AICCCA Advises Research Student Loans Carefully and Borrow Only What is Necessary

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Students Should Consider Six Key Issues Before Borrowing

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[Students who] did not research the projected salary for their career path are finding they do not earn enough income to pay back their student loans... - David Jones, President, Association of Independent Consumer Credit Counseling Agencies

The Consumer Financial Protection Bureau estimates that students and graduates are currently carrying $1 trillion in total student loan debt. The average debt is $24,301 and 60 percent of students borrow annually to help cover costs. Of those with federal loans, 12.8 percent are in default. Counselors with Association of Independent Consumer Credit Counseling Agencies advise students beginning college to research all their payment options and their earning potential for the career they are pursuing in school before taking on student loans.

“Starting a career with a large student debt load is crippling many graduates,” said David Jones, President, Association of Independent Consumer Credit Counseling Agencies. “Those that did not research the projected salary for their career path are finding they do not earn enough income to pay back their student loans along with all their other living expenses.”

Before you take out student loans, be sure you consider the following:

  • Student loans are not dischargeable in bankruptcy except in very limited cases. To have student loans dismissed in a bankruptcy, you must prove undue hardship, which is not met in most cases.
  • Research all scholarship, grant and work-study opportunities. The work you put into finding scholarships is less money you will have to repay in student loans. Be sure you fill out the FAFSA. Even if you don’t believe you will qualify for grants, you may be wrong. Explore work-study options at your school to help decrease costs.
  • Learn what earning potential you can expect from your degree and career path. Experts advise borrowing only as much as your potential salary for your first year on the job. For example, if you can expect to earn $30,000, you should have no more than $30,000 in loans.
  • Consider a community college for your first two years of school. The savings in tuition and fees can be in the tens of thousands of dollars if you transfer to a four year university after your first two years of school.
  • Apply for federal loans only whenever possible and borrow only what you need. The repayment options are much better for federal loans compared to private loans and you have much more time before your loan is in default should you have trouble making payments. Try to limit your borrowing to school expenses only and not living expenses as well.
  • Federal loans have many different payback options including Income Based Repayment. When you begin to repay your loans, be sure you explore all repayment options available to you. In addition, always communicate with your lender as soon as possible if you believe you will be unable to make a payment.

AICCCA: Founded in 1993, Association of Independent Consumer Credit Counseling Agencies is a national membership organization established to promote quality and professional delivery of credit counseling services. AICCCA and its members are focused on financial education, efficient processes and advanced technology to best serve clients and creditors. AICCCA members are independent nonprofit agencies that advocate for debtors, annually counsel millions of consumers nationwide and provide debt management services to consumers with excessive unsecured debt. To contact an AICCCA member agency call (866) 703-TRUSTAICCCA (866-703-8787) or visit http://www.aiccca.org.

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Shari Bedker

Ken Scott
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