With student loan debt toppling over at $1.3 trillion, it’s the largest debt among Americans after their mortgages.
As college costs continue to grow, graduates should consider refinancing their loans to lower interest rates to pay them off sooner, says financial services company LendKey.
On average, students are graduating with $37,000 worth of student loan debt. That is up 6 percent from this time last year. As young people enter the workforce and care more about happiness than income, they could be left with student debt for longer, and end up paying more by the time the loan is completely paid off.
It turns out millennials could be making more money than they are, but since salary (and furthermore, negotiating a salary) aren’t big steps for new grads, they are holding themselves back from making more money — and in turn, paying off debts like student loans.
Why refinancing matters
LendKey says refinancing will help you pay less and pay off your loan faster. According to their report, borrowers save an average of 2.2 percent in annualized interest, which could mean saving more than $10,000 over the life of the loan.
This is good news, considering when entering the workforce, millennials are making $10,000 a year less today than they were almost 30 years ago. New graduates today face a harder time than their baby boomer grandparents, who earned more and had cheaper higher education. Millennials are paying off debt while also trying to merely survive with other bills, like rent and utilities.
Wages being down 20 percent might not be that bad to an average young worker, who admit they care less about money and more about making an impact in the company they work for. In fact, if they could just keep a job, even if it’s not that high-paying, they would be content. But many Americans — whether they’re millennials, Gen X, or baby boomers — are looking for new jobs right now. And it’s not for money, but rather, for benefits.
College is still a priority
Despite the staggering $1.3 trillion student loan debt in this country, families aren’t questioning the value of a degree. Students and parents alike agree: College is still worth it. Even those who haven’t attended college think so!
While young people are more likely to believe college should be free, they are also the group that believes their parents will pay for any college they want to attend. Of course parents want to send their children to the best schools available, but most of them don’t believe they can afford to give their children a full ride. Most parents believe they’ll be able to contribute some college costs, but not all of it.
Even so, parents are doing a better job preparing their families for the costs of college than in the past. Millennial parents may still be paying of their student loans, but they are also already saving money for their kids to go to college so they can avoid the same student loan debt traps. In 2016, parents were putting away $16,000 for their kids’ college, on average.
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