Many worry about post-graduate life with loans


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Student loan debt hit a record high of $ 1.48 trillion in June 2019 and is expected to rise, according to the Federal Reserve Bank of New York.

About 81% of that debt is made up of federal direct loans, as reported by Federal Student Aid (FSA), an office of the US Department of Education.

There are two main components of student loan debt: federal loans and private loans. Federal loans are granted by the government; while private loans are granted by banks and other private financial institutions. Private loans tend to have variable and high interest rates.

Federal loans have low fixed interest rates and are generally based on financial need or credit scores. Currently, the undergraduate interest rate for subsidized and unsubsidized direct loans is set at 5.05%. That rate rose 13.48% in just one year, according to the FSA.

“The latest student loan debt statistics for 2019 show just how severe the student loan debt crisis has become for borrowers of all demographics and age groups,” Zack Friedman wrote, entrepreneur and best-selling author of “The Lemonade Life,” in an article published by Forbes. .

Friedman also said that student loan debt is now “the second highest category of consumer debt” in the United States.

Some students, however, feel that there is a general lack of knowledge about the impact student loans can have on life after graduation.

“Fortunately, I had the advice of my mother, who calculated the amount of my loans for each of the schools in which I was accepted. She made the facts about student loans unbelievably clear – facts I had turned a blind eye to before, thinking finances and scholarships were going to work, ”said Nichola Merkel, senior at the University of Maryland, College Park. .

“Without her, I probably would have ended up in an out-of-state school, ignoring the debt that lay in store for me when I graduated.”

Merkel, along with other UMD students, agreed that without the guidance of parents or older siblings, they too would turn a blind eye to the debt incurred by taking out a loan.

“I was fortunate to have an older brother who went through the entire student loan process so my family was able to help me with the types of loans that would have the least interest and be the easiest to take out. and to repay, “Kathryn Ozeroff, a junior at UMD, said.

With or without family support, the balance of federal student debt remains high compared to previous years.

The balance of all federal loans in the United States and Puerto Rico stood at $ 1.36 trillion as of June 2019, shown in the Federal Student Loan Portfolio released by the FSA.

California, Texas, Florida, New York, Georgia, Pennsylvania, Ohio, Illinois, Michigan, North Carolina, Virginia, New Jersey, Maryland, Massachusetts and Tennessee are the top 15 states with the highest federal loan balances. These states alone represent 66% of the total balance.

Colleges in each state offer different federal loan programs for their students.

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In Maryland, Johns Hopkins University has the highest tuition and fees, but the average federal loan amount per undergraduate student is the lowest from 2017 to 2018, at $ 5,035. Washington College is next with an average amount of $ 6,206, according to the National Center for Education Statistics (NCES).

“I did not do any research before applying for a loan. I had a lot of support from my parents and they helped me through the process, ”said Molly Briguglio, senior at UMD.

“Even now, I’m still unaware of what the entire federal lending process involves. When applying for these loans, I came in with a very indifferent attitude as it is so common these days to have loans, and almost every student I speak to has some form of federal loan.

NCES reported that UMD gave an average amount of $ 6,395 to each of its undergraduates from 2017 to 2018.

Strayer University has one of the lowest tuition rates in Maryland, but the highest average federal loan amount is $ 11,238.

Briguglio and Ozeroff, along with approximately 787,700 borrowers in Maryland, have at least some form of federal student loan debt.

“I’m trying to look on the bright side and figure out, if I have to take these loans to learn then I should be more motivated and successful and ideally have a job that allows me to pay off my loans quickly,” said Ozeroff. “When I think of it that way, it acts more like a motivation than the weight.”

Almost half of these borrowers have at most $ 20,000 in debt and about 21% have between $ 20,000 and $ 40,000 in federal student loans.

About 10% of borrowers have at least $ 100,000 in debt.

Despite their debts, UMD students say they are hoping to secure a well-paying entry-level position so they can start making monthly loan payments.

“I am constantly thinking about finding a job so that I can start saving money for the end of my studies,” said Briguglio.

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