TULARE COUNTY – Local college graduates are faring better than most of the country in paying off their student loans.
Nearly every city in the Valley was in the top quarter of carrying manageable post-college debts, according to a recent report by WalletHub, a personal finance web site offering analysis to consumers. Student loan debt remains one of the biggest financial burdens to Americans,. In fact, student loans make up the second highest form of household debt after mortgages, totaling $1.5 trillion.
But how burdensome are the individual loans? According to one study, the share of students graduating with $50,000 or more in student loan debt has more than tripled since the year 2000. High balances combined with a payoff timeline that lasts into middle age force many graduates to significantly delay or forego other financial goals such as saving for retirement or buying a home.
That’s the unfortunate reality for many student-loan borrowers who cannot keep up with their payments. According to Forbes, 40% of borrowers may default on their student loans by 2023. Surprisingly, though, students with smaller debts are more likely to default than those with larger ones. Student-loan debts are also more unsustainable in some places than others. WalletHub therefore compared the median student-loan balance against the median earnings of adults aged 25 and older with a bachelor’s degree in each of 2,510 U.S. cities to determine where Americans are most overleveraged on their college-related debts.
In Visalia, the median student loan debt is just under $16,000, putting it in the top 14th percentile for the least overleveraged cities out of more than 2,000 analyzed in the report. With a standard repayment plan of 10 years at 5% interest, the monthly payment would be $167. The total interest paid by the end of the loan would be more than $4,000. Experts recommended getting a job out of college that pays at least $20,000 in order to repay the loan. In order to save on interest, experts suggested increasing your monthly payment, making payments every two weeks, or reducing the term of the loan to pay down the principal amount faster.
Dinuba graduates got the biggest bang for their buck in terms of their student loan debt to income earnings with their degree. Dinuba graduates carried less than $10,000 in debt and had a median income of about $46,000. The ratio of student debt to median earnings for Dinuba was 20.38%, putting them in the top 1 percentile for cities in America. Tulare graduates were in the top 3 percentile carrying slightly more debt ($13,000) but making more money with their degree ($55,600). Hanford and Bakersfield were in the 4th percentile and Lemoore and Cloves were in the 5th percentile. Fresno almost finished outside the top quarter coming in at the 25th percentile. Tehachapi fared the worst in the Valley. Graduates there carried more than $17,000 in student loan debt but made less than $50,000 in earnings.
Don Hossler, senior Scholar at USC’s Center for Enrollment Research, Policy, and Practice, said the three most common mistakes people make when financing their post-secondary education are:
-A solid student who is so debt averse that even though loans would help him/her get their degree in a timely manner the elect to take no loans, slow their academic progress by taking fewer courses, when in fact loans would have been a good investment in themselves.
-Taking out large loans for a proprietary school.
-Avoid private loans.
When applying for student loans, Hossler cautioned students to avoid borrowing more than the estimated starting salary of the first job in their career.
“Beware of private loans,” Hossler said. “Don’t use loan dollars like they are an ATM machine.”
For those having trouble making their student loan payments, Hossler suggests consolidating loans to create a more manageable payment for multiple sources of debt.