Consumers owe more on student loans than credit cards

[Aug 28, 2010.]

 

The cost of getting a college degree has steadily increased over the years. Tuition and fees for a private four-year college averages $26,273 per year, according to the College Board. In-state students attending public colleges pay an average of $7,020 per year for tuition and fees, and out-of-state students average $11,528.

Billions in student loans

Many students turn to financial aid to help pay for some of the costs. Despite the fact that more than $126 billion in financial aid was awarded to undergraduates in the 2008-09 academic year, many students are graduating with huge levels of debt. Student loan debt now surpasses consumer credit card debt, according to Mark Kantrowitz of FinAid.org and FastWeb.com. Outstanding federal and private student loans total $829,785 billion.

"The growth in education debt outstanding is like cooking a lobster. The increase in total student debt occurs slowly but steadily, so by the time you notice that the water is boiling, you're already cooked," Kantrowitz told the Wall Street Journal.

How will you pay for college?

While more Americans are more focused on paying off credit cards because of increasing minimum payments and other fees, the fact is that more students are finding that they can't get through school without borrowing. Students and their parents are increasingly turning to loans to pay for tuition bills, housing, books, and other related expenses.

In an ideal world every parent would begin a college fund for each of their kids at birth and religiously sock away money each year so that they could foot the bill for all education costs. However, although 67 percent of parents recently polled by Fidelity Investments have started saving for education expenses, those parents would only be able to pay for 16 percent of college costs with what they've put away.

Keeping college costs down

If helping your kid (or yourself) get a college education is important, consider the following ways to keep costs down. Always apply for the maximum amount of federal financial aid you can possibly get before turning to private student loans or personal loans. Private and personal loans have higher interest rates than federal loans and require good credit scores.

Do an extensive search for scholarships and grants your student might qualify to receive. Free money is available for people who have certain religious, racial, ethnic or civic affiliations, as well as people in the arts, science majors, athletes, you name it. Finally, your student may have to get a job or attend a less expensive school in order to help that degree become more affordable.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.