The Wisconsin Bankers Association offers for your use the following consumer education column. Your bank is free to use this as a community column in your local newspaper, a letter to the editor, a press release or in any other way you see fit. The purpose is to give our members an easy-to-use tool for promoting the banking industry to Wisconsin's communities. An archive of Consumer Columns is available, as well.

Student loan debt is a hot topic today, and with good reason. In 2006, U.S. student loan debt hovered around $600 billion; today, that number has skyrocketed to $1.5 trillion. By itself, that number isn’t a bad thing – it means more Americans are going to college. One in four Americans has student loan debt (an estimated 44.7 million people), carrying an average $37,172 in loans. However, the number of defaults is also approaching critical levels, with delinquency rates approaching 12%. The average monthly payment for student loans is nearly $400, but some graduates (or students who left school without graduating) have far higher payments.*

Despite those scary statistics, taking on student loans in order to obtain a college degree is still widely considered a smart financial investment by experts. According to the U.S. Bureau of Labor Statistics, median weekly earnings for a high school graduate is $718 (or around $37,000 per year), compared to the median weekly earnings for college graduates: $1,189 ($62,000 per year). That difference in earning potential shows that a college degree is still incredibly valuable.

Whether you’ve just graduated or haven’t yet taken on any debt, there are strategies you can use to make your student loan story a success story, rather than a cautionary tale.

Before School:

Follow a strategy. First and foremost, create a strategy early. The longer you have to save, the bigger the impact will be. However, if you’re starting late, resist the temptation to pull from other savings like your retirement fund. Parents: never forgo saving for retirement in order to build up a college fund. There are many resources available to help students pay for college, but there’s no such thing as a loan to retire.

Use a tax-preferred savings option. One great way to save money for college if you’re able to start early is through the Wisconsin College Savings Program. This program, made up of the 529 EdVest and Tomorrow’s Scholar college savings plans, enables consumers to save tax-free dollars to pay for future post-secondary education costs. You can find out more about the program at

Know how much you need. The most important thing to remember when applying for loans is to calculate how much you’ll need to complete your education. Having a defined “ceiling” in mind will help prevent you from taking on more debt than necessary. It's rarely necessary to take on all of the debt available to you.

Finish your degree. It may seem obvious, but completing all requirements and obtaining the degree you’re paying for by taking out loans is absolutely critical to success. Otherwise, it’s like buying a car but never driving it!

After Graduation:

Get organized. The first thing to do is to organize all of the information you have for all of your student loans. Make a list or spreadsheet that organizes important information such as the name of the loan, the lender, interest rate, total principal (amount due), monthly payment, and when repayment is scheduled to begin. Different loans may have different grace periods (the amount of time after graduation you can wait before making your first payment), so the first payment may be due at different times for different loans.

Consider consolidating. A consolidation loan combines multiple loans into one for a single monthly payment and one fixed interest rate. There are several pros and cons to consider, however. Consolidating often extends the repayment period, meaning while you will have a lower monthly payment, it will take you longer to completely pay off the loan. However, it can also provide an interest rate break (especially if you have any variable rate loans) and the single payment is more convenient and simpler to budget for. Seek expert advice if you’re considering consolidation as a strategy.

Don’t “ghost” your lender. Make sure that your lenders know how to reach you! Many recent graduates relocate for work. Updating your contact information is often as simple as visiting the lender’s website and filling out a form. It’s also a good idea to stay in touch in case you start having difficulty making your payments. This can happen due to unemployment, injury or medical condition, or another financial emergency. Lenders will work with you to adjust your payments or schedule, but only if you tell them your situation first!

If you are struggling to make payments or aren’t sure your strategy is the best way for you to repay your student loans, seek the advice of a financial aid counselor at your alma mater or talk to your lender. Another good resource is, which has tools like repayment estimators and information on various repayment plans available for federal student loans.


An archive of Consumer Columns is available here on WBA's website.
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