Founded in 1976, David Lerner Associates is a privately-held broker/dealer withheadquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL;

Teaneck and Princeton, NJ; and White Plains, NY.

www.davidlerner.com

Material contained in this article is provided for information purposes only and is notintended to be used in connection with the evaluation of any investments offered by

David Lerner Associates, Inc. This material does not constitute an offer orrecommendation to buy or sell securities and should not be considering in connection

with the purchase or sale of securities.Member FINRA & SIPC

How Much is College Debt Costing Students Today?

Student loans were one of the issues in the Presidential electioncampaign, and for good reason: Nearly one in five families hasoutstanding student loan debt, according to the Pew Research Center.

The average outstanding debt is $27,000, but about 10 percent offamilies that have debt owe more than $61,000—and four percent owemore than $100,000, Pew reports. The total college debt load in theU.S. is now about $1 trillion.

Long-Term Impact of College Debt

With the job market for recent college graduates still challenging, someexperts are concerned that these heavy debt loads could burden youngpeople for many years and hinder their ability to save and invest for theirown future retirement.

Consider Mary, who borrowed $27,000 in federal student loans butgraduated college last spring owing $33,000, including interest. Hermonthly student loan payment is $380, which is based on an interest rate of6.8 percent and a repayment period of 10 years, at which time she will endup repaying a total of $45,572, including interest.

Mary was fortunate enough to land a job in the fall at a starting salary of$25,000. But after paying her rent, utilities, groceries, health insurance andother fixed expenses, she barely has enough left to make her student loanpayment—much less contribute anything to her company’s 401(k) plan.

Mary could talk to federal loan servicers about lowering her monthlypayment by extending the repayment term. If she extended the term to themaximum 25 years, this would lower the monthly payment to $229, butincrease the total amount paid to $68,712—or more than twice the originalamount borrowed. So while extending the loan term may offer sometemporary relief in the form of lower monthly student loan payments, thetradeoff of more interest paid over the term of the loan can be expensive.

Potentially Better Options

A better option for many students and families is to try to avoid student loandebt in the first place. Here are three strategies for doing this:

1. Start saving for college early. It’s really never too early to start savingfor your children’s college educations. Fortunately, there are several tax-advantaged options available to families, including Section 529 plans,Coverdell Education Savings Accounts (ESAs), zero coupon municipalbonds and Roth Individual Retirement Accounts (IRAs).

2. Apply for grants and scholarships. Unlike college loans, grants donot have to be repaid. ere is a wide variety of different types of grantsand scholarships available to students and their families today, many ofwhich aren’t well-publicized. If your child is in high school, speak with theschool’s guidance counseling department and/or financial aid departmentto find out more.

3. Send your child to a local or community college. ese tend to beless expensive than four-year colleges and may offer virtually the same coreclasses that are required for a degree during the first two years. And bystaying local, your child may be able to live at home, which could savesignificant money on room and board. Be sure to find out whether creditsearned at a community college will transfer to the four-year universityyour child plans to attend next.

Student loans were one of the issues in the Presidential electioncampaign, and for good reason: Nearly one in five families hasoutstanding student loan debt, according to the Pew Research Center.

The average outstanding debt is $27,000, but about 10 percent offamilies that have debt owe more than $61,000—and four percent owemore than $100,000, Pew reports. The total college debt load in theU.S. is now about $1 trillion.

Long-Term Impact of College Debt

With the job market for recent college graduates still challenging, someexperts are concerned that these heavy debt loads could burden youngpeople for many years and hinder their ability to save and invest for theirown future retirement.

Consider Mary, who borrowed $27,000 in federal student loans butgraduated college last spring owing $33,000, including interest. Hermonthly student loan payment is $380, which is based on an interest rate of6.8 percent and a repayment period of 10 years, at which time she will endup repaying a total of $45,572, including interest.

Mary was fortunate enough to land a job in the fall at a starting salary of$25,000. But after paying her rent, utilities, groceries, health insurance andother fixed expenses, she barely has enough left to make her student loanpayment—much less contribute anything to her company’s 401(k) plan.

Mary could talk to federal loan servicers about lowering her monthlypayment by extending the repayment term. If she extended the term to themaximum 25 years, this would lower the monthly payment to $229, butincrease the total amount paid to $68,712—or more than twice the originalamount borrowed. So while extending the loan term may offer sometemporary relief in the form of lower monthly student loan payments, thetradeoff of more interest paid over the term of the loan can be expensive.

Potentially Better Options

A better option for many students and families is to try to avoid student loandebt in the first place. Here are three strategies for doing this:

1. Start saving for college early. It’s really never too early to start savingfor your children’s college educations. Fortunately, there are several tax-advantaged options available to families, including Section 529 plans,Coverdell Education Savings Accounts (ESAs), zero coupon municipalbonds and Roth Individual Retirement Accounts (IRAs).

2. Apply for grants and scholarships. Unlike college loans, grants donot have to be repaid. ere is a wide variety of different types of grantsand scholarships available to students and their families today, many ofwhich aren’t well-publicized. If your child is in high school, speak with theschool’s guidance counseling department and/or financial aid departmentto find out more.

3. Send your child to a local or community college. ese tend to beless expensive than four-year colleges and may offer virtually the same coreclasses that are required for a degree during the first two years. And bystaying local, your child may be able to live at home, which could savesignificant money on room and board. Be sure to find out whether creditsearned at a community college will transfer to the four-year universityyour child plans to attend next.

Founded in 1976, David Lerner Associates is a privately-held broker/dealer withheadquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL;

Teaneck and Princeton, NJ; and White Plains, NY.

www.davidlerner.com

Material contained in this article is provided for information purposes only and is notintended to be used in connection with the evaluation of any investments offered by

David Lerner Associates, Inc. This material does not constitute an offer orrecommendation to buy or sell securities and should not be considering in connection

with the purchase or sale of securities.Member FINRA & SIPC

How Much is College Debt Costing Students Today?