College loan debt has crippling effect on many
NORTH FORT MYERS, Fla. Kelly Lynn is one of millions of Americans who have not made payments on their student loans.
New government data shows that 3,000 people a day default on their federal student loans.
Defaulting means going 270 days or more without making a loan payment.
“I think sooner or later I’m going to run out of deferments and wind up in default because I just don’t see how I’m going to be able to pay this off and continue make daily expenses and do simple things like eat,” he said.
47 and living at home
Lynn and his 12-year-old daughter were forced to move back in with his mother after bills started racking up. In 2013, he graduated magna cum laude with an associate’s degree in paralegal studies from the National Paralegal College.
Lynn said he sent out dozens of resumes but never heard back. Since then, he’s bounced from job to job and currently stocks shelves at a grocery store.
He owes more than $31,000 in college debt, which he described as overwhelming.
“Absolutely. I thought it was lower than that and then when I looked at it this morning, I just kind of hung my head and thought there’s no way,” he said. “I’m never going to pay this off.”
Costs add up
The average student debt for a four-year degree is $37,173, Consumer Reports found, but Senior Editor Donna Rosato talked to some who owe upwards of $60,000.
“(The) Department of Education says one in four students are late on their payments,” Rosato said. “If you have federal student loans, and most student loans are federal loans, we have a number of repayment options. The standard repayment option is paying over 10 years, an equal amount every month and there’s interest every year.
“But if you’re struggling to afford your payment, there are several types of what you call Income Driven Repayment Programs, and that can reduce your monthly payment to as little as 10 percent of the income you bring home every month. Studies show people who get into these income repayment programs tend not to default and tend to stay on track.”
Number of local students with debt
At Florida Gulf Coast University, 40 percent of students have a federal loan.
About 18 percent of Florida SouthWestern State College students have a federal loan.
Matt Sanchez, FSW financial aid director, said they work hard to make sure students and parents understand the magnitude of college loans.
“I think the big thing is, one, to be reasonable,” he said. “For example, here at the two-year college, a student can walk away with a two-year degree and possibly use the Pell grant to cover all the tuition and fees. You don’t necessarily need to go to a big four-year institution just to start out.”
Florida is competitive with its college pricing, Sanchez said. For example, the maximum amount offered through a Pell grant, which is needs-based, is $5,875.
Yearly tuition at FSW costs $3,401.
How to repay reasonably
On the federal government’s student aid site, you can find several repayment plans called Income Driven Repayment Plans. These plans take into account how much money comes into a household and how much gets spent to come up with the amount owed each month.
There are public service loan forgiveness programs that often apply to those who pursue careers in teaching or nonprofits or work for local, state, or federal governments.
“If you made on-time payments for a 10-year period, at the end of that 10-year period the balance of your loan is wiped out,” Rosato said. “So say you have $50,000 in debt and you make payments equal to $25,000, the balance is going to be paid, is going to be erased.”
Click here to see how different payment plans would work for the average $37,173 loan.