Student

Debt

Let’s talk about the reality of loans: are they worth it?

Let’s discuss:

John, a 62-year-old father living in northwest Ohio, is one of the millions of parents that took on a Parent PLUS loan in hopes of giving his daughter a better life. Now unemployed, he says he'll likely be paying them off well into his 80s.

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Borrowers who took on Parent PLUS loans remain one of the student debt holders with the highest interest rates, but they've been largely left out of any student debt forgiveness plans under Biden's administration.

Parent Plus loans are a huge risk

Payments start IMMEDIATELY for them

Why do students have so much debt?

Student loan debt figures

Among the Class of 2022, 69% of college students took out student loans, and they graduated with an average debt of $29,900, including both private and federal debt. Meanwhile, 14% of their parents took out an average of $37,200 in federal parent PLUS loans.

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Americans owe over $1.71 trillion in student loan debt, spread out among about 44.7 million borrowers. That’s about $739 billion more than the total U.S. credit card debt.

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General student loan debt facts

The most recent data indicate there is:

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• $1.71 trillion in total U.S. student loan debt
• 44.7 million Americans with student loan debt
• Defaults were halted as part of the pandemic relief measures — prior to the pandemic, 11.1% of student loans were 90 days or more delinquent or are in default.
• Monthly student loan payments were halted as part of the pandemic relief measures — prior to the repayment moratorium, the average payment was $300.

Let’s look at some numbers:

Let’s look at some numbers:

More statistics

• 56% of seniors graduating from public and nonprofit colleges in 2022 had student loan debt.
• Average debt at graduation from public and nonprofit colleges was $28,800 in 2022, a $400 decrease from 2018.
• 66% of graduates from public colleges had loans as of May 2022 (average debt of $25,550)
• 75% of graduates from private, nonprofit colleges had loans as of May 2022 (average debt of $32,300)
• 88% of graduates from for-profit colleges had loans as of May 2022 (average debt of $39,950)
• Students borrowed an estimated $102 billion for the 2021-2022 academic year, and 14% of that were private and other non-federal loans.
• About 17% of the student debt held by the graduating class of 2022 was private.
• 48% of borrowers who attended for-profit colleges default within 12 years, compared to 12% of public college attendees, and 14% of nonprofit college attendees.

All student debt in the u.s., visualized

But is it worth it?

• In 2020, 65% of ALL jobs needed some sort of post-high school education (mostly due to technology)
• 4 year college, 2 year college, technical, vocational, military
• 35% needed at least a Bachelor degree
• By 2025, there will be 55 million more jobs than in 2015
• Of those, 36 million (65%) will need some post-high school education
• Some of these jobs may not have been created yet
• In 2010, these job did NOT exist
• App developer, Uber driver, Podcast producer, Drone manager
• By 2030, The Public Policy Institute of California reports California will be short 1.1 million skilled workers who possess a BA degree

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National Data

National Data

Over $3 BILLION unclaimed, free financial aid occurs each year

Do your research!

Saving on a Valuable Education (SAVE) Plan

Lower Payments Through Increased Income Exemption

The SAVE Plan decreases monthly payments by increasing the income exemption from 150% to 225% of the poverty line. This means SAVE can significantly decrease your monthly payment amount compared to other IDR plans

OPtions outside of Loans: Grants

Federal Aid

• Federal Pell Grant (up to 6 years)
• Up to $6,345 per year
• Federal Supplemental Educational Opportunity Grant (FSEOG)*
• $100-$4,000 per year
• Federal Work Studies
• Must work to earn award; up to $5,500 per year
• TEACH Grant*
• Up to $4,000 per year
• Iraq/Afghanistan Grant*
• Awards vary

***Must fill out FAFSA or Dream Act

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OPtions outside of Loans: Grants

California Aid

• Cal Grant
• $1,094-$12,570 per year (4 years max)
• Chafee Grant (Foster Youth)
• $5,000 per year
• Middle Class Scholarship (MCS)
• $2,189-$4,877 per year
• California National Guard Education Assistance Award Program
• Awards vary

***Must fill out FAFSA or Dream Act

OPtions outside of Loans: scholarships

• College/University awards
• UC’s Blue and Gold Program
• ALL Tuition and Fees covered for 4 years (upwards of $60,000+ total)
• University/Chancellor/President
• Awards vary by school
• Athletic or Department Specific
• Awards vary by school
• Private
• Dell, Gates Millennium, Questbridge, etc.
• Awards vary (***Must fill out applications***)

***Some required you fill out FAFSA or Dream Act

Facts about UC Financial Aid Packages

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57% of UC students pay NO tuition- $0!!!

42% of UC students graduate DEBT FREE

The average UC student receives $17,000 free money, per year

$2.4 billion of free financial aid in 2019-2020!!!

Facts about CSU Financial Aid Packages

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80% receive financial aid

75% of CSU undergraduate financial aid recipients have their tuition and fees FULLY covered

51% of CSU students who earn bachelor’s degrees graduate with zero loan debt

Important reminder:

Statistically speaking, jobs that make the most money require a post-secondary education. In some cases, you have to spend money on your education in order to MAKE MONEY later on in life.

Your education is an investment in your future. Sometimes debt is necessary in order for you to make the most money.

LOANS

Car Loan for $30,000

Education Loan for $30,000

0% Interest

5 years, 60 payments of $500 per month

Value in 5 years- $15,000

Value in 10 years- $5,000

Value in 40 years- $5

6% Interest ($10,000 in interest)

10 years, 120 payments of $333 per month

Value over 5 years- $272,000 more income

Value in 10 years- $545,000 more income

Value in 40 years- $2,181,613 more in income

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1 year’s increase in income pays off the loan and interest with money left over!!!!

HOw are you feeling about student debt?

Remember, debt is something necessary in life, but managing your debt and making smart decisions about how much you are borrowing and at what rate are paramount to you paying off your loans on time without defaulting.

Ask questions and research terms and conditions

Be smart about your borrowing: Borrow as an investment into yourself

Never take on more than you can pay off, and learn how to budget your money