The student loan crisis is one of the most significant issues impacting the overall economy. Thousands of graduates struggle to pay their student loan bills each month. Many college students wrongly assume that a degree guarantees them a job after graduation. However, numerous graduates quickly learn that a college degree is not always a path to success.
In just the past decade, the cost of college has doubled. Multiple universities are coming under intense scrutiny for raising tuition each year. Some politicians are calling for a massive overhaul of the entire education system.
The good news for graduates is that there are multiple repayment plans available from the government. Some people choose an income-based repayment plan. This plan allows students to pay a certain percentage of their income toward student loans. After 20 years, the student loans are forgiven.
Although this may seem ideal, there are various issues with this option. In many cases, the loans become much more substantial than what was initially borrowed. When the loans are forgiven, the forgiven amount is taxed as income. Some students never plan for the hefty tax bill that comes after the loans are forgiven.
Paying the Loans
Various studies indicate that graduates are working multiple jobs to help pay for their student loans. There are numerous options for people who want to pick up additional work regularly.
Some students are living with roommates after graduation. With the cost of housing rising each year, it makes sense to split the housing bill with someone else.
Although repaying students loans is arduous, it is critical for graduates to prioritize paying down the loans after graduation. Some people wait a few years to start budgeting or planning for the future. Students should have a financial plan to pay down student loans before borrowing any money for college.