During the 2006-2007 college year, nonfederal loans peaked at 25% of the total educational loan volume. By 2006 2008, that percentage had dropped to 11% of total educational loan volume and by 2009-2010 the number fell to 8%. But theres a lot of student debt out there. In June of 2010, total student loan debt both private and federal was more than total credit card debt. And seasonally adjusted revolving credit debt, about 98% of which is credit card debt, topped $ 826.5 billion. $ 168 billion of the $ 830 billion in outstanding student debt is private student loans.
So while private lending rates are falling, there are still many, many students who are now paying off billions of dollars in private college loans. While revolving credit has been decreasing, due to new government rules about minimum credit card payments, lower credit limits, and the difficulty many people are experiencing in getting credit, student loans have soared.
College costs have increased, families are economically strapped, and there just arent enough government grants now to keep students from taking out large student loans. As the amount of money available to students through Pell Grants and subsidized federal student loans decreased, students scrambled to pay college bills, resorting to private loans and credit cards. There are now as many students with outstanding student debt, much of it private loans, as there are students with credit card debt.
So whats the best way for students to manage their debt? First of all, those students who already have debt and are paying it down, need to decide which loans cost them the most and pay those down first. These loans are normally private student loans and credit card debt.
Students who are in college, or planning on attending college, should plan to live like students so they dont need to live like paupers after graduation. A student should take their planned career path into consideration when incurring debt. Then they should not borrow more than theyre going to be able to handle on the salary thats associated with their chosen career.
Students who need to borrow much money for college to attend college, should consider transferring to a less expensive school, changing their living arrangements, or working to pay some of their bills, rather than borrowing.