Thirty-Eight Percent of Iowans Owe More Than $20,000 in Student Loans
DES MOINES, IA (June 19, 2013) According to a survey of Iowa credit union members conducted by the Iowa Credit Union League (ICUL), almost a quarter of respondents are carrying student loan debt, and 24 percent said they are not on track to pay it back. Of the 936 respondents, nearly 25 percent said they owe between $10,000 and $20,000, with 38 percent owing more than $20,000.
According to the National Center for Education Statistics, tuition costs have risen by more than 26 percent since 2005. As a result, student loan debt is rising too, currently estimated at $986 billion nationally. A recent study by TransUnion reports more than half of all student loans are now delinquent or in deferral.
“Falling behind on your student loan payments can be very costly,” said Emily Caropreso, Director of Communications & Marketing, ICUL. “It also damages your credit, which can have a negative effect on all aspects of your financial life.”
According to the Associated Press, 53.6 percent of Americans under the age of 25 are either unemployed or underemployed. More than 13 percent of college graduates default on their student loans within three years of leaving school, according to the U.S. Department of Education.
Caropreso encourages people who are deciding where to go to college to consider how much to borrow very carefully. “It’s easy to get caught up in finding the perfect college experience,” said Caropreso. “However, students should investigate the long-term ramifications. In the long run, it may be wiser to choose a less expensive option or work part-time in order to borrow less.”
New graduates with student loan debt can be overwhelmed with this burden. ICUL recommends these tips to help them repay their loans in a timely manner.
- Review all loans. List loans from those with the highest interest rates to the lowest. If it’s possible to pay more than the minimum, any extra money should go toward the higher interest rate loan.
- Go for graduated payments. A graduated student loan repayment plan means payments start low and go up every two years. This strategy works well if income will likely increase.
- Consider consolidation. Combining several federal loans into one may lower interest costs, particularly if any loans have a variable rate.
- Delay with a deferment. Unemployment, economic hardship or being in school or an internship program may qualify a loan for deferment. Check whether interest will still be charged while loan payments are deferred.
- Taking a job that helps pay back student loans. Several occupations may help get some student loan debt forgiven, including teaching or practicing dentistry or medicine in underserved areas, law students who work in public interest or non-profit positions, some federal government jobs and volunteer stints in AmeriCorps, Peace Corps and Volunteers in Service to America.
About the Iowa Credit Union League
The Iowa Credit Union League is the trade association that represents the interests of Iowa credit unions and their more than one million members. Credit unions are not-for-profit, financial cooperatives owned and operated by their members. Iowans use their credit union membership to receive higher interest rates on savings and lower interest rates on loans. For more information on ICUL and Iowa credit unions, visit www.IowaCreditUnions.com. Follow ICUL on Twitter at www.twitter.com/icul or on Facebook at www.facebook.com/iowacreditunions. To learn more about credit unions, visit www.ASmarterChoice.org.