Rolling back student loan debt clock

(FOX Providence) - Everyone knows that student loan debt is on the rise.  In fact, last year, the amount of outstanding student loan debt overtook consumer credit card debt levels for the first time. 

A number of organizations have developed tools to help families understand the dangers of student loan debt. 

Peter Kerwin of the Rhode Island Higher Education Assistance Authority joined The Rhode Show talk about some of the things families can do to make sure their loved ones don’t take on too much debt.

What can people do to get a handle on student loan debt?

Last month, Michelle Singletary, the personal finance columnist for the Washington Post had a column entitled “Student debt hint: Avoid it” and I think that says it all.  We’re at a point where overall consumer debt has dropped about $60 billion according to the Federal Reserve Bank of New York.  Consumers are cutting back on mortgage and credit card debt, which is a good thing.  The problem is they are loading up on student loan debt.

The Fed found credit card debt levels in the 2nd quarter of this year was $694.  But student loan debt was a whopping $845 billion.  And you can get a sense of where that number is now by checking out an online Student Loan Debt Clock.  It was created by Mark Kantrowitz, who publishes FinAid ( www.finaid.org ), a great website with a lot of college financial aid information.  The clock ( www.finaid.org/loans/studentloandebtclock.html ) is an estimate of current outstanding student loan debt—both private and federal loans.  

And it’s staggering to look at it.  You sit there and get mesmerized, watching the total go up by about $3,000.00 every second.   Last time I looked yesterday, it was over $965 billion.  Last year, two-thirds of college seniors graduated with loans and they owed an average of just over $25,000 according to the Project on Student Debt.  That’s a five percent hike from the previous year.  And the scary part is, those students are graduating into an economy which seems to be facing chronic unemployment.

But can students really avoid all loan debt?

We talked earlier this year about a book called “Debt Free U”, written by Zac Bissonnette, who graduated from UMass last year and now works as an online financial blogger for Time Magazine.  His whole message was if you’re taking on too much debt to go to college, you’re going to the wrong college.  Everyone wants to go to their dream school, but it can turn into a nightmare if it means being saddled with tens of thousands in student loan debt.

Colleges now have to put net price calculators on their websites.  Parents and students need to get familiar with those and really comparison shop when it comes to selecting schools.  And you have to set realistic guidelines.  No parent wants to tell their child they can’t go to their dream school, but if you don’t get the financial aid you were hoping for, you have to be willing to take a hard look at your options and do what makes sense for your long-term financial stability.