NJ expert warns soaring tuition and loan caps are crushing students

🎓 Student loan changes are making it harder for many students to afford college and graduate school, with new federal borrowing caps leaving major funding gaps.
💸 An education finance expert warns more students may turn to private loans as tuition continues to soar and student debt nears $2 trillion.
📚 Experts urge borrowers to compare lenders, apply for aid and choose repayment plans carefully to avoid costly mistakes.

College students are saddled with more student loan debt than ever before.

With inflation at its highest level in years, colleges and universities costing tens of thousands of dollars, and trying to find a job to pay back the loans even with a six-month post-graduation deferment, affording college has become so difficult.

New student loan limits make graduate school harder to afford

“The student loan debt for the average college grad is about $38,000, and in many cases a lot more. That means the overall debt grads are now carrying is fast approaching an astounding $2 trillion,” said Paul Oster, president and CEO of credit repair firm Better Qualified, in Eatontown.

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Graduate students are getting hit the hardest with the new sweeping student loan repayment program.

“They eliminated the Federal Direct Grad Plus Program. That’s what every graduate student took advantage of. So, that’s completely gone, and now graduate students are capped at $20,000 a year and an aggregate total of $100,000,” Oster said.

To make matters worse, professional students like doctors, lawyers and pharmacologists are capped at $50,000 with a total aggregate of $200,000.

It’s the same nightmare for undergraduate students.

The U.S. Department of Education capped the Parent Plus Loan at $20,000 a year with a total loan amount of $65,000. That doesn’t even cover one year at many four-year colleges, Oster said.

Big changes are coming this summer that will affect the way parents pay for college tuition (Canva)

Expert warns soaring tuition is the real problem

Oster issued a stark warning as the bottom line.

“Students will not be able to afford grad school, for sure. So, where is this money coming from? They’re going to have to take out private student loans to make up the difference. You know, $20,000 a year? Most grad programs are $50,000 a year,” Oster said.

This country does not have a student loan problem. It has a tuition problem. Oster believes tuition should be capped at colleges.

There is $1.8 trillion in total student loans, and a large percentage of those loans are in late-stage delinquency, 90 to 120 days late and going into collections, he said.

Canva / Townsquare Media illustration

Tips for paying off student loans and borrowing wisely

But there are things that can be done to help college students pay off student loans, Oster said.

First, if you’re a recent college graduate and you have a student loan, be sure to contact a student loan servicer or go student.aid.gov to get into a safe plan, Oster said. Pick a plan that works best for you to repay.

But if you don’t pick a plan within 90 days from July 1, a plan will be chosen for you, and you don’t want that, Oster said.

For graduate students, have a plan in mind. Don’t take out the first loan offered to you. Many times, these students will overborrow because they figure the interest rates are good and they still have a six-month grace period before they have to start making payments.

But Oster suggests only borrowing the amount that you need, maybe even less. Some employers will even pay for tuition if you work and go back to school.

Student loans are getting tougher to pay off, especially for grad students, one NJ expert says (Canva)

Look for scholarships, fellowships and institutional aid before you pull the trigger on one of these student loans, Oster said.

For undergrads, get pre-approved from two or three different lenders. Shop around. Get into a fixed rate, and not a variable rate loan. Oster said while those rates may sound okay to start, they can balloon very quickly.

Check to see if you have a longer grace period before having to pay back the loan. While the standard is six months, some loans have longer deferment plans, some even up to 48 months, Oster said.

If you need a co-signer, some of these lenders have a co-signer release program, which is very attractive to parents.

“If you make 12 to 24 payments on time, then the co-signer can be released from that obligation. So, make sure that there is no origination or pre-payment fees and penalties when you’re taking out these loans," Oster said.

Fewer students may attend college if costs keep climbing

Oster said he’s already seeing a decline in applications to four-year schools, undergrad and graduate programs. That’s because students are looking at this and thinking they’re not going to be able to afford this with only being able to borrow $20,000 a year.

He says more has to be done to cap tuition and have a balance between tuition costs and student loan repayment programs.

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