Tips for students, parents struggling with loan debt

JONESBORO, AR (KAIT)- With graduation season under way, many graduates will soon start paying on their student loan debt.

Those graduates are increasingly defaulting on their student loans, according to FICO Labs.

"I do have student loans that I take out every semester andit will add up in the years, I know that and I do worry about it," said Katie Elms, sophomore at Arkansas State University.

Elms said she also plans to go to graduate school .

"I'm gonna have to pay that off and that is going to be alot more stress on me," she said.

According to a report by the Federal Reserve Bank of New York, 35% of people under 30-years-old who have student loans were at least 90 days late on their payments at the end of last year.

"I think people are having a hard time finding jobs whenthey get out of school," said Terry Finney, director of Financial Aid and Scholarships at ASU.

About 60% of students borrow money to help cover the costsof college and now a large majority of those students are drowning in studentloan debt.

"Students just need to be aware of every piece of paper thatthey receive that's looks like it's from a federal servicer or may havesomething to do with loan repayment or other student loans," Finney said.

A recent study by FICO revealed more and more graduates are starting todefault of their loans, which leaves them in a very bad position.

"That's going on your credit report, the federal governmentcan garnish wages, they can take your tax returns, it's going to keep you fromgetting a loan for your car or for a house or anything," Finney said.

But the responsibility does not only fall on the student buton the co-signer.

"If that student doesn't make those payments on time then it'sgoing to fall to the parents as a co-signer to make those payments," he said.

Junior Devonte Lockett said he  hasn't really given his loanrepayment much thought.

"I'm a little worried, I haven't really thought about it yet," he said. "I'm kind of waiting till graduation comes.

"They give us counseling online as you accept the loans, butI haven't really taken any other steps other than that," Lockett said.

Finney said it's important that students only borrow whatthey need.

"It's not going to go away, and if a servicer is calling, oremailing and if the school is saying hey you are delinquent, don't ignore that," he said.

The amount of student loan debt has increased 11% last yearand is up 51% since 2008.

Copyright 2013 KAIT. All rights reserved.