Student loan debt is a significant financial obstacle for millions of Americans. According to the latest data from the Federal Reserve, outstanding student loan debt has reached a staggering $1.73 trillion. As an accountant and tax strategist, I’ve seen firsthand how this debt can crush the dreams of recent graduates and deplete disposable income for years to come. However, there are ways to confront and overcome this burden, and achieve financial freedom.
It’s important to note that the federal government makes a substantial profit on student loans annually. According to the Congressional Budget Office, the government profited $81 billion in 2021 from student loans. This profit is due to the high-interest rates charged on loans, which effectively operate as a tax on young Americans looking to further their education and career prospects. In this blog, I will cover the different ways to tackle student loan debt and take control of your financial future.
First, it’s essential to understand the severity of the problem. The student loan debt bubble is not only a threat to individual financial stability, but also to the larger economy. High levels of student loan debt mean young people are unable to buy homes, make major purchases, start families, or contribute to the economy as effectively. As a result, it slows down economic growth and stifles many opportunities in the job market.
So, what can be done to address this issue? One solution is to eliminate interest rates on student loans. Interest rate accumulation results in an additional tax on those who have the burden of debt. The detrimental effects of compounded interest could quickly and easily be removed if interest were eliminated from this long-term debt. The debt won’t go away, however, it would make the goal of paying off that debt much more manageable.
Another solution to student loan debt is loan forgiveness programs. The government offers loan forgiveness programs as an incentive for helping society. For example, teachers, nurses or those in the non-profit sector may qualify for Student Loan Forgiveness Programs. It allows the recipients of loans to have debt forgiven if they invest a certain number of years in their field.
Repayment assistance programs are also viable options for alleviating the stress of student loan debt. Students can potentially take advantage of repayment assistance programs provided by their employer to eliminate a significant portion of their student loan debt.
In addition to the programs offered by the government or employers, consolidation is another viable option for reducing monthly payments and interest rates on student loans. Interest rates can be reduced to a level that will enable payment in shorter periods, allowing freedom from debt sooner rather than later.
Canceling student loan debt would be a great option, especially considering the economic and societal benefits it could provide. Canceling student loan debt would stimulate economic growth by freeing up disposable income for millions of Americans, who could then contribute to the economy through major purchases, home buying, and starting families. Additionally, canceling student loan debt would allow graduates to pursue careers they may have otherwise avoided due to financial constraints, such as entrepreneurship or public service, leading to a more vibrant and diverse job market. Overall, canceling student loan debt would be a powerful investment in the future of young Americans and the overall strength of the economy.
Private student loans should be a last resort due to their high-interest rates. Before attending universities, research should be done on the various types of loans. When looking for loans, students can also research myriad scholarships, grants, and other financial assistance programs available.
Paying off student loan debt can be challenging, but it’s an achievable goal once you understand how the debt consolidation and repayment process work. Knowledge is power, so use resources like the National Student Loan Data System (NSLDS) to keep track of the loans you have and monitor repayment plans and options.
Inflation increases as the supply of money increases. More people are becoming significantly impacted by the cost of financing education. Whenever possible, always prioritize avoiding debt altogether. Consider the cost of universities before enrolling, and be sure to use monetary education resources. Your options may demonstrate that any educational opportunity is a good opportunity if approached intelligently.
Rome was not built in a day, and neither is financial freedom, but by prioritizing your student loan debt, it’s a manageable task. Lifestyle changes such as cooking at home instead of dining out, finding a side hustle, or selling items are all methods of earning extra money to allocate toward loan payments. Tracking finances and budgeting is also suggested, for when these methods are employed, receiving professional advice is a wise investment.
In conclusion, student loan debt can seem overwhelming, but it doesn’t have to be. By using the resources listed and researching more, confronting your student loan debt can lead to greater financial freedom and create opportunities for overall personal growth. Successful methods have worked for millions of people; put those methods to work for you.
JoAnna Laiscell July 5, 2023
References:
- “Student Loan Debt Statistics In 2021: A Record $1.7 Trillion” (Forbes)
- “The Siege of Financial Literacy in America” (CNN)
- “Understanding Student Loan Consolidation” (College Ave)
- “The Ultimate Guide to Financial Freedom and Personal Growth” (Entrepreneur)
- “How to Overcome your Student Loan Debt Stress” (The Balance)5
