According to the Federal Reserve, there is more than $1.74 trillion in outstanding student loan debt in our country, which falls on the shoulders of about 15% of Americans. That’s a lot of debt to carry around, which can take graduates years (or decades) to pay off!
According to a recent poll, Americans said that taking out too much money in student loans was the financial mistake that took them the longest to recover from. And with student loans taking an average of 18.5 years to repay, this is no big surprise.
Over the past two years, federal student loan borrowers have enjoyed a payment moratorium, or a pause of their monthly loan obligation. With federal loan forgiveness still up in the air, most of these borrowers are set to see their required payments return as early as September 1.
Most college graduates will walk the stage with at least some form of educational debt. Generally, this is in the form of student loans, which are often used to help pay for tuition, books, housing, meal plans, and even certain materials (like a new laptop for class).
While a recession is difficult for any age demographic, it can be especially challenging for young Americans paying off their student loans. An economic downturn usually results in lost jobs and reduced salaries, which is magnified for those who haven’t established a lot in savings (or an emergency fund) and need to pay student loans while juggling other monthly bills in their budget.
For many Americans, graduating college means entering the real world and joining the workforce. For others, however, educational pursuits roll on at the postgraduate level, whether it's to obtain a medical, law, business, or other master’s degree. With that comes another two to four years of tuition to shell out, depending on the career you wish to pursue.
Americans really aren’t all that savvy in terms of financial literacy. A recent survey of adults in their thirties found that the majority of respondents lacked a basic understanding of financial terms. Of those who took the survey, nearly half didn’t understand what interest is, how bankruptcy works, or even possesses a basic understanding of inflation. That lack of knowledge can have long-term negative ramifications. It may lead to credit cards with high-interest payments, paying more than necessary in banking fees, and does little in terms of helping people amass a nest egg — or any savings, for that matter. This financial literacy deficit also comes against the backdrop of a nation that owes trillions of dollars in unsecured debt. Fortunately for you finance noobs, nowadays, you don’t have to go through your adult life financially blind. Gaining all the knowledge and savviness won’t happen overnight, but you can, in fact, become a financial literacy guru; all it takes it education, experience, and determination. Keep reading to find out how to get yourself started on the path of financial literacy.
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