5 interesting facts about student loans
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The student loan debt crisis is not improving. Many former students cannot afford rent and other basic monthly expenses. Student loan debt has surpassed credit card debt, and many graduates are delaying marriage. Student loans cannot be discharged in bankruptcy. https://medium.com/@EugeneSchneur/5-interesting-facts-about-student-loans-334256caf00e
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5 interesting facts about student loans
- 1. 5 Interesting Facts About Student Loans The student loan debt crisis is not improving. Many former students cannot afford rent and other basic monthly expenses. Student loan debt has surpassed credit card debt, and many graduates are delaying marriage. Student loans cannot be discharged in bankruptcy. The Average Debt Amount is Increasing The average borrower leaves college owing more than $30,000. The amount is steadily increasing. A decade ago, the average debt was 70 percent lower. Debt in excess of $100,000 accounts for a third of the total outstanding student loans. Five percent of borrowers owe more than $100,000. Default Rates are Increasing In 2016, loan delinquency rates reached 11.2 percent. The delinquency rate is higher than any other category of household debt. After college, many students cannot afford their monthly student loan payments. Former students are prioritizing their rent, grocery bills and utilities. The recession ended eight years ago, but thousands of people are still defaulting on their student loans. Students from low-income areas have the highest default rates. Many Borrowers Cannot Make Payments More than 10 percent of borrowers are in the 90 days late category, and forty percent of borrowers fall behind on payments within five years of repayment. The late payments are preventing millions of graduates from purchasing homes. Half of Americans make less than $30,000 a year. Many young adults have a high debt-to-income ratio, and the large balances are contributing to the national debt.
- 2. The Student Loan Bubble Can Burst The student loan bubble will affect every American. If the majority of former students default, the burden of repayment will fall on the taxpayers. The government might cut social safety net programs. When the student loan bubble bursts, the collapse may be worse than the 2008 financial crisis. There will be thousands of job losses in the real estate industry and the automotive industry. Competition for Jobs Graduates of for-profit colleges have a disproportionately high amount of student loan debt. Many entry-level jobs require a master’s degree, and some white-collar jobs do not pay a living wage. More than 25 percent of new graduates cannot afford to rent an apartment after graduation. The IRS can seize tax refunds and garnish wages. Borrowers can utilize the student loan forgiveness program, but the borrower must pay taxes on the amount forgiven. The tax bill will accumulate interest, and many former students will find themselves owing the IRS tens of thousands of dollars.