Statistics show that most college graduates are already in debt. Only 34.4 percent of all individuals attending universities manage to graduate without taking a loan and having to make repayments. More than 18 percent of the graduates have to repay 10,000 to 19,999 dollars in debt, 15.5 percent have to repay between 20,000 and 29,999 dollars and almost nine percent have a debt in the range from 30,000 to 39,999 dollars.
With so many graduates being in debt, it’s interesting to point out that numerous rumors and myths about college debt circulate and are vastly believed in.
Are you about to start college? Or maybe you worry about getting in debt and the effect it’s going to have on your future? Here are five of the most common college debt myths that you shouldn’t believe in. Don’t let these misconceptions guide your decision!
Myth 1: You have no other option but to pay back the entire amount.
Most people believe that they will have to return the entire amount that has been provided in the form of a student loan. They, however, forget about the availability of loan forgiveness programs.
These programs are designed to either eliminate the entire student loan or a portion of it. Some programs are available for certain types of loans taken, others can be used by the professionals working in a particular field.
According to Forbes statistics, nearly 50 percent of the individuals that have taken a student loan and are in debt can qualify for a certain loan forgiveness opportunity. If you’re eager to decrease the amount you have to return or you want to eliminate the debt altogether, do your research to figure out what possibilities are available.
Myth 2: The high cost of tuition means that the financial return of going to college now is lower.
It’s true that tuition costs are going up and more people have to take a loan in order to afford going to college. This is why some have started thinking whether going to college makes any financial sense at all.
Since the Great Depression, the salaries of individuals that have recently graduated from college have gone down nearly five percent, Washington Post reports. The wages of individuals that don’t have a college degree, however, have decreased by an even bigger percentage.
Recent graduates have also found it much easier to get a job than the individuals that haven’t pursued a degree. Thus, these two features still define college education as one of the factors influencing the decisions of employers and giving graduates better workplace opportunities.
Myth 3: Students don’t have to worry about loan and debt until they graduate.
This is probably one of the biggest myths about college debt. Most individuals believe that they will have to start worrying about the loan only after they graduate.
Thinking about your loan while still in college can help you come up with a better repayment strategy. Otherwise, you may end up being unemployed and having to repay a significant amount.
It’s a good idea to find a calculator and figure out how much you’re going to have to repay on a monthly basis. Using this information, you can determine what kind of career and what kind of salary you’re going to need in order to enjoy financial stability upon graduation.
Myth 4: College debt has reached unprecedented levels, signaling to a crisis.
College debt levels show that it exceeds both credit card debt and automobile loans. This kind of debt is the only one that saw an increase during the financial crisis of the past few years.
The fact that tuition is becoming more expensive is just a part of the explanation. According to economists, many families are no longer following the tradition of accumulating college savings for their children. Taking a student loan has become the norm.
These facts are in no way indicative of a crisis. People are simply starting to rely on a different set of financial tools in order to accomplish a goal. There’s even something positive about the trend – the fact that more and more young individuals are choosing to go to a college and invest in their education.
Myth 5: College debt is good debt.
If you think that college debt is a good kind of debt that can have a positive impact on your credit score, think again!
Many students that take money for their college education struggle to make the repayments. Being late with these installments or accumulating even more debt can have a seriously negative impact on credit history. This is why planning is needed before you take a student loan. You should also have at least one backup option for making the repayment in case of an emergency.