The rise of student loan debt is a major issue for millions of Americans and in an already burdened economy that has practically stalled out it is becoming more difficult for those who have student debt to pay their bills.
Although our nation’s leaders have addressed the situation with some financial relief programs, it’s still not enough to curb the impending impact that the student loan bubble will have on the economy once it bursts.
According to the Department of Education the average college student graduates with over $26,000 in debt, and that can have an undesirable impact on their life choices.
According to the Consumer Financial Protection Bureau (CFPB) website, student loan debt topped $1 trillion nationwide in July of 2013, most of which is federal student loan debt.
As a veteran and student with over $40,000 in student loans and no guarantee of a career position once I graduate, this is an extremely alarming situation.
Even those who have graduated with master’s degrees are having a hard time finding a well paying position, and the fact that they are struggling to pay the copious amounts of student debt makes it that much harder to enter into their desired career field.
It is estimated that approximately 37 million Americans have outstanding student debt and 5.4 million Americans have at least one past due student loan account according to the American Student Assistance (ASA) website.
Student debt is practically unforgivable though there are a handful of exceptions, such as proving that the debt is causing undue hardship, which is extremely difficult to prove by the way, or a crippling permanent disability that doesn’t allow one to work, or even death.
Even in the event of death, private student loan debt may or may not become the responsibility of the cosigner depending on the policy of the lender.
The White House has addressed the issue of the student loan crisis. The creation of legislation such as the Bipartisan Student Loan Certainty Act of 2013, maintains low interest rates on federal student loans.
The government has also introduced the income based repayment program that allows people to pay back their federal debt based on their income.
Private lenders often don’t let their borrowers refinance their loans, nor do they offer alternative payment plans that provide financial relief to those especially in need of it; and the longer debt goes unpaid, the more money that must be paid back.
In some cases, the borrower ends up owing twice as much as what was originally borrowed due to unfair interest rates.
According to the ASA, those with student debt are less likely to buy a home, get married, have children, save for retirement, and enter a desired career field because of their debt; student loan debt is limiting young people’s ability to achieve financial success.
In 2008, more than $900 billion of taxpayer money was distributed to bail out banks and big businesses, and we’re still paying for it.
Student loan debt will have a detrimental impact on the economy nationwide, one that could compound the problems that the 2008 housing market crash posed on the U.S. not very long ago and we cannot afford to go through again.