Student Loan Debt Reaches $1 Trillion
The CFPB predicted a 20% growth in student loan debt between the end of 2011 and May 2013, and it looks like that prediction may be coming true. New reports indicate that college students have amassed a staggering $1 trillion in federal student loan debt to date, with an extra $200 billion out in private loans.
These numbers are growing higher and faster than the national credit card debt, and they are causing major concerns for graduates of the future.
To add insult to injury, interest rates for federal student loans doubled on July 1 from 3.4% to 6.8%. Politicians are trying to find ways to lower that rate and combat the increasing debt for college students. A proposal in the Senate would tie the interest rates on these federal student loans, called Stafford loans, to the financial markets. Some analysts believe this would mean lower rates in the short term, but higher rates in the future.
The federal government will make $50 billion this year along because of student loans, and that number could increase by nearly 50% if the interest rates are not lowered for Stafford Loans.
Student loans are not dischargeable in bankruptcy, so students have no way to escape them. All they can do is aim to pay off their balances as soon as possible so they can avoid high interest charges.
If you are a college student or the parent of a college student, search for grants and scholarships to pay for the bulk of education costs. These do not have to be paid back, and they can provide significant support in times like these.