The Bangor Daily News recently ran a story about a young man who slept in his car to help manage his student debt. Clearly, he took his education and financial situation seriously.
Here are some figures from the Institute for College Access and Success, a nonprofit that tracks debt load nationwide. In 2012, the average debt that a Maine student racked up was $29,352, seventh highest in the country. Just over two-thirds of all students at four-year institutions in Maine carried some debt.
The total debt for higher education in the United States was recently reported to be more than $1 trillion; that’s larger than all U.S. credit card debt. It’s taken on by young adults who may have had no formal instruction in financial planning, and many of them take many years to pay off their debt.
Get help in planning your borrowing from agencies that will help because they want to, not because they want you to pay them. The Downeaster Common Sense Guide to Student Loans is a great place to start. Find it online at www.maine.gov/pfr and click on “consumer guides.” Maine residents also may call 800-332-8529 to have a free copy sent by mail.
The guide is filled with solid advice about types of loans — read carefully the part about private versus government-backed loans — plus finding free money for college and repayment options. It also gives some guidance on what you can expect to earn by choosing different majors and whether an advance degree is worth considering.
Your choice of a school can greatly influence the amount of debt you may need to incur. The guide offers some side-by-side comparisons of in-state, four-year institutions; the amount of debt an average student carries at some of those schools may surprise you.
Another source of information is the Finance Authority of Maine. FAME’s website ( www.famemaine.com/education) features tips on scholarships, financial aid and help for nontraditional students. Students pursuing careers in education and health fields may be eligible for forgiveness of some of their loan debt if they serve in Maine after completing their studies.
Most education technicians do not qualify for loan forgiveness. However, those working in Chapter One programs may qualify; check with FAME for more information and call 623-3263 or 800-228-3734.
Once in school, there are many ways to reduce the total amount needed to borrow. Living at home, working part-time and staying alert for scholarship opportunities are just three possibilities.
The nonprofit National Consumer Law Center operates what it calls the Student Loan Borrower Assistance Project. Its website ( www.studentloanborrowerassistance.org/) includes a step-by-step guide to dealing with your student loan program. It also tackles tough issues such as bankruptcy and getting out of default.
Last month, the Consumer Financial Protection Bureau fired a warning shot at many lenders in the private student loan market. The bureau objects to a widespread policy termed “auto default,” under which a borrower is place in default if a loan co-signer dies or files for bankruptcy. This can happen regardless of a borrower’s track record of making payments on time. For more information, visit www.studentloanborrowerassistance.org/?s.
In bottom-line terms, most student debts follow long after graduation. If you feel overwhelmed, get advice from a financial planner.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer, ME 04412, visit http://necontact.wordpress.com or email firstname.lastname@example.org.