July 8, 2013

College Crisis: Increasing Loans, Decreasing Sentiments

[For the official release, check out the complete survey and results]

Just what we need—more debt. Last week Congress stood by as interest rates on subsidized Stafford student loans doubled from 3.4% to 6.8%. As a nation we’ve already racked up more than $1 trillion in student loan debt. Now, we can rack up even more.

With that kind of baggage and a jobless rate above 7%, it’s no wonder Americans are losing confidence in the value of higher education. Only half of those polled in the latest COUNTRY Financial Security Index survey think a college education is still a good financial investment. Five years ago 81% polled thought a degree was worth the money.

The Americans surveyed had even more discouraging news for higher ed:

  • 59% blamed student loan debt for the U.S. economy’s anemic recovery.
  • 74% expect the amount of student loan debt to be higher in ten years.

The impact of student loan debt is rippling through the overall economy with more than half of those surveyed saying they are putting off marriage, buying a home, and other life decisions because of their student loans.

Here are some quick stats:



So, does that mean you should scrap those plans and find a job that doesn’t require a degree? Not necessarily. Just make sure you have a strategy in place to pay off the debt:

  • Be on time It’s just as important to be on time with your first student loan payment as it is being on time for work.
  • Minimize your interest costs. Accelerating monthly payments can shorten the overall loan period. Graduated payment plans allow you to make lower monthly payments early on and higher ones later.
  • Don’t overlook important tax breaks. Remember, you may be able to deduct, subject to limits, up to $2,500 a year in student loan interest. That can help at tax time and may provide extra cash to pay down principal.

Another thing to remember: There are a lot of success stories about people who graduated from college with a huge debt burden, but found creative ways to pay it off quickly.