Student Loan Debt May Exceed A Trillion By Years End
Apr 11th, 2011 @ 4:29 PM by Debbie Dragon
According to an article on NYTimes.com, student loan debt could very well pass the trillion dollar mark by year’s end. Just last year student loans surpassed credit card debt, and it did not stop there. With the economy continuing to be sluggish, coupled with colleges receiving less funding and raising their tuition, more and more students are being forced to borrow and borrow more than ever in the past.
In 1993 only about half of those who graduated from college had student loan debt compared to today where 2/3 of all college grads are faced with paying back student loans. For those leaving college last year, the average loan bill came in right around $24,000.
This is not good news for college graduates.
In the coming years, a lot of people will still be paying off their student loans when it’s time for their kids to go to college,” said Mark Kantrowitz, the publisher of FinAid.org and Fastweb.com, who has compiled the estimates of student debt, including federal and private loans.
According to the article, student loan debt is likely to continue on an upward trend in the near future. With budget cuts expecting to deeply impact education, Pell grants are expected to be greatly reduced. This will force the neediest, if they want an education, to have to borrow even more.
High student loan debt can cause financial distress for years after graduation. In the years to come with mounting debt it will most likely be harder for graduates to pay off their loans quickly and many will most likely have to wait to make larger life purchases, like a home, for example.
If you have a lot of people finishing or leaving school with a lot of debt, their choices may be very different than the generation before them,” said Lauren Asher, president of the Institute for College Access and Success. “Things like buying a home, starting a family, starting a business, saving for their own kids’ education may not be options for people who are paying off a lot of student debt.
So, what are potential college students to do is a question being raised by many. With such a focus on getting out of debt, should students be racking up so much debt before they are even employed? While some will argue no, others will argue yes. Some look at student loan debt as being good debt as it invests into your future. Additionally, last year Obama did pass legislation meant to help struggling graduates repay their loans including low income based repayment plans.
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.