Over the last decade, the price tag of a college education has continued to climb higher and higher. So much so that it has become a hot topic in recent years, with politicians and experts proposing various solutions to address the problem. Proposed solutions range from forgiving all student loan debt to implementing income-based repayment plans. However, finding a fair and effective solution continues to be a challenge.
What is student loan debt?
Student loan debt is debt that individuals accrue to pay for their education at a higher-learning institution, such as a university or college. Student loan debt is different from other forms of debt because it cannot be discharged through bankruptcy. This means that borrowers are often stuck with this debt for a significant portion of their lives, making it harder for them to save for retirement or buy a home.
What is the current average student loan debt in the U.S.?
The average student debt loan as of 2022 is $37,000, a 3.7% increase from the previous year. When it comes to college, many students have no choice but to turn to loans to finance their education, which significantly increases student loan debt. Below is a year-over-year breakdown for the last five years of student loan debt growth in the U.S.:
- 2017, +5.76%
- 2018, +5.17%
- 2019, +4.55%
- 2020, +3.17%
- 2021, 0.31%
What is the student loan debt forgiveness plan?
The student loan debt forgiveness plan is a proposed solution to address the issue of overwhelming student loan debt. Under this plan, a certain amount or percentage of student loan debt would be forgiven for borrowers, potentially providing much-needed relief for those struggling with high student loan debt levels.
Proponents argue that it would offer a fresh start for borrowers and stimulate the economy by allowing them to spend their money on other necessary expenses or investments. Conversely, critics argue that it would be unfair to those who have already paid off their student loan debt and could potentially lead to an increase in tuition costs as colleges rely on the possibility of future forgiveness.
How to get rid of student loans
Paying off student loan debt is important because it provides more financial freedom and stability for borrowers. Paying off student loans also has a positive impact on the economy as a whole, as borrowers are able to spend their money on other necessary expenses or investments. When it comes to finding ways to get rid of student debt loan, it’s essential to consider all the options available. Some options include:
- Repayment plans
These plans are based on income so that borrowers are not overwhelmed with high monthly payments.
- Accelerated repayment plans
Accelerated payment plans have borrowers pay more each month in order to pay off their student loan debt faster.
- Loan consolidation
A loan consolidation combines multiple loans into one single loan with a lower interest rate.
- Get creative
Finding new ways to earn extra money, such as through side gigs or freelance work, can be a helpful way to put money towards student loan payments.
- Employer Repayment Plans
Try to find an employer that offers benefits to help with student loan repayments.
Student loan debt is a heavy burden for many Americans, and finding a solution to this problem is crucial. The soaring levels of student loan debt not only affect individual borrowers but also have a harmful impact on the economy as a whole.
Thinking about consolidating your student loan? Talk to the financial experts at Americor first.