Student loan debt is worse than you thought
A new congressional report says the US burden is nearly $1 trillion, posing a threat to both new grads and the entire economy.
It's a fact: Getting a college degree can also get you a better-paying job. But as enrollment in colleges and universities has risen, so has student loan debt, making it the only type of consumer debt that continued to grow during both the recession and the economic recovery.
According to a new congressional report, student loan debt has nearly doubled since the recession started -- going from $550 billion in the fourth quarter of 2007 to almost $1 trillion during the first quarter of this year. And the Joint Economic Committee report says student loan debt, from both federal and private loans, "now represents the biggest aggregate balance among non-mortgage debt categories."
The report notes two-thirds of recent college and university graduates left their alma maters with an average balance of $27,000 in loan debt, which works out to about 60% of what a young graduate earns annually
Other financial challenges loom. Unless Congress acts, the interest rate on federally subsidized Stafford loans -- low-interest, fixed-rate loans for any student enrolled at least half time -- are expected to double on July 1 from 3.4% to 6.8%.
That rate increase would raise the cost of interest for students borrowing the maximum amount of Stafford loans to $4,500, or by $2,600, for the average borrower. This change was originally scheduled to take place last year, but Congress passed an eleventh-hour one-year extension.
As the Joint Economic Committee report notes, the rising cost of higher education and increasing debt burdens for students pose a risk not only for new graduates but for the overall economy.
"Higher education provides students with the skills needed to be competitive in today's global economy and creates a gateway to well-paying careers," Sen. Amy Klobuchar, D-Minn., the vice chair of the Joint Economic Committee, said last year during the first round of debate on the Stafford loans.
"But rising costs for education are putting a strain on . . . families and students, and burdening students with thousands of dollars in additional debt is simply unacceptable."
Can we just say a collective 'duh'!!!! You've created a system where schools are not held accountable for their performance (i.e. - stupid classes that serve no purpose in the real world, arrogant professors that don't actually teach but have someone else take the burden, a pattern of increasing 'easy' grades to cook their graduation numbers) and all they're focused on is competing for that gubment cheese. Have fun kiddos paying for all the amenities which is where your money's really going just so you can graduate and never have them again. College is basically saying "These will be the best 4 years of your life because we can't promise you a job after this so sit back and enjoy this brand new Student Center you'll be leaving in 4 years!"
According to the Gang of Eight, America needs to TRIPLE LEGAL immigration (in addition to amnesty for 11-20 illegals) because there are not enough skilled workers here already.
So why are we bothering to educate young Americans anyway? The Gang of Eight's bill provides for massive increases in low, middle, and highly-educated immigrants. And our unemployment rate is and has been high for over a decade now.
Hmmmm. Very interesting future for America.
I worked my ay through college in the 70`s.You better have a great job to do that these
46 percent of America's college students don't graduate college within six years. Guess what, they still owe the money. I'd like to see the stats on that.
I went to college thinking it was a good choice. Went for education, not a ton of money, but something that is very useable. I knew on a teacher's salary loans wouldn't be easy to pay off, but I could still do it. I graduated 3 years ago and still have not been able to find a full-time job! I found that most employers would not risk hiring me because they were afraid that as soon as I was offered a teaching job, I would leave them and with all the budget cuts in education (and across the board) veteran teachers are being given the open spots. It is not due to lack of trying, but there just aren't jobs, so how are we suppose to pay our loans?!
I agree with someone's previous post, I am well over the $27K mark, because I had parents who couldn't fund my college at all, tuition and living expenses were all on me (and yes I worked). My mid-line university's tuition went up EVERY year, which was not helpful.
Maybe colleges should start charging based on the degree seeked, rather than an across the board fee???
As a recent college grad I've see some things in college in the students that need to be changed, and it's up to parents or guidance counselors to help.
1. Someone one needs to tell them that doing what you love just might not be practical, if the subject you love in is not in a good field economically then minor in it if you have time, but try to major in something safer. This is also a lesson in growing up for the students.
2. Unless no public schools with a region have your major go to them, it saves so much money, and I would've if there was one within 500mi.
3.If you're unsure after a year withdraw its better to figure your life out without paying 20k a year. and if you want to go back you can re enroll.
Higher education provides students with the skills needed to be competitive in today's global economy and creates a gateway to well-paying careers.
I hear that recent grads have first pick at McDonalds and Starbucks. Not everybody should go to college. And you definitely shouldn't go without a plan, a financial one. Too many people are wasting their and taxpayer money on useless education. If there was a giant market for educated folks, I could see taking the risk, but there isn't.
If you can't afford to take the risk on your own dime, taking it on someone else's is worse because now two people are broke.
Has anyone ever thought about all the money that is given out in Pell Grants each year to students that never finish school? I attended a "state college" and found that classes were basically empty unless it was exam day. Many students were there to pick up that extra cash left over from their grant and had very little interest in learning while those of us who had to pay for our education made every moment count.
Yes, it is a choice to continue our higher education. We worked hard for our degrees and we will pay. But, maybe we wouldn't have to pay as much and more would graduate if the government started expecting a return from those students that were given the opportunity for a "free ride" only to blow it.
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