The number of student loan defaults has become critical
across the nation!
June 16, 2003 — MINNEAPOLIS, MN - Across the nation, college graduates are throwing parties, sending out swarms of resumes and preparing for their futures. However, within this commotion of dreams and aspirations, many students overlook one crucial factor-how are they going to pay off their student loans?
“Unfortunately, many recent graduates are accepting jobs below their income requirements due to a stagnant growth of business and job opportunities,” said Gary Williams, president-elect for ACA International, the Association of Credit and Collection Professionals, whose agency has collected over $50 million for 450 colleges and universities across the nation. “Due to this and other acquired living costs, former students are having trouble completing their financial obligations to their institutions in a timely manner
In 2002, the average public school student left college with $17,000 in student loan debt, and the average private school student left college with $21,200 in student loan debt. With undergraduate student loan debt steadily increasing in recent years, the U.S. Department of Education and other higher-education institutions have contracted with private collection agencies to collect delinquent student loans.
“With the cost of college increasing by 25 percent over the past 10 years, many students are left with only one option-to take out a loan,” Williams said. “However, some of these same students are also unprepared to pay off the loan for various reasons, causing the burden to fall back on the institution.
” With well-trained staff members and efficient resources, private collection agencies have the knowledge and tools to collect on accounts that may have otherwise gone unpaid. In 2001, collection agencies recovered $780 million in delinquent debt for the Department of Education, money that was in turn used to fund various higher-education programs.
Just as students prepare for a career, they should also prepare to pay off their student loans. The following tips from ACA International can helps students pay off their loans in a timely manner:
Save - Well before graduation, open an extra savings account for student loan money only. Decide how much money you can afford to put away each month and stick to it. Just think- during four years of schooling, if you put away just $30 every month, by the end of college you will have almost $1,500 saved for your student loans.
Budget - Many college graduates exceed their cost of living. Therefore, ACA suggests developing a budget and sticking to it. Determine what bills have to get paid (i.e. student loans, rent), and then calculate what you have leftover for savings and additional expenses (i.e. cable).
Ask for advise - Don't hesitate to ask your student loan representative or collector for a flexible payment plan. Most organizations are willing to develop a payment schedule that works for both the consumer and lender.
ACA International, formerly known as the American Collectors Association Inc., is the association of credit and collection professionals. Founded in 1939, ACA International has approximately 5,300 members, including third-party collection agencies, attorneys, credit grantors and vendor affiliates. Headquartered in Minneapolis, ACA International serves members in the United States, Canada and 58 other countries worldwide.
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