NEW YORK (BankingMyWay) — Student loan debt is turning into a game-changing event for younger U.S. consumers, and for their parents who, in many cases, wade in to help pay the tab.
According to FinAid.com total student loan debt has exceeded $1 trillion (the site has a “student loan debt clock" that stood at $1.07 trillion as of Thursday).
College debt has also surpassed credit card debt, an uneasy trend for college graduates struggling with credit card bills on top of their student loan payments.
The federal government and its favorite college tuition lender has noticed.
Specifically, Sallie Mae is getting really aggressive about pushing its Smart Option Student Loan, which the lender says offers lower interest rates, a menu of repayment options and cash rewards for paying your student loan bills on time.
Giving college borrowers some options seems like a good idea. Nobody’s financial situation is the same, and the “smart option" takes that into account with increased flexibility in loan options and (especially) in payment terms, including:
The Smart Option Student Loan, rolled out in 2010, seems to be a hit with consumers. Sallie Mae reports that 56% of smart loan borrowers are making payments while still in school. The lender also notes that it’s paid out more than $2 million in cash-back rewards to on-time borrowers.
Paying back student loans on time while still in school doesn't just pay off loans faster; it also means college students are building good credit that will come in handy when renting an apartment or buying a car.
“Paying for college is a significant commitment for any family, and in many cases it is a student’s first opportunity to participate in a major financial decision,” says Charlie Rocha, a senior vice president at Sallie Mae. “We’ve designed our loan program to promote financial responsibility by encouraging families not to wait until graduation to start loan payments, even nominal ones, and rewarding them for it.”
For college student facing back-breaking debt, the smart loan isn’t perfect. But it is a step in the right direction for college students looking for creative ways to handle their debt.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.