Like April rain and May blooms, college commencements are a mainstay of springtime. Thousands of new graduates will throw their caps in the air in 2012, some heading to graduate school, some pounding the pavement, and some entering the workforce for the first time.
Regardless of vocation, many of them will have one task in common — writing checks, specifically those for student loans coming due. The latest figures show more than half of students who graduated college in 2010 used some sort of loan to finance their education, many leaving campus with more than $20,000 in debt. The number is not expected to decline and the strain is evident. A recent article showed graduates in their 20s delaying milestones such as marriages and home purchases because of such burdens.
It’s a hot topic that’s netting attention from the government, lenders, and the students themselves, says Robert Weinerman, senior director, college finance for College Coach®. College Coach, in fact, has received so many inquiries about the subject that it’s become the focus of the group’s first program aimed at graduates rather than future students. Aptly named, “Repaying College Loans,” the program helps people already paying student debt find better strategies for managing it. It’s no small subject for employers, since worry about budgets is known to be one of the chief concerns negatively affecting employees’ job performances.
Help Paying Debt
Nationally, student debt figures are said to have reached the $1-trillion mark – surpassing credit card debt for the first time. Further highlighting the issue, a recent Federal Bank of New York study indicated that a small percentage of student loans belong to people over age 60.
While such dramatic stories are thankfully not the norm, even borrowers who manage their debt ably feel the sting. That $20,000 loan, for example, will cost roughly $230 a month when it comes due — a big bite from an entry-level paycheck.
By the time they arrive at College Coach, Mr. Weinerman says working people have often struggled with payments for years without knowing relief was a possibility via loan restructuring or debt consolidation. It’s not surprising since student loans are a tangle of complexity, with any one student paying multiple entities both in the government and private sectors.
Strategies can offer welcome relief. Someone struggling with today’s budget, for example, could potentially trim their monthly payments by $100 or more by extending the life of the loan. That, on the other hand, means a longer term loan, which may not appeal to someone whose goal is simply to be debt free. “These are different issues,” says Mr. Weinerman. “We can address both, but we have to understand your challenge to get into the process of solving it.”
Making Smart Choices
Such challenges should provide cautionary tales for new students about to sign on the dotted line. May 1 marks the deadline for deposits for most colleges and Mr. Weinerman, who assists families with financing before college as well, counsels incoming freshmen to choose their schools with more than just academics in mind. Large loans may seem intangible when they’re four years in the future, but they become real in a hurry. “You want to think about how much you’re going to be paying off before you make the commitment,” he says.
Good advice, agrees Elizabeth Heaton, senior director, educational consulting at College Coach. Ms. Heaton says students should think carefully before choosing an elite private university over one offering a generous financial package. Lofty schools are understandable ambitions but a pile of debt will impact your post-college freedom to choose jobs for career over paycheck.
“The best school for you,” she concludes, “may be the one that fits your academic ambitions and your wallet.”
Repaying College Loans is just one of the many employer-sponsored benefits of College Coach, a Bright Horizons solution at work. The leader in educational advising services, College Coach helps parents avoid the disruptive stresses associated with a child’s pursuit of higher education, and helps their children pursue, apply to, and pay for college. Helping address life’s disruptions can help boost productivity and the bottom line. Visit College Coach to learn more.