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New TV game show shines spotlight on student loan crisis

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A new comedy game show is turning the spotlight on student loans.

Hosted by actor Michael Torpey, “Paid Off” premiered this month on TruTV. “Paid Off” mixes elements from popular game shows as contestants answer trivia questions about college life and academics.

The prize? College graduate contestants can win money to pay down their student loans. Get enough questions right and they could win enough money to wipe their entire student loan slate clean. Even the losing contestants can walk away with no less than $1,000.

“Correct answers are worth $100, and there’s no penalty for wrong ones because I just want to give you guys money,” Torpey told contestants during the first show.

What does this mean?

Beyond the prize money, this new game show could help Americans better understand the full scale of the student loan crisis.

Just how bad is it? In the U.S., total student loan debt ballooned to $1.5 trillion in the first quarter of 2018, according to the Federal Reserve.

Based on June 2018 credit report data for more than 60 million U.S. Credit Karma members, those who have student loan debt owe an average of about $33,370 in student loans. That makes up a little more than 13% of those members’ overall debt and comes in at the second-highest amount of debt after mortgages.

Why should you care?

The student loan crisis only seems to be getting worse.

Tuition costs seem to keep rising, making it increasingly difficult for students to avoid taking on debt. According to a 2017 report published by the College Board, after adjusting for inflation, public college tuition and fees at four-year institutions rose by 8% over the past five years, while published private nonprofit four-year school tuition and fees increased by 13% over the same period of time.

This all could translate to sky-high tuition costs and higher monthly student loan payments.

By 2035, J.P. Morgan predicts the cost of attending a four-year private school for a student who is just starting college could hit $487,004.

Meanwhile, according to the Federal Reserve, the average monthly student loan payment was $393 as of May 2017. On top of that, in its 2017 report on the economic well-being of U.S. households, the Federal Reserve found that among respondents with outstanding student loans, 20% were behind on their payments.

And low-earning college graduates are likely feeling the strain.

A 2016 survey by Citizens Financial Group of college graduates age 35 and under with student loans found that graduates surveyed spent about one-fifth of their salaries making student loan payments. About half of graduates surveyed responded by cutting back on discretionary spending for travel, shopping, entertainment and restaurants. Four in 10 reported being forced to limit the amount they could spend on rent (or mortgage) payments.

The increasing burden of student debt can also prevent borrowers from paying off their loans until later in life, with a majority of the college graduates surveyed expecting to make student loan payments into their 40s.

What can you do?

You can always try out for “Paid Off” for a chance at winning money to pay your debt. But the odds of being selected for a game show are pretty slim. That doesn’t mean you have to be stuck paying off student loans for the rest of your life, though.

Here are a few ideas that could help you get out of debt.

  • Consider a second job. Oftentimes, sharing-economy gigs allow you to set your own hours, which can help you cope with your full-time job.
  • Double your student loan payments (if you can). By increasing your payments, you can pay down your debt faster and save money on interest charges over time. By following some simple cost-cutting tips or by picking up a side job, you might be able to put some more money aside to pay down your student loans.
  • Refinance your student loans. If your credit has improved since you graduated and you have a stable job, you might be able to refinance your student loans at a lower interest rate. Plus, paying one lender can be a whole lot simpler than paying a dozen different banks that all helped finance your education.

About the author: Tim Devaney is a personal finance writer and credit card expert at Credit Karma. He’s a longtime journalist who prides himself on being a good storyteller who can explain complex information in an easily digestible wa… Read more.