Student Loans and Student Debt
December 7, 2012
Student loans and student debt can be daunting topics, especially when you read headline stories about college graduates who have six-figure debt and no job. Being informed will help you and your student ask the right questions and make smart, long-term financial decisions when it comes to student loans and student debt. Today’s post provides three resources to help you consider the options and make wise decisions.
#1 Student Debt: Myths and Facts
The Council of Independent Colleges, a national organization representing small and mid-sized, independent, liberal arts colleges and universities in the U.S., released a study last month entitled "Student Debt: Myths and Facts." The findings provide an interesting balance to some of the media articles that have been published recently about the critical issue of student indebtedness.
#2 Top 5 Things to Know Before You Accept a Loan
The Wall Street Journal also provides a helpful blog post regarding the top 5 things a student should understand before taking out a loan. Here's the condensed version:
- Research what is available- scholarships, grants, loans, etc.
- Know the terms of the loan.
- Recognize that loans will not go away until they are paid.
- Look up information on your institution.
- Look up the earnings potential of your major.
#3 How Much Debt do Most College Graduates Really Have?
One last helpful article, a blog post from financial aid consultants, Scannell & Kurz, summarizes new statistics on student debt. For example, 1 in 3 students graduated with no student loan debt, while the average debt of the remaining two-thirds increased from $25,250 to $26,600 last year.
As you visit colleges this fall, ask about student indebtedness and loan default rates:
- What percent of your students graduate with debt?
- What is their average indebtedness?
- What is your graduates' loan default rate?
Last year the two-thirds of Cedarville graduates who had loans borrowed an average of $20,789 through the Federal Stafford Loan program. This equates to a $260 monthly repayment, a manageable level for working adults.
This conservative approach to debt is affirmed by Cedarville graduates' remarkably low loan default rate of just 0.8%. The national average default rate for private colleges is 5.2% while the overall national loan default rate is 9.1% These results affirm both the quality of a Cedarville degree and the availability of career opportunities for our graduates.