Due to the economic recession in the United States, the Americans find it very much difficult to get suitable jobs after they complete their education. As such, they are unable to pay off their student loans and are facing financial problems. Student loan debt may cause an economic mess in similarity with the mortgage crisis. As per the study by the National Association of Consumer Bankruptcy Attorneys, the Americans owe more on student loans than on credit cards. The total outstanding loans have exceeded to $1 trillion for the first time in the previous year. The student loan debt is becoming a rising threat to the US economy. It has reached about $870 billion surpassing the credit cards and car loans and these balances are expected to continue rising.
Seniors entrapped in $36 billion debt in college loans
Student loan debt seems to be the next problem that the US people are going to face in this tough economy. No one can escape from this unavoidable debt burden. The cost of education is rising with each passing day and the parents are finding it difficult to pay the college fees of their children. Thus, the problem of student loan debt is increasing. The job market is unable to offer the appropriate job to the youngsters. It is hard to believe that a huge number of senior Americans are still facing student loan debt.
According to the data from the Federal Reserve Bank of New York, it focuses on how student loans are becoming a burden not only for the youngsters but also for the senior citizens of America. The data shows that the Americans aged 60 years and above have $36 billion in student loans that they have to repay. About 5% of $85 billion delinquent student loans in the U.S. is owed by the seniors of 60 and another 12% is owed by the Americans aged 50 to 59.
Student loan debt outperforms credit card debt
For the first time, student loan debt has crossed credit card debt and is possibly to top a trillion dollars this year as the number of students going to college is increasing and many of them borrow money from credit cards or take out an educational loan to pay their college tuition fees. As per many economists, student debt should be considered more favorable since the rising loan bills mean that many graduates will require long time period to pay off their student loan debt. According to Mark Kantrowitz, many people will be repaying their student loans in the coming years when their children will go to colleges.
In the year 2008, two-thirds of the graduates had passed out with debt, compared with less than half in the year 1993. The graduates who had taken out loans in the previous year passed out college with an average of $24,000 debt. Thus, the rates of graduate defaulters are increasing particularly among the ones who have completed their bachelor’s degree from profitable colleges.
Few ideas to manage student loan debt
Have a look at some of the ideas to manage student loan debt.
- Look for scholarships and grants – A lot of financial help do not need repayment and some of these aids remain unclaimed every year. The students need to fill out the application form for Federal Student Aid free of cost they enroll themselves even though they do not imagine to qualify for it. This will let the financial aid office of the college know if the students have any interest in any of the opportunities offered by them.
- Select a college according to price – The students take into consideration several factors when they choose a college. It would be best to take admission in a college that has low tuition fees than one with a reputable name according to their financial capability.
- Choose loan forgiveness – If you’ve taken out Federal loans like Stafford loans and Perkins loan, you can qualify for student loan forgiveness options. However, you need to demonstrate undue financial hardship that is barring you from making the monthly student loan payments on time in order to qualify for the student loan forgiveness programs.
- Pay off your student loans soon – The students should keep aside as much money as they can from their income after meeting the daily expenses. The students should also make it a point to pay off the student loans soon so as to come out from such problems.
According to the studies, student loan debt has topped $25,000 on an average which has increased to 25 percent in 10 years. The Americans obtain a degree so that they can get a suitable job and pay off their student loan with the help of it. But due to economic recession, they are unable to get a suitable job and so, the problem of unemployment seems to exist. Thus, paying off the rising student loans have become a heavy burden for the Americans.
This post was contributed by Justine Anderson who is a contributory writer associated with the Debt Consolidation Care Community. She has written several articles for various financial websites and has made significant contributions through her various articles for the Debt industry.