Americans are borrowing more money. And it's not just on their credit cards.
Student loan debt is now the number one consumer debt, totaling more than $1.4 trillion.
Here in South Dakota, students carry about $26,000 in student loan debt. That's slightly higher than the national average.
There are two types of loans, federal and private loans. And the two are totaling different. Federal loans are fixed loans and you get those from the government. Private loans usually come from banks, foundation, etc., and the process is different if you fall behind on your loan payment. With a federal loan, you can usually get a deference or forbearance, which will allow you to temporarily postpone or reduce your federal student loan payment. Private loans are like borrowing money for a house or car. Lenders don't distinguish between education and another loan you may have. Those loans have a variable rate, which means the rate changes all the time. And banks aren't too sympathetic if you fall behind on your payment.
As the cost of education continues to rise, South Dakota Governor Dennis Daugaard says his administration will work with the South Dakota legislature this year to freeze tuition at state universities and increase the money given to technical schools.
Can carrying a lot of student loan debt affect you? The answer is yes. Terry Mills, a consumer credit counselor, says that carrying a lot of student loan debt can affect your ability to buy a home or a car, which hurts the economy.
"It's really holding a lot of people back. And it's really hurting our economy because people aren't buying houses and cars and stimulating the economy. Most of the money is going back to pay that debt and not used in the economy," Mills said.
Mills also says he thinks many students are using the money to finance their lifestyle.
"Student loans people don't have any restrictions on how they use the money. And I see people use it for car payment, to pay the rent, buy their food, and put gas in their car, because most students don't have a lot of money. So they're using this money to live on basically. And there in lies the problem," Mills said.
So before signing on the dotting like of that student loan application, try getting a grant, enroll in a work study, or find a part–time job to help reduce your potential student loan burden.