As a result of the increasing debt levels, college students are having to delay many life events.
The level of borrowing grew dramatically last year. The U.S. Education Department reports that student-loan disbursements—the amount borrowed by students and received by schools in the 2008/09 school year jumped by about 25%.
These higher borrowing levels are likely due to the poor economic climate combined with the increasing costs of college. Estimates vary, however approximately two-thirds of students borrow to cover the costs of college. This percentage is significants higher than it was ten years ago. New grads are often cash strapped due to high student loan repayment requirements. As a result, they often have to delay personal milestones such as buying a house, starting a family, etc. This trend is likely to get worse for current college students.
Given the high costs of college and the common need to borrow, it is critically important for parents to make sure their student is using their student loans only for true educational costs. Unfortunately, too many students use loan proceeds to pay for lifestyle related costs and non-essentials.
We will be adding some posts with tips for lowering college costs and reducing student loan levels.