Despite all the news of student loan forgiveness in the past year, a simple truth continues to plague America’s higher education system: no matter how much we forgive, millions of new students will borrow.

While FAFSA delays have made it so fewer students have applied for financial aid for the 2024-25 academic year so far, it’s just the start of the college enrollment season. Now is the time students figure out what school they will attend, how much financial aid they’ll receive and how they’ll fill any funding gaps that remain.

This brings us to the crux of the problem when it comes to America’s crushing student loan debt issue. Collectively, students and their families are borrowing way too much to pursue college degrees that don’t always have the best return-on-investment (ROI).

Case in point: Recent data shows that almost $100 billion new student loans will be issued for the 2024-25 academic year in 2024, compared to $98 billion in 2023.

That may not seem like a huge increase, but to put this into context, the most recent press release from the Biden Administration highlights that the President has forgiven $138 billion in student loans during his entire presidency.

Rising Costs Of Higher Education

One of the biggest factors that’s driving students to borrow more for college is the rising cost of attendance at various colleges and universities, plus the cost of room and board. Data from CollegeBoard shows that, for the 2023-24 academic year, average costs to attend a public four-year in-state institution came in at $11,260. This is $270 higher than in 2022-23.

But, public four-year institutions aren’t necessarily driving up student debt rates as much as out-of-state schools and private institutions of higher education. The fact is, CollegeBoard figures show that tuition and fees for public four-year out-of-state schools came in at $29,150 this year, or $850 higher than last year.

Meanwhile, average tuition and fees at private nonprofit four-year schools came in at $41,450 for the 2023-24 academic year — or $1,600 more than costs for the 2022-23 academic year. And remember, these costs are for average tuition and fees only, so they don’t include room and board.

Other Reasons Students Borrow Too Much

High costs aside, many students also go about choosing a school in the worst possible way — at least in a financial sense. For example, some might make a list of dream schools, apply for several, get accepted to one or two, then figure out how they’ll be able to afford it.

Chris Keaveney, who serves as CEO of a student loan company called Meritize, says this scenario is common since so many families make college decisions based on emotion instead of investment value. This means they pursue whatever field of study fits their area of interest at whatever school they want. From there, they borrow whatever it takes to graduate regardless of how much financial sense it makes.

Ultimately, this is why Keaveney argues that the real challenge facing students and families is the fact they borrow more than their anticipated earnings should really allow.

“Higher education faces a repayment and ROI crisis, not necessarily a student loan crisis,” said Keaveney.

While some experts would say our student debt crisis is about much more than that, it’s easy to understand the core of what he is saying. After all, someone who graduates with $100,000 in student loans and goes on to earn $500,000 per year within a few years shouldn’t struggle to pay the money back.

Unfortunately, borrowing too much for college can lead to an array of consequences that hurt worse than just having less discretionary income to spend on food and fun.

Patricia Roberts of Gift of College and college savings expert, says graduates who start their adult life with crushing student debt have difficulty pursuing typical life milestones like living on their own, saving for retirement or starting a family.

Other family members can also suffer as well, writes the author.

“When parents take out substantial educational loans on behalf of their children, their later years may be impacted adversely,” said Roberts. “Retirement may need to be delayed or not able to be pursued at all.”

How To Borrow Less For College

While student loan borrowing trends don’t look good for families for the 2024-25 academic year, there are steps you can take to borrow less for college no matter what others are doing.

Economist Peter C. Earle of the American Institute for Economic Research says that families who want to pay less for college (and borrow less) should start by researching schools and college costs intensively, then create a budget for school and consider alternative funding sources outside of loans (grants, scholarships, etc.)

Another option is attending community college for a year or two before transferring to a four-year school, he said. Most importantly, Earle said you have to learn to look at college degrees as a transaction to get you where you want to be instead of a “coming-of-age ceremony.”

Your degree should lead to more competitiveness in the employment markets along with higher lifetime earnings and greater fulfillment.

“College is a means to an end, not an end in itself,” he said.

Roberts also says saving as much for college as soon as possible can also make a difference. Ideally, you’ll save for school in a 529 college savings plan that lets your funds grow tax-free and allows tax-free distributions when money is used for eligible higher education expenses.

“The earlier you can begin, the better,” said Robert. “After all, whatever you can save is that much less that your child will need to borrow and repay with interest.”

On top of that, you can also politely ask friends and family to skip the stuffed animals and outfits that are quickly outgrown and consider a contribution to your child’s 529 plan for their birthday and other holidays.

“With 18 birthdays and at least 18 holidays between birth and college, these contributions can really add up,” she said.

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