How Banks Could Make Student Loan Repayment Easier
Student loan debt can put a young person’s finances on rocky ground from the start. Many statistics show that each $1,000 in student loans makes it less likely that the person will be able to repay the debt. And for Arizona residents, it could mean filing for bankruptcy later in life.
If you have a son or daughter that is evaluating where to go to school and how much to take out in student loans, read on. The statistics on student loan default and bankruptcy are concerning, but true. You’ll want to know all the facts and figures before you sign or co-sign for that loan.
In fact, it’s best to know more about student loans before you or your child starts visiting and applying to colleges and universities. Informed with student loan knowledge, you can decide whether or not to visit a color or university based on tuition costs, scholarships and loan information.
Student loan facts and figures related to bankruptcy in Arizona
National Bureau of Economic Research released a working paper all about the likelihood of students being able to pay off their loan debt. The major factors in their ability to repay the debt are the amount of debt they incur, their family backgrounds and the careers that they go into.
For every $10,000 that a student makes post-graduation, they are 1.2 percent more likely to be able to pay back their student loans. As you evaluate whether or not to take out a student loan, evaluate you or your child’s earning potential after graduation. Do some salary research on the career you are hoping to get and know your earning potential.
The type of school you attend also factors into your ability to repay your loans. Students who earn a four-year degree are more likely to be able to pay off their debt, while students who earn a two-year degree are more likely to default. The type of institution you attend also factors in. When a student attends a public university versus a private one, they are more likely to default when attending a public school.
Even though a student who attends a two-year program or a public school might have less debt overall, they are still more likely to default on that loan.
The amount that the student borrows is also a large factor in whether or not they will default on the loan. Each $1,000 that the student borrows makes them .4% less likely to pay back the loan because they need to make an additional $10,000 to pay back that $1,000.
What to look for in a student loan to avoid bankruptcy
To start, you should apply for FAFSA. Federal loans generally have better terms than private student loans. The more you receive in federal loans the better for your long-term financial success.
Next, only take out a student loan for the amount you truly need. If you can do a work-study program where your on-campus work subsidizes your tuition, enroll in the program. If you can work a part-time job while attending college, work the job to offset your costs.
Because student loans have interest rates just like mortgage payments, it’s more difficult to repay that money later than it is to get a job and pay the tuition out of pocket as much as possible from the start. Although working while enrolled in school might not be an option for everyone, it can help offset the expenses for some students.
Regardless of how careful you are when taking out a student loan, hard times or misfortunes still might befall you. If you’re evaluating whether or not to file for bankruptcy in Arizona, contact us. We’ll help you go through your circumstances to know if bankruptcy is the right choice for you or not.