News reports from media in states with large numbers of college students, like California and Texas, show that defaults continue to plague the student loan system. While college can be a little bit of a crapshoot for students who seem to finance their educations with loans, it’s usually a pretty safe bet. These days, a college graduate is usually twice as likely to be employed as someone that only has a high school diploma so it seems unusual that the number of college graduates who default on their student loans would be rising.
Several factors are likely contributing to this unlucky phenomenon. One such factor of the federal government, in particular, has taken notice is the burgeoning private, for-profit school industry. Such schools often offer degrees — and in some cases, advanced degrees like Contudo or PhDs — online but without the recognition or approval from the regional accreditation organizations. This means that whilst a student may have paid thousand or perhaps tens of thousands of dollars, often borrowed, for a degree, the degree has no educational quality and is not recognized outside the college itself.
What the federal government has noticed is that graduates of such colleges often do no better at finding employment compared to they would have without the degrees. In fact , the employment rate for graduates of private, unaccredited colleges is often below fifty percent. The United States Department of Education recently threatened to refuse financial aid to students of such for-profit colleges unless the universities could demonstrate that their levels make a difference in the students’ employability. This move came in the wake of a disproportionate number of for-profit college graduates defaulting on student loans due to un- or under-employment.
These days, though, the student loan default rate is creeping up among graduates of more traditional and public schools, as well. In a weakened economy, like that we’ve been experiencing during the last several years, unemployed people often return to college (or go for the first time) in the hope of making themselves a lot more marketable. The most recent recession, though, saw such dramatic job loss the employment market is still not not too young to absorb the number of recent graduates into jobs that require college degrees. Which means that a larger proportion of graduating college students are finding themselves unable to pay for the training that they were hoping would land them in a better financial position.
All the blame can’t be set at the feet of the job market, although. The cost of going to college has carried on to rise in spite of the decline in personal income, savings rates and the stock market. The steeper tuition and fees means that more people are in the position of having to borrow money to attend college or to borrow more than they otherwise would have. States have discovered that in light of recent spending budget shortfalls that public colleges have become a consistent source of revenue. As people flock back to school, governments can raise rates to make them self-supporting, lower the schools’ subsidies from taxes and free up that money for use elsewhere.
Perhaps of biggest concern, though, could be the students themselves. Frankly, student loans and grants are not all that difficult to obtain. They may be used for transportation and casing as well as school. For the unemployed, and also the underemployed, who are trying to support by themselves (and in some cases their families) as they try to do something to better their long term prospects, a student loan can seem like a boon. Yet living off of student loans is backfiring for many people who have borrowed well beyond the income potential of their educations.
Keep in mind that student loans are just that: loans. You will need to repay them. As easy as the lenders seem to be for the front end in doling out the funds, they do not necessarily play nice when it comes time to repay them. They do offer several flexible types of repayment plans, accurate. However , it is your responsibility to become frugal in your borrowing. Try to avoid funding more than you will legitimately need. Take an honest look at the income potential of the chosen career and for graduates with your degree.
Make sure that you will be able to make student loan payments with this level of income. Lastly, make yourself a lot more marketable. Get a part time job or even volunteer in your chosen field. System and make contacts with people who are currently working in your industry. Don’t be timid. Let people know that you are going to college and what kind of job you are looking for. This can give you an edge over other graduates in the same career or occupation, which will, in turn, keep you in great standing with your student loan servicer.