Survey: Paying off student loans will take twice as long as education

On March 16, CollegeGrad.com revealed that 51 percent of students who took a survey reported they would spend 10 or more years paying off student loans. This statistic indicates a five percent increase from two years ago. "Student loans began growing about 20 years ago when the Middle Income Student Assistance Act was passed," said Jim Patton, director of Student Financial Assistance at USI. In 1978, Congress passed the act to include students from families with middle and lower level incomes in federal student assistance programs. "Basically, students are borrowing the maximum and relying entirely on aid," Patton said. With the increasing cost of tuition, students are experiencing greater difficulty in financing their education. As a result, students proceed to take out loans from several financial institutions, resulting in multiple repayments. Congress sets the interest rates for Stafford Loans, which are the same for all universities. However, students have the option of borrowing from private lenders, who provide competitive rates and services. Patton encourages students to research all borrowing options before signing. "Students often do not shop around and instead go with the familiar name," Patton said. "Also, students are not often aware of the different repayment options." Upon graduation or exit from the university, a student receives a six-month grace period for direct loans. Once the grace period ends, the direct loans can be repaid through four options. The first two are the standard and the extended repayment plans. The third, the graduated repayment plan, begins with small increments that increase over time. CollegeGrad.com reports it will take 12 to 30 years to repay such a loan. The fourth plan, the income contingent repayment plan, is based on the reported adjusted gross income that the student reports in his yearly income tax return. Payments for the year are then based on what is reported to the IRS. Still, when it comes to repaying loans, students sometimes are unable to make payments.

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