The debt clock starts ticking this month for college graduates, who are leaving campus with a bachelor’s degree in one hand—and a hefty loan averaging $37,712 in the other.
Student loan debt now puts a serious dent in the economy, outpacing auto and credit card debt, according to the Federal Reserve Bank of New York. The cost per second is $2,858,calculates the debt repayment company debt.org.
With seven out of 10 college graduates taking out loans to pay for school, this is a critically important story for business reporters to look into by asking one or more of the following questions:
Why is student loan debt rising so quickly?
Student loan debt grew by 2.1% and reached $1.41 trillion in the first quarter of 2018, making it the second largest driver contributing to total household debt. And the future doesn’t look any brighter, with the recent decision by the Fed to increase the rate of borrowing money.
Interest rates on federal undergraduate loans for 2018-2019 will notch up from 4.45% to 5.05%—a 13% increase. StudentLoanHero.com, a website created in 2012 by Andy Joshuweit, who graduated with $74,000 in loans, pegs the average debt currently at $39,400, a 6% increase from 2017
What are the best ways to manage student loan debt?
A handful of companies are beginning to offer tuition assistance in exchange for, say, a five-year commitment to a job. Contact chief marketing officer Meera Oliva at Gradifi, a Boston company that designs student loan repayment programs for companies. Be sure to address both recent and future graduates in developing this angle.
To reach new and recent graduates, find out if there’s a company in your zip code with one of these plans. Also look into 529 college savings plans, which allow for tax-free withdrawals to pay future college costs. SavingforCollege.com offers good resources, including interactive maps detailing available plans by state. Another good source: the College Savings Plans Network, an affiliate of the National Association of State Treasurers.
How are your readers paying off their student loans?
Engage your readers in a conversation, in print and through your news organization’s social media outlets, about how they are paying off (or not) their student loans. Focus on helping them answer their questions on how to pay off debt. Develop a “Readers’ Forum” for participants to share information on successful strategies, and include a consumer finance expert or Certified Financial Planner with a “PFS” (Personal Finance Specialist) in your discussion. The Institute for College Access & Success (TICAS), an independent nonprofit, offers new graduates 10 tips on paying off loans, which may be a good starting point to kick off a discussion. TICAS also offers an interactive map on student debt statistics nationwide.