There are millions of people out there that have student loans and many are in the process of repaying these loans – a process that can take decades.
And there are also those that are choosing to or not able to pay. The problem with debtors defaulting on student loans has become so widespread, lawmakers have even floated ideas concerning debt forgiveness. According to this information from the Federal Education Department default rates have soared through 2011 and will likely continue to do so for the foreseeable future.
Statistics show there is more than $1.2 trillion in student loan debt spread among 40 million borrowers. The average college graduate is carrying $29,000 worth of debt – an amount that affects all of their life decisions, including marriage, buying a home, and parenting. There is also evidence student loan debt affects social mobility – graduates are unable to excel in their professional lives because they are stuck in a situation that makes debt repayment possible but is otherwise undesirable.
College Education is Still Valuable and a Necessity for Many
Despite the rising cost of attending college and the burden of student loans, the average American still values college. And it’s true – as of 2012, college graduates on average earned 60% more than those with only high school diplomas. For many, it is impossible to even be considered for a position in their chosen field without higher education.
Unfortunately, college graduates are sacrificing much of the American dream for their college education. Many are foregoing homeownership because they have no money to save for a down payment and they struggle to get approved for a mortgage with their debt load.
They are also waiting to start families. As each year passes, the median age for the birth of a first child increases. The overall birth rate among women in their 20s is also at an all-time low, according to the Centers for Disease Control.
Student loan debt is also pushing graduates into certain career paths that offer more financial security than others. Fewer and fewer grads are choosing social work careers and instead opting to enter financial and tech industries. And taking entrepreneurial risks is all but out of the question, at least until well into middle-age for many. Without the ability to save and build a cushion, fewer and fewer are comfortable taking any sort of risk with their careers and finances.
Student Loan Debt and Your Future
So what does this mean for the average person? If you are lucky enough to secure a higher paying job right out of college there is hope. It might take 10 to 20 years to repay your debt, but it is possible to live a comfortable life.
However, if you are one of the many that struggles to find work even with a college degree or loses a job as the result of cut-backs or a poor economy, the steep student loan debt you have looms even larger. Many are just one mishap away from serious financial trouble, primarily because of their several hundred dollar per month student loan repayment obligation.
Often times, the student loan burden causes a domino effect. While a person pays off the student loan, they are increasingly turning to their credit cards for everyday living expenses. In turn, those credit card interest rates eventually rise and the financial situation spirals out of control.
Fortunately, realizing the pattern is the first step towards solving the problem. The benefits of bankruptcy could help to balance your personal budget and lower the overall debt rather than watch it grow faster than you can pay.
Are you faced with serious financial problems because of student loan debt? Did you accept student loans with high hopes for your future, but now as a graduate you realize it was a mistake? We might be able to help. Contact the law office of Frank J. LaPerch, PC at 845.942.5500.