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Financing Your Future: The 2024 Student Loan Landscape

Financing Your Future The 2024 Student Loan Landscape (1)

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Pursuing higher education is a milestone for most Americans, often bringing them closer to their dream careers. However, it does come with a hefty price tag. Tuition costs can be too expensive for most students, which leads them to borrow money to continue their education.

According to the latest 2024 tally of the Federal Reserve, students with existing debt in the US owe approximately $1.74 trillion in federal and private student loans. Prospective borrowers and individuals currently repaying their debt can benefit from knowing about the current atmosphere of the student loan market and how to navigate it.

The student loan landscape this year has been shaped by the preceding years. Here are some of the primary trends that opened the first quarter of 2024:

Common demographics

The most recent College Board report on trends in college pricing and student aid shows the existing trend among borrowers. Among the 46.1 million borrowers, 20 percent are aged 50 or older. This demographic holds 25 percent of all outstanding federal loan debt. 

Of borrowers with outstanding debt balances exceeding $200,000, 30 percent are under age 35, and 29 percent are aged 50 or older. Half of the borrowers with a $5,000 or less balance are aged 35 or older, with 21 percent being 50 or older.

Average student loan debt

Given the high costs of college education, most incoming students continue to borrow money to finance their studies. The average debt for students in public universities is 32,637. On the other hand, the average debt for a federal student loan in the United States is around $37,090.

Private loans vs federal loans

Private student loans comprise less than a tenth of the whole student loan debt in the USA, with an average of 7.8 percent. Some companies that offer private loans can lend you the total cost of the entirety of your school attendance. These loans can include tuition fees, books, school supplies, and lodging.

Federal loans account for roughly 92.8 percent of the existing student loan debt. This type of loan can either be subsidized or unsubsidized. With subsidized loans, the government can pay for all or a portion of your loan interest if you prove your financial need. Currently, the interest rates for federal loans are 7.05 percent for graduate students and 5.50 percent for undergraduates.

Federal student loan application rate

The submissions for the Free Application for Federal Student Aid (FAFSA) for the class of 2024 decreased by 57 percent compared to 2023. This trend is a possible effect of the delayed launch of FAFSA for the 2024-2025 academic year.

Policies Aimed at Student Loans and Finances

Policies and programs that aim to relieve some student debt and make it easier to get a student loan have been proposed and implemented recently. They include:

College Cost Reduction Act

The College Cost Reduction Act (H.R. 6951), proposed by the House of Republicans, aims to help relieve borrowers of some of their student loan burdens. Introduced by Rep. Virginia Foxx, the plan proposes holding the colleges and universities accountable for the increasing school costs.

Saving on a Valuable Education (SAVE) Plan

The Biden administration’s Saving on a Valuable Education (SAVE) Plan currently has 7.5 million borrowers enrolled. Of these borrowers, 4.3 million have a monthly payment of $0. Under this program, $1.2 billion worth of loans will be disbursed to 153,000 eligible borrowers. The SAVE Plan is positioning itself as an affordable repayment program for low and middle-income students.

Additionally, the administration has approved the debt cancellation for almost 3.9 million Americans, rounding up to $138 billion in debt relief. It has also secured a significant increase in Federal Pell Grants, the largest in ten years. The new rules are set to protect people with student loans from career programs that leave them with excessive debt.

Technology and Student Finances

Technology can be part of the solution to ensuring that students can afford to study in college and university. For example, a digital learning arrangement reduces the costs of academic resources since many pertinent data can be accessed online. 

Transitioning to an online or hybrid learning environment can also give students flexibility when juggling work and personal life. Research conducted by the American Psychological Association affirms that students show great value in the flexibility of digital learning since it offers diversity in academic resources and various learning styles.

With the transition to online learning comes cheaper expenses. An estimated 80 percent of public and 96 percent of private schools have more affordable online programs than their counterparts. An estimated 65 percent of students across different countries preferred online learning if it meant lower tuition fees.

Private Companies: An Alternative to Federal Loans

Private loans can be taken from various sources, including credit unions, banks, and financial organizations. Unlike federal loans, the money you can get from private companies tends to have a higher borrowing limit. 

This type of loan is not based on financial needs, which is one of its primary differences from federal loans. Private lenders will assess a person’s eligibility and arrive at a rate based on their creditworthiness. Some of the requirements they will evaluate are your credit and income. A qualified cosigner can suffice for teenagers or young adults who have yet to build a credit history.

It pays to know the factors you should consider when choosing the type of loan that suits you. If you need help to qualify for a federal loan, a private lender may suit you better. After all, the leverage of private loans as an alternative to federal loans is how they can be customized to the borrower’s financial needs.

SoFi is an example of an innovative private lending company. They offer competitive rates, no hidden fees, and flexible payments. Among the selection of private lenders in 2024, it’s one of the most reliable options. When you finalize your choice, create a checklist that you can go through before applying.

Gain the Financial Means To Pursue Higher Education

Everyone deserves a chance to have a good education. Tapping into every possible resource and taking advantage of the positive changes in the student loan landscape can help you meet your financial needs. With the information provided here, you can have a headstart on how to plan financially for your higher education.

Joshua White is a passionate and experienced website article writer with a keen eye for detail and a knack for crafting engaging content. With a background in journalism and digital marketing, Joshua brings a unique perspective to his writing, ensuring that each piece resonates with readers. His dedication to delivering high-quality, informative, and captivating articles has earned him a reputation for excellence in the industry. When he’s not writing, Joshua enjoys exploring new topics and staying up-to-date with the latest trends in content creation.

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