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Sallie Mae president Jack Remondi on the steps parents and students should follow when taking out student loans.
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This is -- surprising statistic Lisa caught me off -- 69%.
-- -- are now ruling out colleges that are.
Too expensive in other words of putting cost is the top priority to choosing a school.
-- recent Sallie Mae surveyed that is a 5% jump since last year joining us now it Sallie Mae's president.
And chief operating officer to talk more about how you can plan and safe for college.
Jack -- welcome.
Thank you -- right so do you ever foresee a time where cost doesn't have to be the priority for so many analysts and choosing a college.
It's difficult this too difficult to see that -- -- it sat college costs today are certainly very high -- have been rising faster than family incomes.
And what we really see is that families need to develop a plan to pay for the full cost of education.
Too often we see families who are figuring out how to pay for this semesters bill.
And not taking into consideration how to -- actually graduate with a degree.
What -- get your take guidance something that's been gaining traction that is this idea that student loans the amount of dollars being borrowed by students.
Is literally the next credit bubble to burst that there's so much money and it's so easy to access.
That that's also one of the primary drivers to these rising tuition costs.
Well certainly there's been a lot of headlines made as a result of best student loan debt.
Reaching a one trillion dollar mark.
But I think it's important to note that most of that increase is really driven by the fact that there are six million more Americans in college today in the -- say ten years ago.
When we look at the average amount that graduates coming out of four year schools have today's student loan debt it's only up about 2% a year over the last ten years.
To about 2426000.
Dollars on average.
That's a pretty manageable debt level.
But -- -- -- but when you encourage students to be incredibly thoughtful as to how much my needed to take out to to really.
Be conscious of that course of study they're gonna take and what their income potentials going to be -- that they're not straddled with this debt or generation.
-- that absolutely I I would say there's three take steps that students and family should follow one is they need a plan.
To cover the full cost of education.
-- they need to pick a school that matches there financial ability.
In one that also if they're going to borrow.
The the the income from that degree.
Is in sync with the amount that they have.
And probably the most important thing they need to do is graduate students who -- and do not graduate tend to default.
At about four to five times the rate to students who who graduate with debt.
When we look at the the overall the fall rate in the federal programs today if you if you borrowing graduate -- default rate is well under 4%.
So it it is critical that you get -- -- hello people say that is the availability of money that drives up the price that because the loans are available to students can get them.
That -- the universities are able to inflate their prices further because there's money there to meet that demand how -- -- counter that argument.
Wasn't that -- Is that that varies from institution to institution but I I think there is say there is an availability of federal finance saying to students and families and families do need to bear part of this responsibility -- thinking about how much they can afford to borrow.
Relative to the program a study that they they plan to take on.
You know at the end of the day if you over borrow four year education and you are you you're more likely today to have a problem -- -- -- say ten years ago.
But college still is affordable and I think most importantly it's still -- wise investment if -- if you follows those three key steps of have a plan.
Pick the right school based on your own financial abilities and graduate.
OK Jack -- Monday thanks so much space thank you.
