As far as convenience is concerned. The next thing we're going to evaluate is what the millennials and senior citizens do we they do opt to pay their student loan debt with or without savings for the child's education. The initial step is to look at the options that are available for repayment. The most frequently offered are the following: deferment, forbearance, income-based and the initial payment agreed at the signing of the promissory note. When you sign your promissory note there's a portion of the agreement that says the amount of interest that you will be required to pay back. Depending on the loan and your lender it may or may not have the exact amount that you will be required to pay back. Most, people who have student loan debt have an option to pay it back on a term that meets the federal monthly budget guideline based on their household size. The nice thing about student loans is you have an option when you're having trouble meeting the commitment if you have proper documentation to prove you qualify. Deferment allows you to temporarily suspend your repayment commitment. According to studentaid.gov, "Both allow you to temporarily postpone or reduce your federal student loan payments. The main difference is if you are in deferment, no interest will accrue to your loan balance. " The major contributing factor to needing either deferment or forbearance is usually short term lines of credit. Lexington law reports, "In quarter four of 2018, America owed a total of $870 billion in credit card debt alone — a 5 percent increase from 2017. When other sources of revolving consumer credit are factored in, Americans owe a total of $1.057 trillion as of March of 2019." So the number of people with debt over ten years old has doubled over the last 3 years. So there is a large number of individuals that have not even thought to address there student loan debt and can't consider an emergency fund. Because they are barely making it off of their monthly income.
First of all, most of the working class aren't staying on the job long enough to earn a substantial amount of social security and/or retirement. Also, the large corporations that are going bankrupt have taken a percentage of 401 k funds and drastically affected the working class's monthly bottom line. Those families that did stay long enough often wonder if they are receiving enough to live off of, much less be able to start a separate savings of any kind. For those who do receive a reasonable amount the priority expenses are related to day to day necessities. In closing, the choice to save for your child's education is totally different for each individual. However, the requirements to have a college education are mandatory for minimum wages. So, the option of saving for or a child's high education cost does not negate the reality of it being a mandatory cost as they grow. Hopefully, this article gives you the necessary components to help you make a more informed decision.
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