This year\u2019s high school graduates could take on nearly $40,000 in student loan debt in pursuit of a bachelor\u2019s degree, according to a NerdWallet analysis. And with this debt stretching across federal, parent and private loan sources, the final cost of their education will grow far beyond tuition and fees.<\/p>\n\n\n\n
Today, it\u2019s nearly impossible to work your way through college<\/a>. Because of this, taking on debt for higher education in hopes of greater earning power is generally accepted as a worthwhile cost. But the data shows the amount of debt is increasing and spreading across multiple sources.<\/p>\n\n\n\n 2022 college-bound grads could amass thousands in debt<\/strong><\/p>\n\n\n\n A 2022 high school graduate could borrow as much as $39,500 in student loans by the time they complete their bachelor\u2019s degree, according to NerdWallet\u2019s projections. With 1.3 million high school graduates projected to enter a four-year college and 42% of college graduates taking on debt, this is a significant burden for young professionals entering the workforce.<\/p>\n\n\n\n The average cost of attending a four-year public university, including room and board, reached $22,700 this most recent school year, according to The College Board. Growth in these costs has (fortunately) slowed considerably over the past decade \u2014 climbing 12% from the fall semesters of 2012 to 2021 after rising 22% from the fall semesters of 2002 to 2011. But the burden of student loan debt is still significant.<\/p>\n\n\n\n During the repayment period, students who take out loans can expect to pay thousands of dollars in interest on top of the amount they borrow. Federal loans to dependent students pursuing an undergraduate degree are capped at $31,000 total. Students who max out this cap are looking at roughly $350 monthly payments and about $7,000 in interest during a standard 10-year repayment period on their federal loans alone.<\/p>\n\n\n\n And barring \u201cfree money,\u201d such as scholarships or need-based grants, they\u2019ll have to turn elsewhere to cover any remaining costs. Parents who haven\u2019t been fortunate enough to amass a college fund are increasingly shouldering those costs as debt.<\/p>\n\n\n\n Parents increasingly picking up debt tab<\/strong><\/p>\n\n\n\n The share of parents taking out federal parent PLUS loans to help cover the costs of their children\u2019s college education has grown significantly. So has how much they\u2019re borrowing. From 1996 to 2016, the most recent year for which this data is available, the share of dependent students relying on these federal parent loans at public four-year institutions grew from about 7% to 12%, according to the National Center for Education Statistics.<\/p>\n\n\n\n The amount they\u2019re borrowing has also increased, more than doubling from $5,000 to $11,200 during that 20-year period.<\/p>\n\n\n\n Even parents in the lowest income brackets \u2014 where students are most likely to benefit from need-based aid \u2014 are taking on debt at an increasing rate. The share of dependent students in the lowest income quintile relying on parent PLUS loans rose from 3% in 1996 to 11% in 2016.<\/p>\n\n\n\n Parents may reason that they\u2019re better equipped than their children to cover the added cost of borrowing, but some may think they have no choice. The Pell Grant, the largest source of need-based grant aid, has failed to keep up with the rising cost of education, or even with the pace of inflation, according to an earlier NerdWallet analysis<\/a>.<\/p>\n\n\n\n The costs of these loans can be far more than the principal and interest \u2014 more than one-quarter (26%) of Americans with parent PLUS loan debt say the loans have affected their retirement plans, according to a July 2021 NerdWallet survey. And about 1 in 5 (21%) regret taking out the loan(s) in the first place.<\/p>\n\n\n\n Private student loans, also on the rise, lack protections<\/strong><\/p>\n\n\n\n College students are also increasingly relying on private loans. In 1996, less than 1% of dependent students at public colleges and universities relied on private loans to cover education costs. Twenty years later, in 2016, nearly 9% did.<\/p>\n\n\n\n Private student loans can be tapped when federal student loan limits are reached and when parents can\u2019t qualify for or don\u2019t want to take out parent PLUS loans. But they\u2019re missing some of the protections and benefits of federal loans<\/a>.<\/p>\n\n\n\n For example, private loans generally come at a higher interest rate, lack income-based repayment options and are less forgiving when borrowers have trouble making monthly payments. In addition, private student loans weren\u2019t included in the federal interest-free forbearance period<\/a> recently extended through Aug. 31, 2022.<\/p>\n\n\n\n How families can manage costs of student loan debt<\/strong><\/p>\n\n\n\n Students hoping to earn a college degree may develop a graduate-at-all-costs attitude, but being strategic and cautious about these costs could make their entry into the professional working world easier.<\/p>\n\n\n\n Maximize grant and scholarship eligibility<\/strong><\/p>\n\n\n\n All students should fill out the Free Application for Federal Student Aid each year, and early. Not only does the FAFSA qualify you for federal grants and loans, but many states and institutions also use this data to determine additional potential aid. Also, keep an eye on scholarship opportunities beyond freshman year \u2014 make it an annual or biannual practice to search for scholarships and apply.<\/p>\n\n\n\n Explore work-study opportunities<\/strong><\/p>\n\n\n\n Work study is a government-funded program that helps students with financial need find work, often on campus, to help pay for education expenses. Your FAFSA application will ask if you\u2019re interested in the program, then gauge your eligibility.<\/p>\n\n\n\n Tap federal student loans<\/strong><\/p>\n\n\n\n Before turning to private and even parent PLUS loans, use federal student loans. Above all, these have protections that aren\u2019t provided by the other loan types.<\/p>\n\n\n\n Borrow only what\u2019s needed<\/strong><\/p>\n\n\n\n It can be tempting to accept all of the loans you\u2019re allotted, but you would only be digging yourself into a deeper hole than necessary. When you receive your financial aid package from the school, only accept enough to cover your expenses.<\/p>\n\n\n\n Stick it out when the going gets tough<\/strong><\/p>\n\n\n\n Repayment of student loans, no matter the type, is made easier with a higher income. And graduating with a degree makes that income more attainable. The most recent graduation rate among first-time undergraduates is 63%, according to the Department of Education, suggesting many students leave college with debt but without a degree.<\/p>\n\n\n\n If your goal is to graduate, talk to your advisor or student services department when you\u2019re facing challenges or are at risk of dropping out. While getting a degree might not be the right decision for everyone, walking away should be done only after careful consideration of all of the implications.<\/p>\n\n\n\n More From NerdWallet<\/strong><\/p>\n\n\n\n Elizabeth Renter writes for NerdWallet. Email: elizabeth@nerdwallet.com. Twitter: @elizabethrenter.<\/p>\n\n\n\n The article College-Bound Grads May Share $40K in Debt With Their Parents originally appeared on NerdWallet.<\/p>\n","protected":false},"excerpt":{"rendered":"This year\u2019s high school graduates could take on nearly $40,000 in student loan debt in pursuit of a bachelor\u2019s degree, according to a NerdWallet analysis. And with this debt stretching across federal, parent and private loan sources, the final cost of their education will grow far beyond tuition and fees. Today, it\u2019s nearly impossible to […]","protected":false},"author":7,"featured_media":2736,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","attr_excerpt":["This year\u2019s high school graduates could take on nearly $40,000 in student loan debt in pursuit of a bachelor\u2019s degree, according to a NerdWallet analysis. 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