Students loans have become more of a problem when it comes to debt than credit card debt. While people are paying down their credit card balances in the aftermath of the financial crisis, college costs continue to rise. Many think this is happening because there has been less consumer protection. Numerous think that colleges have been raising the costs of tuition making it almost not worth it to get student loans. Meanwhile, research shows that many of the top growing job fields don’t require a bachelor’s degree.
More student loans required with increasing college prices
The 2010 Federal Reserve figures show that $ 826.5 billion in revolving credit is had by Americans right now. FinAid.org compiled reports shown on the Wall Street Journal to show student loans totals to be at $ 829,785 billion. The Journal talked to the publisher of FinAid.org and FastWeb.com, Mark Kantrowitz, who said that in just the last four years there has been $ 200 billion taken out in student debt. With college costs increasing rapidly and also the duration of unemployment increasing, numerous parents borrow to make up the main difference.
Consumer protection unavailable with student loans
Credit card debt is usually safer than student loan debt. Student loans generally can’t be written off in bankruptcy. Penalties worse than other credit lines are inflicted with student loan repayment that isn’t really paid on time. According to Student Loan Justice, federal student loan borrowers have none of the consumer protections that come with credit card debt, including statutes of limitations, truth in lending laws, state usury laws and fair debt collection statutes. According to the exact same group, student loans are “an inherently predatory lending system that succeeds when the students fail.”
College puts hardship on family finances
We see that the student loan debt and college costs rise together and have been doing so at an alarming rate. As outlined by Bank Investment Consultant, the average costs for private universities and in state students at college were $ 35,636 and $ 15,213 in 2009-2010. A rise of 5 percent has happened each year. This academic year, there is a possibility of charges going over $ 50,000 for top institutions. To cover such costs, families may have to use current income and spend savings as well as borrow money.
Less worth for Bachelor’s degrees
Because student loans are rising, people are concerned that getting a degree doesn’t even have a point anymore. By 2012, only half of those who started a bachelor’s degree program in 2006 will have graduated, reports the New York Times. Only seven of the 30 jobs that are designed to grow fastest in the next ten years even need a bachelor’s degree, reports the Bureau of Labor Statistics. There are also 10 of the top growing job categories, 2 of which need degrees. Richard K. Vedder, founder of the Center for College Affordability and Productivity, told the Times that 15 percent of mail carriers have bachelor’s degrees, as outlined by a 1999 federal study. He explained:
“Some of them could have bought a house for what they spent on their education.”
Further reading
Wall Street Journal
blogs.wsj.com/economics/2010/08/09/student-loan-debt-surpasses-credit-cards/
Bank Investment Consultant
bankinvestmentconsultant.com/bic_issues/2010_8/college-cost-gone-wild-2668047-1.html?zkPrintable=1 and amp;nopagination=1
New York Times
nytimes.com/2010/05/16/weekinreview/16steinberg.html
