Tammy’s Take: America’s Student Loan Crisis
College graduates across the country are looking to the future now that graduation season is over. There are also looking at how to pay their student loans. It is estimated, that the average student graduates with $29,000 of student loan debt.
You may have seen the story in the news about billionaire Robert F. Smith who announced this spring to 400 Morehouse University students that he plans to pay off their student loans. It is a gift worth an estimated $40 million dollars. As you can imagine, this was life-changing news for those students. His goal was to give them a fresh start as they begin the next chapter of their lives without worrying about monthly payments.
Not every student is so lucky. Currently, 44 million Americans have student loans. U.S. student loan borrowers collectively owe $1.5 trillion in federal and private student loan debt; the highest amount ever. Student debt is now the second highest consumer debt category.
The impact of those numbers is real. A recent graduate shared with me that his monthly loan payment is nearly $1,000 a month. How does a college graduate pay rent and his or her student loan? According to Gerri Walsh from the FINRA Foundation, student debt holders are more likely to use their credit cards to pay living expenses and they are getting trapped in a cycle of debt.
How CARE helps
At CARE, we believe knowledge is power. Our volunteers reach out to high school students and young adults to counsel and engage them in conversations about how much education they need and how they plan to pay for it. Many students simply do not understand the implications of signing on the dotted line and how it can impact their life after graduation.
CARE teaches different ways students can reduce the amount of money they need to borrow for college. What the difference is between scholarships, grants, and loans as well as the difference between private and public loans. Lastly, our volunteers explain the consequences of not paying student loans back on time.
Beyond knowledge, CARE volunteers also provide perspective. They share real-world examples from their professional and personal lives that add depth and realism to basic personal finance concepts. Instead of thinking about student loans in the abstract, our volunteers are able to share insights into what living with student loans is like. My colleague wrote about his student loan story last month on the CARE blog, an example of the stories we share to teach students.
We work every day to empower students to make the best choice for their futures. Is your school or youth group interested in hearing from a CARE volunteer? Sign up for a presentation.
About the Author
Tammy Hettinger is the Executive Director for CARE and has a long career of nonprofit leadership and fundraising. She lives in Alexandria, VA with her husband, two young kids, and the family cat.