Student loans surpass credit card debt
With hikes in tuition, parents and students alike search for different ways to pay for their education. Courtesy of stock.xchang
Young adults owe more on student loans, roughly $870 billion, than Americans owe on credit card debt, which is about $693 billion. reported the Federal Reserve Bank of New York.
With rising tuition costs, adults have become concerned with the rising generation.
President Barack Obama has recently asked colleges to find a way to stop tuition hikes. Earlier this month, a Student Loan Forgiveness Act was introduced to the House. The act introduced a 10-10 standard where if a person pays 10 percent of their discretionary income for 10 years, then their remaining student loan debt will be forgiven. However, this is capped at $45,520. Currently, 22 percent of a student’s tuition is paid from loans.
Students pay 26 percent of their tuition either from borrowing money or through savings, according to a Sallie Mae 2011 survey. Students’ parents are the most relied upon source for funding college. Parents pay 37 percent of their child’s college education. However, this is a decrease from the 47 percent reported in 2010.
Parents have become increasingly aware of rising tuition prices, according to Sallie Mae. Together, parents and students have been finding ways to pay less for college. Over the past four years, students have started their higher education by first going to less expensive two-year public schools and then transferring to four-year public schools. The survey also discovered that middle-income families who received grants rose 19 percent in the past year.
It would appear that parents want to make sure that their children graduate college with little to no debt. However, some parents don’t believe that financial independence for their children starts with graduating from college. Three out of ten parents claim that children shouldn’t have to depend on themselves for money until age 25 or later, according to the Pew Research Center.