Student debt increases, financial planners give advice
COLUMBIA - As college students graduate across the state this week, some of them are probably doing so in debt.
Student loan debt in the United States has ballooned to nearly $1.5 trillion, according to the Federal Reserve Bank of New York. Student debt is the second highest debt category, just under home mortgages, but above credit card and car loan debt.
According to Christian Basi, director of the MU News Bureau, 48% of students graduate from the University of Missouri without debt. Those who do have debt, though, have about $22,000.
As of 2017, the national average is $7,000 more than that, nearly $29,000, according to the Institute for College Access and Success.
Nina Breihan will graduate from MU with a degree in education this week. She said she will graduate with more than that average.
"$30,000, probably more. Those are just my loans that I’m going to have to pay off," Breihan said. "My parents took out private loans in their name that they’re going to start helping me pay off. Yeah, it’s just going to be ridiculous."
Breihan used student loans to pay for tuition, books, rent, groceries and extracurricular activities during her four years at MU.
"My parents can help as much as they can but they literally cannot afford to put me through college," she said.
She said she plans to work as a teacher, but will struggle to repay her loans.
"I’m going to be a working professional, with a four-year degree and still living like I am now, paycheck to paycheck," Breihan said.
Breihan's chosen career path might be able to help her qualify for a teacher loan forgiveness program.
Jake Cowan works as an investment advisor for LaBrunerie Financial in Columbia. He said he often works with teachers who are trying to repay student loans.
"The challenge is, unfortunately, teachers just don’t get paid enough, so they really are struggling to make ends meet while repaying their debt," Cowan said.
Cowan said there are two main loan forgiveness plans. One is for teachers.
"If you’re teaching a specialized program like math or science, you might be able to get the majority of your loans forgiven. If you’re in a different area of teaching, you may only be eligible for $5,000 or so forgiven," he said.
The other main program is a federal loan forgiveness program, according to Cowan. In order to qualify for it, a person would have to make 120 consecutive payments. That's 10 years of no missed payments.
For either program, a person would have to be on the income-based repayment program. Cowan said this is the program he suggests for new grads.
"Basically, your loan provider will look at what your current income is now and they will stagger your repayments based off of your income. So in year one you might pay $100 a month and that’ll gradually go up over the length of your loan," he said.
Breihan said she'll be paying off loans for the "rest of her life," but Cowan said loans have a time limit. If someone is struggling to make payments on time, though, Cowan said lenders can be flexible.
"A lot of times your loan provider will work with you. If you’re having trouble making payments, they’ll allow you to defer those payments for maybe 6 months or farther," he said.
Cowan said there are nearly 45 million people with student debt, and said they don't have a choice other than to repay it.
"They’re going to have to pay it back or they’re going to be under water very soon and very quick," he said.
He said he advises parents to "plan early and save often" for their children's academic future.
For students who have to put themselves through school, Cowan said it might be better to look at alternatives to four-year universities, like trade schools.
Breihan said she feels lucky. Even though her parents could not afford to put her through school, they could help her get loans.
"Yeah, I got a great education and I did learn a lot about how to be an adult and how to live in the real world, but it’s just insane at how expensive it is," Breihan said.
For more information on student loan forgiveness programs and how to apply, click here.