By Patrick Sochacki
UNIVERSITY CENTER – Student loan debt outweighs auto loan debt and credit card debt, nationwide. You, or someone you know, is likely affected by this massive bubble. What can be done?
Loans and debt are a major part of American culture. The banking system relies on loans to make money. Your credit score, something that can make or break major decisions in your life, consists of debts and paying them off.
Student loans differ from personal loans, auto loans and mortgages that a bank would usually give you. They are impossible to discharge in bankruptcy; they are guaranteed by the federal government; and they are used to fool young and middle-aged people into thinking massive debt is the best – or only – way to receive a higher education.
Paying off a Bachelor’s degree worth of study at a four-year university can take upwards of 21 years, according to usnews.com.
Trevor Beck, 24, has a four-year degree from Saginaw Valley State University (SVSU) in supply chain management. Beck took out $30,000 in student loans for his four and a half years of education, starting at Delta, then transferring to SVSU. He says that having his career makes him rather lucky.
“They give you 30 years to pay it off, but I imagine I can pay it off in about half of that,” says Beck. “I get random huge bonuses throughout the year and I throw those towards my loans every time.”
Sydney Harris, 23, has a slightly different tale of student loan debt. Harris is a finance major and works at Quicken Loans in the payroll department.
“I went to Olivet-Nazarene in Illinois, a private Christian school,” says Harris. “I took out $23,000 in total for a two-year degree, I have been out of school for two years and I have $16,000 left to pay.”
Harris made clear why she has chosen to attack her loans so quickly: “They offer a 10-year repayment plan, but that obviously includes interest and you wind up paying as much in interest as you pay for the principal.”
“My friends are all taking out way more loans than I am, and they aren’t looking at them the same way,” Harris said when asked about her fears for other students with loans. “Like, yeah, they’re deferred for now, but they’re still accruing interest while they sit there.”
Dealing with student loans can feel overwhelming and never-ending, but there are multiple methods to help with your payments.
Look at refinancing your balance. Interest rates have been lowered three times this year alone. Do what Trevor Beck did and use any windfall bonuses as extra payments instead of only paying the minimum. Or join a company that offers repayment assistance on student loans such as Fidelity or Staples.
Politicians are concocting plans to fix the student loan debt bubble. The Democratic presidential hopefuls have expressed their opinions and ideas for student loan debt. Some believe in forgiving the debt entirely, like Elizabeth Warren or Bernie Sanders. Others believe in forgiving the debt over time, like Joseph Biden and Andrew Yang.
All of these candidates share one thing in common: they see student loan debt as a problem in need of solving, one that will require much deliberation to reach a sufficient solution.