Are Debt Free College Educations Possible?
The decision about whether or not to go to college is continuing to become more of a debatable topic. On one hand, people generally understand the benefits, such as leading to a better, higher paying job. However, the disadvantages, like college debt, are keeping people from going to college. The astounding debt average students have after college continues to worsen. In fact, a recent study found that the average debt for a college student is closer to what they would earn in a year. That means working full time for an entire year and not spending a dime of it, in order to pay off their loans. So many students are wondering, if thanks to recent congress decisions, a debt free college education might be possible.
The Price of College
According to a recent study conducted by Hamilton Place Strategies, the amount of debt students have when leaving college in the next 10 years is equivalent to their annual salary post-college. One year of salary may not seem like much, but consider working for an entire year and every cent going to your college debt. This is worrisome to many college students. According to the study, the cost of student debt after graduation has increased by a staggering 200 percent since 1993. The average debt as of 2012 is approximately $28,720, but that will more than double by 2024. With so many students attending college and very limited scholarships and grants available, the majority of students are having to pay out-of-pocket or get student loans. Since the cost of college is so high, most turn to student loans to cover their expenses. The study also found that between 2000 and 2011, the wages earned by college students dropped by over 5 percent.
Congress Lowers Rates
In June 2013, students were hoping that congress would prevent student loan interest rates from doubling, but it failed. As of July 1st, the interest rates for student loans rose from 3.4 percent to 6.8 percent. Fortunately a month later Congress agreed to keep the rates low for most of the graduates. The legislation is good news for current graduate students, but other students wonder if having a debt-free education will ever be possible. There is a cap for all student loans at 8.25 percent for undergraduates and 9.5 percent for graduate students, but this doesn't prevent loan debt by any means. The current student and federal loan doubt is over $1 trillion.
Tips for Reducing College Debt
It's not all bad news though. Not only is the fact that Congress at least agreed upon a temporary solution a good sign for the future, but there are ways to reduce your overall debt. First, apply for current grants and scholarships. It may not cover all of your fees and expenses, but it helps, and it is money you never have to pay back. If you're employed, find out if they offer a tuition reimbursement program. If you can stay living at home, use that money you're saving on rent to put toward your college tuition.