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 within the aftermath of the financial crisis, college costs continue to rise. Some analysts say less consumer protection for student loans than other types of borrowing is a reason for the trend. Numerous think that colleges have been raising the costs of tuition making it almost not worth it to get student loans. A bachelor’s degree is not even needed for the fields growing the fastest right now. Article source – Student loan debt exceeds credit card debt as college costs rise by Personal Money Store.
Student loan debt rises with college costs
Americans owe about $ 826.5 billion in revolving credit, as outlined by June 2010 figures from the Federal Reserve. Americans have $ 829,785 billion in student loans according to a Wall Street Journal article showing a report from FinAid.org. Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, told the Journal that he estimates $ 300 billion in federal student loan debt has been incurred in just the last four years. Parents are just borrowing because college costs more but unemployment has gone up.
Consumer protection unavailable with student loans
Student loan debt is often times worse than credit card debt. A bankruptcy doesn’t help someone who has student loans. Missing payments with student loan repayment can mean some terrible penalties. Student Loan Justice reports that consumer protections like statutes of limitations, truth in lending laws, state usury laws and fair debt collection statutes don’t come with student loans as they do with credit cards. According to the same group, student loans are “an inherently predatory lending system that succeeds when the students fail.”
College puts hardship on family finances
We see the student loan debt and college costs rise together and are doing this 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. Annually there has been a 5 percent increase. This academic year, there is a possibility of charges going over $ 50,000 for top institutions. This is too much for families trying to use all of their savings and spend income also to pay for school.
Bachelor’s degrees beginning to become worthless
Rising student loan debt leads some to wonder whether going in hock for years to get a degree is worth it. As outlined by the New York Times, despite six years of trying, only half of all students starting a bachelor’s degree in 2006 will graduate by 2012. Only seven of the 30 jobs that are supposed to grow fastest within the next ten years even need a bachelor’s degree, reports the Bureau of Labor Statistics. Only 2 of the top 10 growing job categories 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, according to 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
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