Over the past ten years, the cost of college has increased significantly. The average price for annual tuition is about $10,000 at a state university and approximately $35,000 at a private institution. Although many students are able to qualify for scholarships and federal aid, there are many expenses that still need to be covered. As a result, most graduates finish their education with more than $30,000 in student loan debt.
Repaying student loans is one of the biggest hurdles young adults face in today’s world. High monthly payments are difficult to work into tight household budgets and the cost of housing and childcare is rising as well. As a result, many borrowers fail to make their monthly payments on time and default on their student loans.
Who are the Borrowers With the Highest Amount of Debt?
Not everyone who graduates does so with an unmanageable amount of student debt. Approximately 30% of college graduates earn their degrees without taking out any student loans. More than 18% of all graduates and 48% of for-profit graduates, however, leave school with more than $40,000 in loans and no concrete plan on how they will repay it.
The biggest culprit of student loan debt is not tuition. According to Forbes, more than 22% of public university graduates borrow more than $30,000 for the cost of housing and other living expenses.
High Debt Does Not Equal a High Default Rate
A college graduate with a total of $30,000 in student loans will be responsible for a monthly payment of approximately $300. The monthly payment amount depends on three major factors:
- The principal amount of the loan (total borrowed)
- The interest rate of the loan
- The term of the loan (how long it takes to repay it)
As each of these factors increases, so does the total monthly payment amount. The biggest factor for default, however, is not the total amount of the loan or the amount of the monthly payment. The most notable default factor is the type of institution the student attended.
For-Profit College Graduates Default the Most
According to research, students from for-profit institutions have the highest rate of default. More than 40% of graduates from four-year private institutions default on their student loans. There are multiple factors that may play a role in the high rate of default including:
- Less education on student loan options
- Student loans from multiple lenders
- A higher amount of private vs. federal student loans
- …and more
For these students and all others, there are ways to avoid default. If you’re having trouble making your student loan payments, you should discuss all of the repayment options available to you with your lender. It’s important to remember, however, that the only way to reduce the total amount you owe is through debt settlement.
Reduce Your Student Loan Amount through Debt Settlement
For a viable strategy that works to reduce your student loan debt, talk to the attorneys at McCarthy Law, PLC. Our team is dedicated to helping you negotiate your debt to a fraction of what you owe and will work tirelessly in your favor. We bring years of experience to the table and offer low prices for our services so you can benefit from what we do and move on with your life. As lawyers, we can also help you if there’s a lawsuit at hand or if you’re involved with collection agencies.
Call McCarthy Law PLC at 855-976-5777 or contact us online. There’s no better time to start forging your way to a debt-free life than right now!