Almost everyone knows these days that student loan debt is a pressing problem. Millions of young college graduates are leaving school facing huge debt loads and the inability to find good-paying jobs to pay off these debts. The economy cannot support the number of graduates, and with student loan debt that cannot be discharged in bankruptcy, many find themselves unable to get out of their debt load.
National student loan debt $1 trillion
The latest estimates put US student loan debt at just under or around $1 trillion, depending on the source of the information. The average college graduate owes more than $26,000 in loans when they receive their diploma.
Some people blame the easy availability of federal funds for increasing these figures, while others point to factors such as for-profit institutions offering high-interest loans to prospective applicants and using hiring techniques with misleading information about the availability of funds. jobs for graduates.
Federal student loans are available to almost anyone who applies to go to college, a fact that some experts have pointed to as a major source of problems with individual student loan debt. While not dischargeable in bankruptcy, federal student loan debt has a variety of built-in protections, such as deferment and forbearance, as well as income-based repayment options for those struggling to make payments. Also, the federal interest rate has been pegged at a manageable percentage for some time, although recent legislation could be put in place to increase it.
A major point of contention has been high-interest private loans offered by companies for borrowers in graduate school and enrollment in for-profit institutions. These high-interest loans do not have the same built-in protection as federally-backed loans, and yet they are still not dischargeable in bankruptcy. What this means is that more and more students from higher education and for-profit institutions are graduating with student loan debt at interest rates much higher than the federal levels, without the income-based protection offered by federal loans. These graduates are denied the bankruptcy protection afforded to other such loans, such as credit card debt, to which private student loan debt is most closely related. The result of all this is a growing group of people who are unable to find the kinds of job opportunities their degrees should give them, and equally unable to get any relief from their debts, which can threaten to quickly overwhelm them.
Many experts are actively pushing to fix this issue and hopefully a fix will be found in the near future.
