiana’s financial future

Educational loan

Educational loan 

College loan debt is a growing crisis with direct consequences to Indiana’s economic health.

Graduates burdened with suffocating loan payments have less disposable income and high school students ill-informed in the college planning process often unknowingly marry their future to debt.

A recent report by The Institute for College Access & Success, a non-profit independent advocacy group, paints a sobering picture. Indiana now ranks 11th highest in the nation for average student debt, with 63 percent of the 2011 graduating class having loans. Indiana’s average loan debt burden of $27,500 is $900 above the national average, according to the report released last month.

It doesn’t have to be this way.

The institute’s report should ring the classroom bell of alarm to begin rethinking how Hoosier students and their families plan for college and reshape the approach of financing a higher education diploma. This will have a long-term benefit of helping to strengthen Indiana’s economy.

Consider the current scenario: Average tuition and fees at Indiana’s public colleges have increased by more than 100 percent over the past decade, according to the Indiana Commission for Higher Education.  Increased cost is not limited to just Indiana of course, or to one sector of schools. In addition to the cost increase, the available dollars for grants are stretched by a larger number of eligible recipients, resulting in more loan applications for larger amounts.

Combine those ingredients with a stale national economy, difficult job market, students’ additional debt on credit cards, and Hoosier graduates are often yoked with uncertainty from the start

Switching the collective mindset from paying for college to planning for college is the antidote. It sounds simple, but focusing on avoiding or at least limiting borrowing for college must start early and be unwavering.  The key understands the educational loan process before applying for college in order to make informed decisions.

Student loan debt can be reduced, or even avoided, by making the right moves in a few important areas:

Select the appropriate college and field of study. An online skill profiler can help students identify their interests and skills; with those variables in mind, narrowing the list of colleges (and their affordability) becomes a much easier task. Think long-term success, not short-term gratification.

Finding free money. First on the list should be the Free Application for Federal Student Aid (FAFSA), which is required to be eligible for any state or federal financial aid program. Start planning well before the March 10 deadline. Billions of dollars in grants and scholarships are doled out each year. How to piece together funding makes all the difference.

Understanding loan options. All loans are not the same. Federal money should almost always be first due to the offer of several benefits, including:  fixed-interest rates and a variety of repayment and loan forgiveness plans that are not typically found in other loans.

Indiana college tuition and fees have outpaced Hoosier earnings growth more than 100 to 1 over the past decade, according to the Indiana Commission for Higher Education. Two-thirds of college graduates in 2011 nationwide had loans, according to The Institute for College Access & Success’s report.

It doesn’t have to be this way.

By switching the collective mindset from paying for college to planning for college, the debt burden on graduates can be reduced – often even eliminated – which bodes well for Indiana’s economic health.

Source: https://educationloansinindia.wordpress.com/2016/06/06/stemming-the-student-loan-debt-tide/