When you think about the US government, do you think of them sitting on a bunch of money? Some people think of the government as rich and wealthy while others think that the government is quite poor, considering all of the debt that we, as a country, have.
Before you start to think too much in depth about it, you need to know that the government is in fact sitting on a huge pile of debt that is backed by parents from all over the nation.
The reason for this debt is because parents from everywhere borrow money for their college students to head off to college. Unfortunately, it can be difficult for parents to take on the burden of saving up enough money with the rising tuition costs, so their last resort when they find out all of the fees are not covered is to borrow from the government.
Over 3 million parents in the US have borrowed from the government and the debt from all of that borrowing has racked up a $71B bill. These loans help contribute to the mounting student loan debt that has reached a high of $1.2 trillion.
The most shocking fact about all of these numbers is that half of the amount borrowed by parents is actually in default right now. That is a lot of defaulted loans and they are continuing to rack up interest and fees on them as well.
Will This Debt Ever End?
It does not seem like there is any hope in sight for this climbing debt mountain to come to a stop. The more parents and students borrow alike; the more money the government will be sitting on. It is important that we all begin to look at this number as a whole and find ways to make education more affordable for both students and parents.
Of course, it is important to also note that if you do not go to college, then you will not receive a degree and you may be stuck in a lower paying position for the rest of your life, which almost makes college a necessity to move up in the world, thus leading to higher debt rates.
Another thing to keep in mind is that when students do go to college, their intention is to graduate, but not all of them do, thus leaving them with a lower paying job and no way to afford their student loan payments.
You Do Have Options
While it may seem like you do not have any options for your growing student loan debt, you do. In fact, both parents and students have options. One of the most commonly used repayment methods is a payment plan that is tailored to your individual situation. You can work with your payment provider to work out a plan that works within your budget. They have repayment plans that take your income into consideration as well.
Next, you can consolidate all of your federal student loans into one single payment. The benefit of doing this is that you can reduce the amount you pay monthly, lock in another interest rate, and only have to pay one bill per month. Many people consider federal loan consolidation as a way to simplify their loan payment situation and extend their repayment term.
Lastly, you can set yourself a budget and even pick up a side job to help you send in more money monthly to your student loans. The fact is – student loans don’t disappear, so you will have to pay them back one way or another.
Student loan debt continues to rise for both parents and students alike and as the amount continues to rise, more and more students and parents find themselves deeper in debt. You do want to avoid your loans going into default as this can have ramifications on you such as wage garnishments and a hold on your federal student loan benefits.
Author: Jeff Gitlen
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