Overcome Student Debt
Student Debt has affected a large portion of individuals from all walks of life. In order to afford higher education, most people take out student loans to ease the stress of saving up and paying for school. However, relying on loans for large payments can have setbacks in the long run. Taking out loans in order to afford universities or grad schools is, unfortunately, a common occurrence–and with loans, comes inevitable debt.
What causes student debt to become so debilitating in the future? How can an accomplishment–graduating from a college or university–take such a toll on the years to come? These are questions that various individuals ask themselves as they work to pay off their loans and limit their debt.
We want to help you understand how debt accumulates, how interest affects the overall total, and how you can work toward a debt-free life with the skills and resources from our Master Your Debt course.
Facts About Debt
According to Education Data Initiative, student debt has amassed to the amount of $1.745 trillion, and until recently, that amount was steadily increasing. However, in recent years, the mass amount of debt that built over time has slowly paused in its growth.
While the total amount of compiled debt might be going down, the prices of colleges and universities have not. And with the increase in school payments, comes an increase in financial loans. Individuals are having an increasingly difficult time paying off these loans thanks to the addition of interest.
Where Does Debt Come From?
The cost of college has increased in recent years. Because of this, more students are forced to take out loans to pay for their education–yet while they remain in school, most are unable to make enough money to pay off these loans before they graduate. This leads to overwhelming debt that will follow them for years to come, or until they are able to pay it off.
Debt for students is a collection of loans from various lenders, that increase with interest until the amount far exceeds the original amount borrowed. Colleges and universities remain an expensive source to advance in your schooling–however, individuals still work hard to attain loans, grants, and other income sources in order to attend.
Along with school loans, debt can come from credit card bills, medical bills, taxes, and other financial burdens. Housing, food, and entertainment are other added expenses that can arise in everyday life. Due to the increasing costs of college, however, some of the hardest debts to pay off, remain those incurred by student loans.
How does Interest work?
Interest is an added amount to the money that is borrowed from a loan. The amount to be paid off is affected by the interest connected to it–making the overall sum larger and larger. Put plainly, interest is the amount you pay for the ability to borrow money from someone else.
For example, if you borrow $300 with a 20% interest rate, the amount owed will increase to $360 within a year–this arrangement allows for the lender to make a profit over a set amount of time. Usually, the interest that is added to the amount borrowed is incurred annually. However, every loan type and lender is different–allowing the amount to either increase or decrease depending on the agreement between the lender and the borrower.
There are two main types of interest—simple and compound. Simple interest is calculated by the product of the principal and the time period. It is charged only on the principal amount borrowed and not the gathered interest. Compound interest is calculated by a continually added amount to your balance. This type is not as common as simple interest but is still used for various loan types.
Master Your Debt
Whether you are in the process of paying off student loans or have just begun, we want to help you find the support and resources you’ve been looking for. Everyone manages their debt differently, but they don’t have to do it alone. We’re here to lend that help wherever you might need it. Our Master Your Debt course can show you how to achieve your goal of a debt-free life, and assist you in pursuing freedom from financial burdens.
You can learn more about Student Debt and how to master your financial burdens through the Master Your Debt course.