There is a growing epidemic in this country; student loans. Studies have shown that 90 percent of graduates from four-year, for-profit colleges took out student loans, borrowing 45 percent more than graduates of other types of colleges. Parents have always told their children that they need a college education if they want to get anywhere in life, but colleges aren’t making it easy.
The ever increasing cost of higher education is a precursor to the student loan default epidemic. According to the Federal Reserve Bank of New York, the proportion of U.S. student loan balances that are in delinquency—that is, unpaid for 90 days or more—surpassed that of credit card balances in the third quarter for the first time.
Young graduates today are struggling with more than just finding employment that utilizes their degree; they are struggling with the debt from student loans. Maintaining good credit becomes difficult when trying to seek employment and your financial situation is bleak.
Student loan lenders report a student’s loans and repayment history to the credit bureaus and do have an impact on credit score. Not making minimum payments, paying late or stopping payments completely can make your credit score go down dramatically. Keeping a good track record can be easily attained by making on-time payments.
Credit scoring is a method of helping creditors determine a credit applicant’s creditworthiness; a high credit score suggests the applicant manages credit well and has the ability to meet his financial obligations.
According to Experian, the average U.S. score is 736, mostly centered in the Midwest. Low credit scores are more common throughout Texas and the Deep South, “led” by residents in Harlingen, Texas; Jackson, Mississippi and Corpus Christi, Texas. In Harlingen, the average score was just 686 as of 2011.
President Obama is on the side of the student. According to the White House, the Obama administration announced steps they are taking to help borrowers better manage their student loan debt by moving forward with a new “Pay as You Earn” proposal that will reduce monthly payments for more than 1.6 million people. This will help students gain back their good credit standing or establish a better one.
If you are concerned about your credit score and want to know how we can help improve it, call us at Valley Federal Credit Union at (956) 425-5668 or the Brownsville Main Office at (956) 546-3108.