The world of education has seen the rise of college as a lucrative source of income, but it’s not the only one, according to a report.
The average college graduate is expected to take home $150,000 less than the average non-graduate by 2039, according the US Department of Education.
The report is from the National Student Clearinghouse, which tracks the student loan debt of US students.
In addition to higher tuition fees, the average student loan payments are expected to grow by 8% per year, meaning a total of $150 billion will be forgiven over the next 20 years.
As of the end of 2019, there were 2.5 million US graduates who had paid off their loans.
But there are currently an estimated 5.3 million of those students who are still waiting for repayment.
“The problem is that, over time, people get stuck paying for things that are really not there,” said Michael D. McCauley, senior vice president at the National Association of Colleges and Employers.
A big part of that problem is the lack of flexibility when it comes to how students repay their loans, McCauleys report states.
For instance, most graduates who take out loans after completing a degree have their repayment terms reduced to four years, which could lead to borrowers paying off loans faster than the government should be paying.
To fix that, the report recommends a four-year repayment plan, which students should be encouraged to follow.
But there’s a catch: The repayment plan can be changed for a student who graduates with a bachelor’s degree, as long as they make no more than 15% of the minimum wage.
Some states, such as California, have adopted similar repayment plans, but they aren’t perfect.
For example, students in New York who take a four year repayment plan that’s based on their income can pay off their debt faster than graduates who didn’t.
Additionally, some states require that students pay off a certain percentage of their federal Pell Grant amount, which is $5,600.
For graduates who only earn less than $26,600, it’s $1,200.
And the report notes that a few states, including Florida, Georgia, Illinois, Iowa and New York, offer some form of financial aid that helps pay off student loans.
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Read more about debt at Business Insider: Business Insider What it’s like to live on student loan money