DES MOINES, Iowa (6/20/13)--Nearly a quarter of Iowa credit union members surveyed by the Iowa Credit Union League are carrying student loan debt, with nearly 38% saying they owe more than $20,000 on the loans and 24% saying they are not on track to pay back their debt.
About 25% of those carrying student loan debt said they owe between $10,000 and $20,000, said the league.
Recently the Credit Union National Association's first annual High School Student Borrowing Survey found that nearly half of seniors in U.S. high schools don't know how much money they will need for college and more didn't understand basic student loan terms. The lack of awareness and lack of financial knowledge make it more likely that students will become overextended with heavy student debt. For more information on CUNA's survey findings, use the link.
Emily Caropreso, director of communications and marketing at the league, cautioned people who are deciding where to go to college to consider carefully how much to borrow. "It's easy to get caught up in finding the perfect college experience," she said. "However, students should investigate the long-term ramifications. In the long run, it may be wiser to choose a less expensive option or work part-time in order to borrow less."
The Iowa league had other tips, which credit unions can share with members considering college:
Review all loans. List loans from those with the highest interest rates to the lowest. If possible, pay more than the minimum. Any extra money should go toward the higher-interest-rate loan.
Go for graduated payments. A graduated student loan repayment plan means payments start low and go up every two years. The strategy helps if income increases with experience.
Consider consolidation. Combining several federal loans into one may lower interest costs, especially if any have variable rates.
Delay with a deferment. Unemployment, economic hardship or being in school or an internship program may qualify a loan for deferment. Check whether interest will be charged while payments are deferred.
Take a job that helps pay back student loans. Several occupations may help get a student loan debt forgiven. These include those who teach or practice dentistry or medicine in underserved areas, law students working in public interest or nonprofit positions, some federal government jobs and volunteer stints in AmeriCorps, Peace Corps and Volunteers in Service to America.