Nearly 70 percent of college seniors who graduated this year left their higher education institution with a considerable amount of debt in the form of private and public student loans.
Average student loan debt per graduate hovers around $27,000 – and it’s increasing each year. In fact, the class of 2014 broke a record this spring by graduating as the most indebted class in history with student debt reaching a mind-boggling $1.2 trillion.
Ironically, Washington, D.C., where government is continually looking to find new ways to decrease the burden of debt, is the city with the highest student loan debt numbers. Just under 26 percent of all D.C. residents carry student loan debt. According to the New York Federal Reserve, D.C. also has the highest average amount of debt per borrower. The average student loan borrower in D.C. owes $41,230, compared with the nationwide average of $24,810.
This year, the Economic Policy Institute reported that approximately 8.5 percent of college graduates between the ages of 21 and 24 are unemployed – a fact that presents the dilemma of graduates lacking any opportunity to repay this staggering debt. Fortunately, President Obama has led a recent push to provide relief for student debt by expanding the Pay As You Go model with a goal to introduce effective changes (hopefully) by December 2015.
Obama’s decision to ease the burden of student loan payments is one initiative that has helped students realistically approach paying off loans as they enter the workforce at entry level salaries. And, as we wait for these changes to assist an estimated 5 million individuals refinance their student loan debt, it’s important to promote private organizations available to help individuals now.
While the search continues for the right answer to help students and graduates completely pay off their debt, we are getting closer with the programs that are currently in place. Money Management International offers a free student loan counseling program, which includes a complete assessment of personal finances, a budget analysis, a financial goal review and the creation of an action plan.
Another model that has received consistent successful results is the Union Plus Student Debt Eraser. As the benefits arm of the AFL-CIO, Union Plus has created a way to help union members pay off part of their high student loan debts. In the last 22 years, the organization has given over $3.6 million dollars in scholarship money directly benefitting over 2,400 families. This summer, Union Plus is also offering a $20,000 Student Loan Giveaway through August 15, 2014. The winner will be awarded $10,000 and two more union members will be given $5,000 each to directly pay off existing student loan debt.
Also, American Student Assistance, a non-profit organization whose mission is to help students successfully repay college loan debt, provides valuable tools that teach students how to borrow less and more wisely for higher education; how to repay student loans; and how to build better overall financial skills in life.
In June, Sen. Elizabeth Warren (D-Mass.) introduced the Bank on Students Emergency Loan Refinancing Act. This piece of legislation, if passed, will allow millions of borrowers to refinance at lower interest rates. But, until then, we will need to rely on the continued support of organizations assisting middle class income students and their families by offering realistic programs for repaying debt while pursuing a future in our nation’s workforce.
Tolf is president of Union Privilege, the organization that provides consumer benefit programs to over 13 million members of the AFL-CIO.