The news about college loans is hitting headline status. This August, the Federal Reserve announced that it has reached a total of $830 billion, with over $600 billion of it in the last three years. To top it, the cost of college tuition is rising at a rate higher than the rate of inflation.
At the same time, it's becoming imperative for people to achieve either a vocational certificate or some sort of college diploma. On the average, a person with a high school diploma earns a medium income of $30,000 a year. A person with a Bachelor does nearly 50% better, at $52,000 annually. Most important, there are ways to put college loans down to a minimum and ways to not have any loans at all.
Earlier this year President Obama had put through legislation that returned college loans back to the hands of the government instead of private financial institutions. This should lower the interest rates of college loans considerably to at least the 13% range. Still, there will be students who have low credit ratings, if they have any credit rating at all, who will need to find cosigners.
Those taking out these loans should always be mindful that if they are late on only one payment, they could very well hurt the cosigners credit rating, if not make them responsible altogether. The first thing a student should do is consult with a college financial aid adviser to help them plan out a payment structure or program.
Still, there are ways around all this beyond making these payments. For starters, the Bush Administration created the College Cost Reduction and Access Act. It forgives the loan if the graduate does a decade's worth of public service. Before that, President Clinton created AmeriCorps. There's also VISTA. All these programs can help make loans disappear for services rendered.
Then there's also enrolling in an online college. One advantage of going online for one's education is class hours can be set around holding down a regular job. If one works for the right company such as Blockbuster or McDonalds, they might even help pay the tuition while working for them. Set it up properly and the student can avoid taking out college loans altogether. They will even gain valuable work experience on top of their degree, which always looks good when on the job market.
Still, probably the best way for the student to make sure they don't become part of that $800 billion debt load is to sit down and discuss their ambitions with an online college financial officer. The student should also get on Google, Yahoo! or another search engine and see what's out there for their dream profession. There are a surprisingly large number of grants and scholarships available, many untouched.
Due to the economic downturn, many banks and private lenders have become more willing to work with student borrowers to ensure that they do not default on their student loans. However, online degree candidates who prepare for their student loan payments throughout the course of their career at online college degree programs are likely to preserve good credit and pay off their loans sooner than those who wait until graduation to begin thinking about repayment.
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