More than 20 million Americans have outstanding student loans, totaling more than $1 trillion. The average borrower has about $35,000 in debt, and the average monthly payment for 10 years comes to $350 — that’s about 10 percent of the average income. Given these factors, it’s no surprise that student debt has been dubbed the next financial crisis by economists and pundits alike. Now, as several presidential candidates gear up their campaigns, they are coming out with plans to tackle this problem head-on. Some are more realistic than others…

How to choose student loans wisely

When it comes to choosing a student loan there are a few key things you’ll want to consider. First off, what’s your credit score? Can you get approved for the lowest possible interest rate or will you be paying a higher one? What are the repayment terms? For example, some private loans let you defer payments until after graduation or extend them out as long as twenty years. Make sure your school is accredited and that the degree program meets guidelines so that you don’t waste time and money on an educational goal that isn’t going to yield any results. You should also ask yourself what occupation your degree prepares you for. Ask yourself if this is an in-demand career and whether or not there’s enough jobs in this field to make borrowing money worth it.

What’s with all these consumer protections?

Consumer protections are a way for federal and state governments to safeguard people from financial crimes committed by companies. The reason why they’re necessary is because it’s hard for people to know whether they’re dealing with legitimate organizations or not. There are other protections that can be difficult to understand as well, like whether student loans will be forgiven if you have a low income or what the ramifications of taking out a payday loan might be. This blog post is written specifically with these issues in mind so you can better understand them and have more confidence when making important decisions!

The cost of returning to school as an adult

A majority of adults in the U.S. are living paycheck to paycheck and it’s very difficult for them to take on the risk of borrowing money for college when they’re not sure they’ll be able to pay it back. According to a recent study, around 41% of adults with student debt were over three months behind on payments as of 2017. Taking on that type of debt while not being able to be confident you’ll be able to afford it later is often very risky. In fact, in 2015 The Consumer Financial Protection Bureau found that 40% percent of people with student loans ended up in bankruptcy or other major financial distress within just five years after graduating college–the highest rate ever seen by the agency.

The risks of going into debt as a non-traditional student

A lot of kids are making up their minds to go to college or university because they think that it’s just an inevitability. There are a few misconceptions about what it means to get a degree. One thing is that people believe in order for you to get the best education you have to be going into debt. However, some of the better universities actually offer full scholarships for their undergrad programs which are sometimes even more prestigious than their private counterparts! Then there is this attitude that if you go into debt you’ll be better off because then you will have a nice nest egg. This mindset ignores how high the risk of being unable to repay your student loans can be.

Keeping your head above water

With the all of the attention student loans are getting these days (from Kamala Harris’s legislation to Trump’s tweet storm), we were curious how much you’re supposed to be able to repay each month.

A report published in 2018 found that people earning more than $108,000 have reduced their monthly loan payments by 43% while they’ve increased their balances by 60%. And that’s just what the data is telling us – there are likely plenty of folks not reporting on a monthly basis who feel financially strapped under the burden of this debt.

It gets worse when you see that about 40% of college graduates who started borrowing for school 10 years ago are still paying off their loans–meaning many haven’t even been able to start saving for retirement.

How much can you earn with an advanced degree?

The average salary for a person with an advanced degree is $85,000. But what does that really mean? That’s a lot of money–but only if you make it to the top 10%. Most people with advanced degrees make less than this–$61,039 on average. And then there are those at the bottom who don’t even have a bachelor’s degree and make $29,553.

Beware private loan programs

Private loans typically come with fewer repayment options and lower amounts of forgiveness than federal loans. In order to be eligible for total student loan forgiveness, you must consolidate your private and federal loans into one type of loan. The Loan Consultant can help you understand which option is best for you. Hint: it’s probably not the private loan! Private loans are more expensive than federal loans, have fewer options for paying off your debt over time, and include a longer waiting period before the benefits kick in–that is if they work at all.

In our experience talking to clients considering their repayment options with us there are many things to consider such as who will be responsible for paying the interest on a private loan during the 10 year Repayment period?

Repaying student loans can take forever

Despite interest accruing while borrowers are still in school, there is a lack of knowledge about what an income-driven repayment plan is and how it can help borrowers repay their student loans faster. As Senator Kamala Harris recently said on The View: we should talk about forgiveness. This is something that’s incredibly important to students because student loan debt has surged to $1.5 trillion in the last ten years, making it the second largest category of U.S. household debt after home mortgages. What does this mean? It means that America’s households owe more for student loans than they do for their houses!

Our options are limited in bankruptcy court

An October 2nd hearing in the U.S. Court of Appeals will decide whether bankruptcy court is the appropriate venue for borrowers to forgive student loans. More than 1.3 million Americans are choosing between insolvency and repaying their loans when they file for bankruptcy. Contrary to federal law, a North Carolina bankruptcy judge has ruled that borrowers can use chapter 13 bankruptcy proceedings to repay student loan debt through a repayment plan with no more than 10 years of payments (known as cramdowns). This is something that almost exclusively happens outside of this system because either parties can’t reach an agreement or believe it will be easier in another court setting.