As student loan interest doubles, many college kids are probably wondering what they can do about the rising student loan interest rates.
As previously reported by The Inquisitr, student loan interest rates are doubling back to the 6.8 percent rate they were back in 2007, before Congress decided to cut interest rates.
Student loan debt in the United States has ballooned to over $1 trillion, and many newly graduated students are defaulting on these loans. But, unlike credit card debt, student debt is not forgivable in bankruptcy. Because student loans cannot be written off through bankruptcy, those in their 20s, 30s, and 40s who are buried by debt cannot afford to buy cars, mortgage a house, invest in the markets, or begin to save for retirement.
As a personal example, this writer attempts to live debt free. The only debt we have is the mortgage, and our goal is to pay it off within several years. Our regular expenses are low, and last year we paid cash to go to Europe for 3.5 weeks for our five year anniversary. But I have several friends saddled with student loan debt, auto, credit card, etc. They must earn almost double what we make just to keep afloat, and they’re struggling the whole way.
Some experts claim that student loans themselves are part of the problem. These experts say that the inflation of college tuition costs have greatly exceeded what should be a “normal” increase as tied to the overall inflationary rate of the United States. Further, these experts criticize the college education industry, claiming that tuition costs have only risen so fast because they were fed by the “easy money” of student loans.
So the first tip to surviving student loan debt is to avoid taking a student loan if possible. Work through college if you can do so. If you must take out a student loan based upon your situation, make sure the resulting job market will be enough to pay your bills and your student loan.
Think of the student loan as any product you might buy. You must consider whether the degree will get what you want out of it. For example, if a $25,000 student loan will only “purchase” you a job that pays $12 hourly then you might want to rethink the student loan. If you really want to be in that career field, at least consider working while earning that degree on the side.
So what to do if already mired in student loan debt? I’m assuming you have other debts, probably credit card or auto loans. The best advice I’ve heard is called the “debt snowball.” First, find ways to cut your budget. Skip eating out, unplug your cable TV, or something along those lines. Second, pick the smallest debt and put all the saved money into paying it off as quickly as possible. Once that debt is paid off, find the next smallest debt and start paying it off. Over time, reward yourself with your new financial freedom by slowly bringing back stuff you were forced to cut.
What are you doing to combat student loan interest doubling?