How to Solve the Student Debt Crisis

February 16, 2018
By: Mason Gallik

If you are about to enroll in college, be aware that you will likely have tens of thousands of dollars in debt when you graduate. The average 2016 graduate with loans had $37,000 in student debt and this number has been increasing each year. College is very expensive, and students get stuck paying these loans for a decade or longer. True delinquency rates are around 26% for federal loan borrowers in repayment. The huge question is, how do we solve this problem?

There are many suggestions out there to solve the student debt crisis. Some of the solutions have been implemented like loan forgiveness and income-driven repayment programs. As demonstrated here, income-driven plans have done little to alleviate delinquency rates. Other solutions, like tuition free education on one side and removing government loans on the other side are infeasible in almost any political environment.

The way to solve this problem is to stop it before it begins. Once a student is tens or hundreds of thousands of dollars in debt, it is too late. LoanMajor tries to solve this through its two calculators. These calculators estimate total student loans and monthly payments before a student enrolls or even applies. This makes it much more likely that a student will attend a college that will leave him or her with affordable monthly payments.

The College Search Calculator uses Average Net Prices to estimate your eligible federal loans and total costs before you apply. Average Net Prices are estimated out of pocket expenses from the university based on family income. The calculator then forecasts your debt and monthly payments, which are compared to an estimated starting salary. Now the user can see if a college is affordable before applying.

The College Selection Calculator is for after acceptance and receipt of financial aid packages. It is like College Search only uses your actual aid package to get a better estimate. It estimates student loans and compares payment plans to income. Now the user can make the final decision about which college to attend after comparing the aid packages of all schools.

For some students, college decisions are made on emotional factors with little regard to the financial ramifications. The time has passed where you can go to college, receive any degree, and make a boatload of money. While these realizations may be upsetting, they need to be accepted before the solution is reached. The way to attack student debt crisis is to plan student loans before enrolling and find a fitting career path that will allow the loans to be repaid with ease. LoanMajor’s calculators do this by estimating throughout the application and financial aid process. The calculators are free, but to save the results you need to sign up for an account, which is free as well.