There is no doubt that college is expensive and prices are on the rise. In February this country had $867 billion worth of student loans. Now, outstanding loans are around $1 trillion. In about 5 months, student loan debt in the US has increased 15 percent. As of July 1, Congress passed the bill stating that the Stafford Student Loans were not automatically going to increase to 6.8 percent and that they were going to stay at their current rate of 3.4 percent. Congress had to act quickly, making this one year bill a definite quick fix.
For those students and graduates with tremendous outstanding student loan debt, the bill passed is great for them. It lowers their monthly payments estimated over the life time of the loan and it will help them out. It boils down to this; there’s a mountain of debt in the student loan industry and something has to be done. This is debt and students and parents have to treat it like debt and look at whether it is worth it or not. Having Stafford Loans at 3.4 percent for people may have many overlook their debt because they see a low interest rate. If it were raised however, to the proposed 6.8 percent, then people would start taking a look at these loans. It would also show colleges that people are aware of these loans, the possible debt an education would incur on them and they may not be borrowing as much. This could prompt colleges to not raise their tuition costs as much as they’ve done in the like ten years.
It’s very important to be aware of all the costs of your higher education to make an informed decision. Money-saving ideas that will save you thousands for your future may be to go to a community college for a few years and maintain a part time job. Do your homework and analysis and you should be all set.
For more information on managing your finances or starting a college education savings program with an investment advisor near Albany, Utica or Saratoga NY, call (518) 348-0060 or contact us here. You can also see Andy Guzzetti every Monday morning on WXXA Fox – Albany.