Growing up today in the recent financial times is tough if you can’t find a job and if you’re saddled with debt. According to a recent study by the Pew Research Center, about 26% of the young adults between the ages of 25-36 are living in with their parents and this figure is up from 10% in the year 1980. Similarly, most of the young people are procrastinating their dreams of marriage, buying a new home just because they don’t have enough funds to make ends meet and repay their student loans. If you give a glance at the numbers, it will seem that the reasons for delaying their adulthood has more to do with their personal finances and the sluggish economy and less to do with their personal characters. The student debt relief firms are gaining momentum and a large number of parents and students are trying to delete their debt worries.
As per reports, unemployment for the young generation is higher than the national average and in order to grab a good job, they need a college degree. Unfortunately, the tuition costs in the US colleges have increased by 128% and the students are just footing the soaring bills by taking out student loans. In the last quarter of 2011, student loan debt surpassed the $1 trillion mark which is more than the combined debt on credit card debt and the auto loans. According to the Federal Reserve Bank of New York, the average student loan debt borrower is more than $30,000 and this means that the student borrowers can’t afford to repay the money that they borrow during school.
Don’t delay your marriage plans – Know the big changes in the Federal student loans
In the latter half of the previous year, President Barack Obama announced some big changes in the federal student loan program. The positive changes come in rather negative backdrop where an increasingly large number of students are graduating with debt and are facing the real prospect of unemployment. Since the student loan debt crisis is anticipated to be the next bubble, the changes that have been implemented are in response to the “We the People” petition asking the government to forgive student loan debt and stimulate the paralyzed economy. College graduates are entering one of the toughest job markets and here are some changes that can assist them financially.
- You can consolidate your student loans for lower rates: The new student loans are Direct loans but there are many graduates that carry older Federal Family Education loans. The Obama Administration is trying to alter the entire lending process and move all the borrowers into the Direct loan program. If you may consolidate your debts by taking out a direct debt consolidation loan, you can get rate reduction up to .5%.
- Reduce the student loan payments to 10% of your income: If you have a huge loan but a low-paying job or you’re being forced to raise your family with pressing financial needs, you can consolidate your student loan debt into this debt consolidation loan. The monthly payments can be reduced to 10% of the borrower’s income in 2014.
- You can get student loan forgiveness in 10 to 20 years: The loan forgiveness program was scheduled to start in 2014 but the Congress decided to make it 2012, most of the federal student loans will be forgiven in 20 years. The borrowers who are employed in the government sector will get loan forgiveness in just 10 years.
How much student loan debt are you having now? Is it basically private or federal loans? Ask yourself such questions, make the necessary calculations and then take the required steps in order to close the doors on debt. Protect your credit score and avoid jeopardizing your future chances of getting a good job.