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The Truth About Student Loans

StressThere’s nothing like getting a top education in college. Unfortunately, the price of college tuition has been rising steadily over the last decade. In 2019, the U.S government student debt alone was responsible for 1.6 Trillion dollars of the deficit. That’s a lot of zeros. That is a 116 percent increase over the same 10 year period. It is amazing to think that the average person with U.S. household debt owes just over $47,000.

The statistics are scary, and as you digest that number in your stomach I wish I could tell you that number is going down, but it is not. As the cost for college continues to rise, so does student debt.

Students and parents are looking for ways to reduce this debt. What prompted me to write this article was the information or misinformation I searched and found on the internet. I found numerous companies offering their services to you to help you with your student loan debt. This is why it is so important that you have a financial plan. You want to be able to live comfortably, even if you do have a significant amount of student loans.

Beware Of Scams

Private companies may contact you with offers to help you with your student loans for a fee. Remember you never have to pay for help with your student loans. The U.S. Department of Education and their loan services will help you for FREE!

These privatized companies that you think are trying to help are a business. Their concern is making a profit. They will discuss the consolidation of Federal and Private or State bank loans. Federal Loans can only be consolidated with other Federal Loans, not state or private bank loans. Oranges to oranges and apples to apples is a scam designed to rip you off and make you lose important rights you have on your federal loans.

In actuality, these companies get a commission for refinancing them. It may sound good to you on the phone, but it may cost you a lot more money down the road. BEFORE you do anything, please go onto the Federal Student Aid website, an Office of the U.S. Department of Education, and read the Pros and Cons to consolidation before you take any action on your federal loans. There is a lot to know. You can sign away important rights and not even be aware of it. Reading this information can save you a lot of money.

This is part 1 of 3. Next month I will discuss your choices of repayment.

Brian Mitteldorf D.C. Financial Advisor,
Steven Kanner CFP, MBA ChFp
Wealth Preservation Planning, LLC

 

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