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“At the time, there wasn’t much
difference from my perspective between $5,000 and $50,000” she says.
“I figured that by going to school I’d be investing in myself and
would be able to pay it back, no problem.” It wasn’t until 6 months
after graduation, when the student loan payment was due, that she
realized that her $22,000 debt would cost her $257 a month; a large
chunk of her starting salary budget.
Christine’s story isn’t uncommon. Rising tuition costs and loan
repayments have created student loan payments that are beyond the
budget of new grads on a starting salary. At first, she was able to
defer the loan, but once the deferment ended, her income didn’t
qualify for forbearance. “I didn’t know about student loan
consolidation until I got a letter in the mail,” she says. “At first
I dreaded opening it because I thought it was someone asking for
money—but now I’m really glad that I did.”
Debt Levels of Undergraduate
Degree Recipients by Degree and Institution Type, 2003-04
Source: "Trends in Student Aid
2005" Copyright © 2005, the College Board,
www.collegeboard.com. Reproduced with permission.
The
solution was a student loan consolidation that extended her payments
to 20 years instead of 10 and offered a low fixed interest rate as
opposed to the variable rate of non-consolidated student loans. The
$257 a month payment became a $122 payment; a manageable amount for
Christine’s budget.
“Now I’m able to put aside some
money each month for a down payment on a home,” says Christine. “If
I hadn’t consolidated there is no way I would have been able to
afford to save.” So while colleges and universities have had to
boost their tuition rates in order to cover costs, Congress and the
Federal Student Loan Consolidation program have continued to ensure
that paying for college is still an option for anyone with the
desire to seek higher education.
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