The Student Debt and Default Crisis
What do you say to a generation of college students, freshly graduated with glittering degrees and hopes for a good job, that they owe more debt to the federal government than there is credit card debt in this country? After the first three years of graduation, 13.4% of students have already defaulted on their, and many others increasingly un-manageable student loan debts. The number rises even high for students of for-profit colleges, 22.7% of those students have defaulted after their first three years out of college raising the total amount of federal student loan debt to about 1 trillion dollars, according to statistics released by the Department of Education on Friday. Due to some colleges raising tuition cost and lack of well-paying jobs, more than 1 in 10 defaulted on their federal student loans. It gets even worse for those of us in school now, taking on more debt because commission driven debt collectors, hired by the US government, aren’t telling students about more affordable options to re-paying their debt.
The Secretary of Education Arne Duncan had this to say about the current drastic rise in number of defaulters;
“We continue to be concerned about default rates and want to ensure that all borrowers have the tools to manage their debts. In addition to helping our borrowers, we will also hold schools accountable for ensuring their students are not saddled with un-manageable student loan debt,”
President Obama’s current administration, as well as some members from both parties in congress and asking that colleges give more disclosure on the costs of attendance, coupled with student outcomes. College financial offices have been playing the cost of going to their institution by making out federal loans to students to seem as if they are grants, therefore not having to be re-paid. President Obama has also over publicized an executive bill that has eased the process for applying for a loan by allowing students repayment amount be based off their current income after graduating. This executive order has made it less likely for students default.
Romney however countered this order by saying this doesn’t help the students, it only encourages them to take on more debt now. Romney favors to cut education regulation and under a proposed budget by vice-president hopeful Paul Ryan, and endorsed by Romney, it would cut spending on college tuition grants by 42% and kick out 1 million students from the program. Romney wants colleges to become more cost efficient by the way of use of online courses.
With tuitions rising and incomes of recent college grads falling as well the lack of jobs for students in the field of their degree, it is causing a huge pile of debt to continue to mount for a generation of kids just trying to make it in the world. With education costs and the student debt crisis being one of the focal points of this year’s upcoming election and members of congress calling for some sort of change, at the end of this upcoming semester, new measures may be put in place to aide and allow the students to not become utterly burdened by a debt that if continues as it is, may be on par with our country’s own federal debt.