A new study recently published by the Federal Reserve notes that students are better off finishing a degree than dropping out of school. You might be thinking that is an obvious statement. Well, it is – BUT not for the reasons that you may think. While getting a degree can line up students with a better job, it’s also much easier to pay off some student loan debt after finishing a degree despite the reason for leaving college.
More Interesting Facts:
There are a myriad of reasons why students drop out of school, but one of the top reasons (according to the recent survey) is that students have family obligations to tend to. In addition to family reasons (children to tend to, older parents to support, sick parents to support, etc.), here are some of the other reasons why students leave university programs in search of other paths
-24% of students that dropped out were tired of paying high college tuition fees. These students decided to enter the workforce immediately instead.
-27% of students simply wanted to work and didn’t want to bother with school after a few semesters.
It can make sense to drop out of school if the tuition fees are too high, but not finishing a degree that was started can also make paying down debt a lot tougher. Often, it’s not possible to find a well-paying job without a university diploma of some kind, so not obtaining that diploma means that the likelihood of finding a job that will allow a student to pay back hefty student loans is slim.
Interestingly, 25% of respondents noted that they were simply not interested in school after a semester or two. Based on the survey notes, it’s better to find another program to finish than to attempt to enter the workforce after just a few semesters at school.
The Truth about “The Default Status?”
In order to default on a student loan, a student has to stop all payments for a period of 360 days. According to the same study, students that drop out of school are a lot more likely to default on a student loan. Some experts believe that the high default rate is a direct result of loan education – or lack thereof.
When a student drops out of school, exit counseling should follow that decision. Unfortunately, most students drop out without meeting with a counselor or understanding what monthly student loan payments will look like.
It stands to reason that the longer a student attends school and then drops out, the more debt that student will incur. So while dropping out means paying a lot of debt that will be tough to pay due to a lack of education and, thus, a good job, it’s better to drop out of college as a freshman than a senior.
Getting Default Debt Help
There are some things that you can do to get out of default status when it comes to your student loans. If you find that you cannot pay a student loan debt, it’s best to speak with a qualified attorney before defaulting.