Student loan default rates are at a staggering seven percent compared with the 2007 default rate of 6.7 percent, according to a recent report released by the U.S. Secretary of Education.
The default rates for student borrowers are considerably higher for those who attended public schools than those who attended private ones. Due to a lackluster economic turnaround and high unemployment, it's no surprise that student borrowers are struggling to make loan payments.
Financing tips
Financial experts at Money Management International (MMI) are offering the following tips for managing the cost of a higher education:
• Look for scholarships. Scholarships are the best way to pay for school; it's free money that doesn't require repayment. There are several online sources to help students find great scholarships, such as FastWeb, FinAid, and the Financial Aid Resource Center.
• Apply for federal grants. Obtaining a grant is another way to pay for college with free money. To secure federal grants fill out the Free Application for Federal Student Aid (FAFSA). Also, check out the Academic Competitiveness Grant or the National Science and Mathematics Access to Retain Talent or SMART grant.
Easier said than done, according to some of the folks who have written ConsumerAffairs.com.
"They (U.S. Department of Education) hold my student loan and refuse to come to an agreement about a monthly payment," writes Catherine of Rhinelander, WI. "They stated they want a debit or credit card number or my checking account number, which I will not do. They just refuse to work with me with me not being willing to give my checking account number. It's impossible to get this debt taken care of."
Mary of Jamestown, KY, found herself in a Catch-22 situation. "Young people that can't afford to go to college have left home and are working can't apply for a Pell Grant based on their own income but must show their parents tax returns as their own income until they are 25 years old," she tells ConsumerAffairs.com. "Now isn't that clever it looks like cheap way to cheat this country out of giving a fair chance for an education. Who benefits from taxes anyway?"
• Choose the right school. Sometimes affording tuition is as easy as choosing a school that fits your family's budget. It is cheaper to go to school in-state vs. out-of-state. Also consider a public funded school over a private school. Students can find a college cost comparison tool and apply for financial aid.
• Finally, consider an alternative program. "There are other programs that are just as rewarding, but cost significantly less than a university program," said Cate Williams, vice president of financial literacy for MMI. "For example, instead of a four year nursing degree that could cost up to $40,000, consider a certification program in respiratory therapy at a community college for only $27,300."
