Student loan debt to cross $1 trillion, no solution in sight
The College Board has said that full-time undergrads borrowed an average of 4,963 last year. Student loan debt is set to cross $1 trillion shortly. And the loans taken by them crossed the $100 billion mark for the first time and this year another record will be made as total outstanding loans will exceed $1 trillion as students are borrowing twice as they did a decade ago and the outstanding debt has doubled in the last five years alone. So this makes Federal Reserve Bank of New York calculate that this makes Americans owe more on student loans than credit cards.
Taxpayers and other lenders do not face the risk of losing money on these loans, unlike mortgages made during the real estate bubble. The lenders have got from Congress and the government wide-ranging collection powers so the debt can’t be shrugged off in bankruptcy.
However, the credit lies on the youngsters who are ever burdened by their loans, starting their adult life deep in debt, hence bringing an allover drag on the future economy of the country.
Mark Kantrowitz, publisher of FinAid.org, “Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children,” says.
Nick Pardini, a Villanova University graduate student in finance, has already thrown in the red flag of student loans as the next credit bubble. However, he says, this time the borrowers will be on the shortchanged.
He said, “It’s going to create a generation of wage slavery — with borrowers, rather than lenders, as the losers.”
As per the official data, full-time undergraduate students borrowed an average of $4,963 in 2010. This is 63% an amount higher than what they did ten years ago, even after adjusting for inflation.
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