Debt among students has reached astonishing levels in recent years. While much of a young person’s debt is in the form of student loans, young adults are also plagued by car loans, mortgages and overwhelming amounts of credit card debt.
Credit card debt is fastest growing among young adults aged 18 to 24. From 1982 to 2011, credit card debt among this demographic more than doubled. In the same time frame, credit card debt among 25- to 34-year-olds increased more than 50 percent.
And studies show that debt only increases from there. The best way to curb debt later in life is to learn debt management techniques early. Debt reduction strategies like debt settlement can help you pay off outstanding debts now so you can live debt-free later.
Typical Student Debt
College students typically form a habit of accruing debt, which only gets worse each year. A 2008 survey found that college freshmen carried a median of $940 on their credit cards, meaning half had more and half had less. And through four years of college, this number quadrupled: College seniors owed $4,100 in credit card debt by the time they graduated.
The average undergraduate student carries $3,200 in credit card debt.
The average graduate student now carries $7,800 in credit card debt, up 60 percent from 1998.
Credit card debt isn’t the only debt held by 20-somethings. About 9 percent of people in their early 20s have auto loans, while 3 percent have mortgages. These figures increase dramatically over just a few years. By their late 20s, about 38 percent of people have car loans, and 29 percent have monthly mortgage payments.
Students in debt commonly justify their habits, claiming that they will be able to pay off their debts after they graduate and begin working full time.
However, credit card debts and auto loan debts are considered bad debt. They don’t add monetary value to your life such as by increasing your net worth or your earning power.
High levels of debt – especially bad debt – at younger ages are leading more students and young people to the bankruptcy courts.
Before filing for bankruptcy, young consumers may wish to look into debt consolidation and debt settlement, which can improve their financial standing.
In debt consolidation, all or several of your debts are rolled into one. You’ll still owe the same amount of money, but you’ll be responsible for just one bill each month, making your debt payments easier and more manageable. It can also save you money in interest over time.
Debt settlement reduces the amount you owe through negotiations with your lenders. You can get a debt settlement company to negotiate on your behalf, or you can negotiate directly with your creditors. A successful settlement can save you money.
Student Loan Debt?
You can consolidate your loans or get your loans forgiven.
In addition to personal debts like credit card debt, it’s hard to forget about student loan debt. For the college Class of 2013, the average borrower carried more than $35,200 in student loan debt.
Despite students often graduating with tens of thousands of dollars in student loan debt, this type of debt is actually considered good debt. Higher education increases your earning potential in the workplace, allowing you to pay back student loans and continue earning more.
Still, too much of any type of debt is a bad thing. After graduation, you must be able to pay for your basic necessities as well as meet your minimum monthly student loan payments.
If you find that you’re unable to pay all your bills, seek assistance as soon as possible. Look into student loan consolidation, modification and deferment, which can all help make your bills more manageable.
Loans and debts can help you improve your life, but only when they’re used properly. No matter what types of debt you take on, make sure you can handle the bills and continuously progress toward a debt-free future.