Interest on student loans could double next month | Education
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ATLANTA -- If you took a dollar bill and added about a million tons of them, you'd have a trillion dollars.
That's how much debt our college students are carrying, and that's before the interest rates double. If congress doesn't act before July, the interest rates will jump from 3.4 to 6.8 percent.
You don't need an MBA to know that student loans are big business. Only home mortgages now exceed them in the amount of debt they create.
"The amount of student loan debt right now is roughly a trillion dollars," said Scott Scredon of the credit counseling service Credibility. "It surpassed the amount of credit card debt about a year or so ago."
More than 7-million students across the country are saddled with government-guaranteed Stafford loans, according to information from Obama administration. And nearly a quarter-million of those borrowers are right here in Georgia, where the total debt is nearing a billion dollars.
"Student loan debt is very hard to discharge in bankruptcy," said Scredon. "There are very few options in terms of how they reduce the amount that they pay, so it's very difficult. And the more debt that students take out of the college the tougher it's going to be as they go on through life."
If the interest rates double to almost 7-percent, students in our state will be carrying close to a thousand dollars more per loan. And many take out multiple loans.
"The whole student loan thing... I'm pretty much done with it," said GSU student Ian Lovelace. "It's too much of a hassle."
Lovelace said he took out one loan and immediately paid it off. He says the better investment is to keep hitting the books to maintain your HOPE scholarship, because it's better to graduate with honors than debt.
"When you're doing a subsidized loan you only get so much," explained Lovelace. "When you do an unsubsidized loan you get a little bit more money, but the interest is constantly accumulating from the first day you take it, until you start paying for it. And then it's going to keep on accumulating."
Scott Scredon of Credability advises taking these steps to keep from incurring too much student debt:
- Avoid taking a loan if at all possible.
- Try to work extra hours to generate more money for school.
- Start saving in high school.
- Consider community college for the first two years.
- Borrow as little as possible; and read the fine print.