Take a guess at how much the average debt a college senior graduated with in 2006. Perhaps a few thousand? Try $19,000. That's the average!
Almost 8% of graduating seniors in 2004 had $40,000 or more in student loans. That percentage has increased significantly since 1993, when only 1.3% of college seniors carried a debt that large.
According to an article by USA Today, part of the problem is the steep rise in tuition costs. "College costs have risen by more than 50% since 1990, but federal aid hasn't kept up. Congress hasn't increased the Pell Grant, the most common form of direct aid for low-income students, since 2003."
Because federal aid is so low, more and more college students are taking out private loans, which have higher interest rates. With the way things are going, college graduates will be lucky to have their loans paid off before their kids start college!
The Census Bureau estimates that college graduates earn $1 million more over their lifetime than their peers who only hold a high school diploma. This drives many college-bound students to take on large student loans to receive their education.
As a parent, you're probably thinking that there has to be another way. Well there is! It's not easy, but with focused dedication, hard work, and careful budgeting, it's possible to save enough so your child can go through college debt free!
Remember to never save for college with insurance, savings bonds, or pre-paid tuition. These are all rip-offs!
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