Preparing for Student Loan Sticker Shock

September is College Savings Month, a good time to think about education costs and how the average person can prepare to send their kid(s) off to the school of their choice without burying themselves in mountains of debt.

Various savings vehicles are available to help families deal with the expenses – 529 plans, Coverdell Education Savings Accounts, and IRAs, for example – but before you start thinking about those accounts, it helps to understand what exactly the student loan issue is all about.

That’s what this article is designed to do: impress upon you the importance of saving early so you’ll be ready to handle the costs.

General Student Loan Statistics as of 2021

According to the U.S. Federal Reserve and the Federal Reserve Bank of New York:

• As of mid-2021, Americans are carrying $1.73 trillion in total student loan debt (that's nearly DOUBLE the $900 billion in credit card debt Americans are carrying)
• 43.2 million Americans have college debt
• Average college debt at graduation is $39,351
• The average monthly student loan payment is $393
• 11 percent of new graduates default in the first 12 months of repayment

Class of 2019 Data (most recent available)

Among those who graduated in 2019:

• 69 percent of them took out student loans
• Their average debt was $29,900
• 14 percent of their parents took out PLUS loans at an average of $37,200

More Information

Though the prospect of saving for education can seem daunting, there are multiple tools available to help you and your family manage it. Check out our previous articles on this topic:

• Getting started on saving for a child's education
• How college costs have risen in 20 years
• When saving for college, there's more than one game in town
• It's College Savings Month. Do you know where your 529 plan is?

Talk to a financial advisor about student loan savings options

College costs have skyrocketed and there appears to be no end in sight. The sooner you can get started saving for this major expense, the better. Talk to a financial advisor to learn about all the different ways you can save and the potential tax benefits of the different options. Visit servionfa.com or call 651-631-3111 to schedule a meeting with Servion Financial Advisors.

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