Student Loan Debt: The Importance of Early Financial Education

STUDENT LOAN DEBT THE IMPORTANCE OF EARLY FINANCIAL EDUCATION KNOW WHAT YOU ARE GETTING INTO SELECT A SCHOOL THAT YOU CAN AFFORD AVERAGE CUMULATIVE AVERAGE TUITION AND FEES FOR 4-YEAR INSTITUTION 2010-2011 DEBT FOR TYPE OF BACHELOR'S DEGREE PROGRAM BORROWER DEFAULT RATES FOR 4-YEAR INSTITUTIONS $15,918 PUBLIC $23,310 PRIVATE FOR-PROFIT $20,040 PUBLIC 4.5% PRIVATE NON-PROFIT 5.2% PUBLIC $27,535 PRIVATE NON-PROFIT $32,909 PRIVATE FOR-PROFIT $36,364 PRIVATE 15.4% PRIVATE FOR-PROFIT NON-PROFIT UNDERSTAND THE TYPES OF STUDENT LOANS FEDERAL LOANS PRIVATE STUDENT LOANS Typically more expensive than federal student loans, with higher, variable interest rates and far fewer options for borrowers in repayment. Fixed interest rates, deferment and forgiveness options. 42% 2007-2008 Proprietary schools had the largest proportion of students taking out private loans and the steepest increase in private loan borrowing, 14% 2007-2008 13% 2003-2004 5% 2003-2004 PROPRIETARY SCHOOL PRIVATE LOANS UNDERGRADUATE PRIVATE LOANS From http:/wwwticas.org/iles/pua/Private_Joan_data_NR.adf For every borrower who defaults on a student loan, at least two more fall behind in payments. Only 37 percent of borrowers who started repaying their student loans in 2005 were able to pay them back fully and on time. MAKE A PLAN FOR REPAYMENT Fromc http://www.nytimescom/2011/09/1s/abcatk/1ranshtwil Applying for Free Application for Federal Student Aid (FAFSA) At least 17 million students fail to file the FAFSA each year because they incorrectly believe themselves to be ineligible. ARE YOU ELIGIBLE FOR AID? I PELL GRANT YOU MIGHT BE SURPRISED. FULL PELL GRANT 36.7% 26.3% 17.7% 15.3% 18.2% 11.4% TUITION < $10,000 TUITION $10,000-$20,000 TUITION > $20,000 STUDENTS THAT QUALIFIED FORA PELL GRANT WHO DID NOT FILE FAFSA Frowc http://www.fhruldorg/atcator/20110118vofafsarmsompif AND DON'T GET YOURSELF IN FURTHER DEBT 84% of undergraduates have at least one credit card. The average number of cards is 4.6. 50% of college students have 4+cards. 30% of college students put tuition on their credit cards. $$$$$=$ PASS UP THE FREE T-SHIRT $23,118 AVERAGE STUDENT LOAN DEBT $4,100 AVERAGECREDIT CARD DEBT OF CARD CARRYING SENIORS From How Undargradate Studonts Use Credit Caris," Salke Mae 2009 $27,218 TOTAL DEBT Only 9.4% of college students pay their credit card in full each month. From Firaneial Literaey and Credit Cardk A Multi Campos Survey."In betenational kural of Business and Sodal Selanoe Vol 3 No. 7; April 2012 Seniors graduated with an average credit card debt of more than $4100. 20% of seniors carried balances greater than $7000. From "How Undergradate Studonts Use Credit Caris," Salke Mae 2009 AVERAGE SALARY AFTER GRADUATION $37,000 *Median salary in 2009 for Bachelor Degree holders one year after graduation. 73% TOTAL INCOME The average student loan debt is 62% of average post-Bachelor's income. The average post-graduation CC debt is 11% of average post-Bachelor's income. Average student loan debt + average CC debt at graduation makes up 73% of average post-Bachelor's income. 62% 11% AVERAGE STUDENT LOAN DEBT AVERAGE POST-GRADUATION CREDIT CARD DEBT brfo above s combirafion of NOES and Sale Mae data INCOME POST-GRADUATION KNOWLEDGE IS POWER! of students were surprised at how high their credit card balance had reached. 40% said they have charged items knowing they didn't have the money to pay the bill. Only 17% said they regularly paid offall cards each month, and another 1percent had parents, a spouse, or other family members paying the bill. 82% carried balances and thus incurred finance charges each month. 84% of undergraduates indicated that they needed more education on financial management topics. 64% would have liked to receive financial information in high school. 40% would have liked to receive financial information as college freshmen. From How Undergradate Students Uhe Crudit Cardk" Salke Mae 2009 Only 14.6% of students claimed to know the interest rate they paid on credit. clearpoint Consumer Health Through Financial Education CREDIT COUNSÉELING SOLUTIONSS www.RepayDebt.org