Written collaboratively by Andrew Zumwalt, Gragam McCaulley, Kathy Sweedler, Erica Tobe, Peggy Olive, Elizabeth Kiss, Joyce Serido, Lorna Wounded Head, Carrie Johnson, Mary Jo Katras, Suzanne Bartholomae, and David Evans.
Funding for the development of this toolkit was provided by the Mary O’Neill Mini Grant supported through the Association of Financial Counseling & Planning Education (AFCPE).
Work of the Student Loan TIPS project was supported by North Central Region Extension Program Leaders.
Student Loan Debt
The rising cost of a college degree and decrease in the availability of grants and scholarships have forced students to borrow more (Burdman, 2005; Mezza & Sommer, 2015). Student loan borrowers have a difficult time managing their debt (Akers & Chingos, 2014). According to U.S. Department of Education data, 30% of federal student loans were in deferment and forbearance while 7% were in default (Cho, Johnson, Kiss, O’Neill, Mountain, & Gutter, 2016). Recent research has led to an understanding of the effects of loan debt on subsequent health, financial capability, transitions to adulthood, and wealth accumulation (Cho, Xu & Kiss, 2015). Student loan debt has been linked to higher levels of stress and anxiety (Andruska, Hogarth, Fletcher, Forbes, & Wohlgemuth, 2014); poorer academic performance (Hossler, Ziskin, Gross, Kim, & Cekic, 2009); longer expected time-to-degree (Letkiewicz et al., 2014-2015); greater dropout rates (Joo, Durband, & Grable, 2008); and lower wealth accumulation (Steuerle, McKernan, Ratcliffe, & Zhang, 2013). Student loan debt also greatly affects young adults’ decisions about getting married, buying a home, and having children (Bozick & Estacion, 2014; Nau, Dwyer, & Hodson, 2015). Student loan debt is a good investment if the potential benefits exceed the cost of the education. Unfortunately, with the rising cost of tuition and the uncertain job market, young adults are finding the debt affecting their financial security.