Student educational debt is set to exceed $1.2 trillion in the coming year, and while college tuition inflation has slowed, rates have still increased an average of 6 percent in the past ten years. New graduates need to be ready to tackle the challenges of the job market while balancing a large student loan debt. With more and more students entering college each year, many without a college fund, more debt will be added to the staggering total making graduates of 2014 more indebted than their predecessors.
If you are in your first year of college and have not completed the Free Application for Federal Student Aid (FAFSA), then this should be your first step. This application is used to determine eligibility for any number of federal and merit-based programs. It will also assess your need and give you a gap number for the amount you will need to cover in loans or payments. Current students should proceed with caution and be aware of your loan payment dates and cost of the money you are borrowing. Interest will continue to accumulate on the unsubsidized loans while you are in school. Make a note of which loans apply and consider making payments where possible to keep the amount manageable while you are in those years prior to repayment.
Graduates in dire straits should begin by reviewing the rates on all their loans to ensure they are receiving the lowest possible rates on all. If you find that any loans with higher than average rates, you will need to complete paperwork for loan consolidation. This can save your thousands in interest and aid in keeping all your loans together in one place. There are also other routes for graduates that can assist in formulating a repayment plan that considers earning capabilities in monthly payment plans. Graduates in sectors such as nonprofit and teaching may qualify for loan forgiveness programs that absolve the debt of graduates in exchange for years of service in underfunded or low-income areas.
Whether you are a graduate with a mountain of educational debt or a college freshman, there are steps you can take to ensure that you are not burdened by the crushing cost of higher education.