The student loan debt bubble in America is spiraling out of control, and it is financially crippling an entire generation of young Americans.  At this point, the grand total of student loan debt in the United States has reached a staggering 1.2 trillion dollars, and an all-time record high 40 million Americans are currently paying off student loan debts.  Just when our young people should be planning on buying homes and starting families, they find themselves financially paralyzed by oppressive levels of debt.  What makes all of this even worse is that only some of our college graduates are able to get the “good jobs” that we promised them.  So with limited job prospects and suffocating levels of debt, this generation of young Americans is increasingly putting off major life commitments such as buying a home and getting married.  As a society, we really need to rethink how we are “educating” our young people, because what we are doing now is clearly not working.  Here are some facts:

• According to the Wall Street Journal, the class of 2014 is “the most indebted ever.” The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, nearly double the amount borrowers had to pay back 20 years ago.
•  Approximately 15 percent of graduate and professional school students leave school with student loan debt balances in the six figures.
•  At this point, student loan debt has hit a grand total of 2 trillion dollars in the United States.  That number has grown by about 84 percent just since 2008.
•  The median net worth of young households that have student loan debt is 20 percent lower than the median net worth of young households that do not have any student loan debt and that are led by someone with only a high school education.
•  Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined. The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.
•  According to CNN, 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year.
•  Even after accounting for inflation, the cost of college tuition increased by 275 percent between 1970 and 2013.

How can I manage my student debt and not hurt my credit score?

The obvious answer is to minimize your student loan debt before even beginning school. But if you are already a college student, there are other ways to ensure that your credit score will not be hurt by student loan debt. First, you can begin paying the interest on your loans before you even graduate. That may mean getting a part-time job. If you already have a job, ask your advisor or manager for extra hours. Finally, always make sure to work full-time (time permitting) during summer break. Once you have graduated, you can also take steps to protect your credit report. Often there is a grace period of 6 to 12 months after graduation that allows recent grads the opportunity to find steady, full-time work. However, if you find a job before the grace period is over, make a point to open a savings account for your student loans and save up as much money as possible toward your loan payments during that period. That way, you will have money for your first few payments.

In summary, unless a graduate’s household income increases each month, paying off student debt can become a hardship. The Home Income Program provides a financial plan to increase your household income and reduce student debt.

Complete the contact form to receive information on the Home Income Program.