The student debt clock online displays the current of student loan debt rising at an alarmingly fast rate, jumping approximately $2,853.88 a second.
Student debt is a major economic issue which affects millions of people all across the country. According to “Student loans: Do college students borrow too much-or not enough?” in the Journal of Economic perspective, the student loan debt in the United States has risen to $800 billion as of June 2010, surpassing total credit card debt for the first time in history. All across the United States students are taking out more and more loans in an attempt to pay for the higher education they feel they need in order to secure the kind of future they want. It has been calculated by experts that by the age of 64, college graduates will have amassed approximately $1.2 million in salary as compared to high school graduates who were estimated to be $780,000, a difference of $420,000 over the course of about 40 years, as outline in a study by Christopher Avery and Sarah Turner in the Journal of Economic Perspective.
There are numerous articles and stories everywhere, chronicling the struggles that today’s students and graduates face once they take out loans, in many cases loans which they either cannot pay back or cannot pay back in time. In an article regarding defaulted loans and collection issues, the NY Times spoke with Amanda Cordeiro, a student currently being hounded by collection agencies. She dropped out of university in 2010 and currently owes $55,000 in loan payments stated that as a result of the creditors constantly calling her, up to seven times a day, that “In a year this is probably my fourth phone number.”
Some students pursue majors in which their careers will not produce large salaries, so it will be difficult and time consuming to pay their loans back. Other students drop out of college and don’t see a need to pay back loans for an education which they did not complete, or there are those who do graduate but are unable to get far enough ahead at any point to pay back their loans. Jake Brockman, a 2008 Keuka College graduate, spoke to Andrew Martin of the New York Times about his experience of falling quickly behind on his student loans. He defaulted on an $8,000 loan he took out while in school, which with interest and the like, has now grown into $13,000, in addition to the $100,000 in student loans he currently owes.
Duquesne University prides themselves on their low default rate. Rich Eposito works as the Director of Financial Aid and can attest that “Borrowing has most definitely gone up; student loans now exceed the national credit card debt.” He takes pride in the fact that “Duquesne is lower than the average when it comes to the national default rate. National default rate is 13.4% where as at Duquesne it’s 2.3%.” Duquesne tries to consul students against taking out large student loans, which could put the students in debt, but will help them to take out the loans, if that is what they really want to do.
Jessica Dayen, a third year physician’s assistant student at Duquesne University, is not a big fan of student loans and the issues they cause. She knows quite a few people who take time off from school to save money to pursue and education later. Although she sees the benefit of saving up money first she believes that “it’s beneficial to take the loans, at eighteen years old I didn’t have the money to pay $35,000 for a year of schooling.”
Students are easily caught in this whirlpool of debt; they take out loans in order to attend the universities they wish to, but the cost of the school quickly rises, leading many students to take out more loans. Over time the loans continue to build up, so much so that the students are unable to pay back after school has ended or they are unable to pay them back quickly enough, causing interest to mount and default to grow.
One of the major issues with student loans is the government’s lack of background checking on the people taking out student loans. In the article “Student loans backed by government crush many families,” NBC News found that people are checked as to their past credit history, but income is not evaluated nor is the borrower’s ability to repay the loan in the future. Some parents take out large unrealistic loans which they are unable to pay back promptly, or as Mark Kantrowitz so aptly told NBC News, “The government runs the program by the seat of its pants. You have some parents…who are getting in completely over their heads. Those parents are going to default, and their lives are going to be ruined, because they were allowed to borrow far more than is rational.”
There are no limits to the amount of loans that people can take out between student aid loans, government packages, plus loans just to name a few. One of the scariest parts of the whole student loan debt crisis is that there is no statue of limitations when it comes to collecting these loans. Students and their parents need to pay close attention to the loans they signs for, in case of a default, there is no ending period that the collectors will stop calling. Student loans can be very beneficial in helping students to attend university they wish to, but they need to be aware of the future implications of the loans they take out now.