Student Loan Literacy
Just about everyone is, has been or knows a student and many Americans are either thinking about saving for college or paying off student loans. Student debt doesn’t have to derail a graduate’s financial future, even though there’s no shortage of discouraging news:
“The number of consumers aged 20-29 with student debt increased over 61% between 2005 and 2015, while student loan balances increased 54% between 2010 and the first quarter of 2015 â€“ from $589 billion to $1.1 trillion.”
Here’s some important information for parents, students and graduates:
Section 529 college savings plans offer tax advantages. Even though they were created by federal law, design and implementation is left up to each state. Here are some highlights of these savings vehicles:
- Less restrictive than prepaid tuition plans
- Federal and state tax advantages
- You can find the features that meet your needs and join any state’s 529 college savings plan
- Usable at any college accredited by the US Department of Education in the US or abroad
Your wealth and tax planning professionals can help you choose a great plan to help offset the high and rising costs of post-secondary education. We can refer you to individuals with the right knowledge and experience to help with this.
No one wants to begin their post-college life mired in debt; however, a study by credit reporting agency TransUnion entitled, “Are Student Loans Really Hurting Consumers? The Impact of Student Debt on Consumer Lending” contradicts much of what we hear in the media. TransUnion looked at the performance of consumers ages 18-29 on mortgages, credit cards, and auto loans in the 24 months following the start of their student loan repayment.What they found may surprise you:
- Consumers aged 18-29 with a student loan in repayment gain access to new loans as well â€“ or better
- than their counterparts without student loans
- Student loan consumers in their 20s surpassed their non-borrowing counterparts in obtaining mortgages, auto loans and credit cards
- Consumers with student debt are usually able to catch up to the rest of the public in their ability to access credit within three to six years of finishing school and that has not changed even though student loan debt has increased
College is expensive, but paying for it â€“ even if it’s financed â€“ isn’t necessarily debilitating.