We’ve been hearing a lot lately about how and when student loans will exceed the national credit card debt and go over the $1 trillion dollar mark. A USA Today article by Dennis Cauchon, Oct 19, 2011, detailed the facts and figures very succinctly.
Here are a few quotes from the article for your consideration:
- “The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.”
- “The debt can’t be shed in bankruptcy.”
- “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 Mark Kantrowitz, publisher of FinAid.org.
- “The highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation’s largest, got 88% of its revenue from federal programs last year, most of it from student loans.”
- “Federal student loans are like no other loans,” says Alisa Cunningham, research chief at the Institute for Higher Education Policy. “The consequences are so high for making a mistake.”
In the same issue of USA Today, there was a related article, also by Dennis Cauchon, titled “For-Profit colleges become focus of student loan issue”. Cauchon discusses the default rates among for-profit schools.
Here a selected quotes from that article:
- “The federal government has promoted and subsidized loans as a way to help young people and workers get the education needed to succeed in a troubled economy. The government made or guaranteed more than 80% of the $1trillion in loans outstanding and backed more than 90% of new loans this year.”
- “Critics have questioned the quality, cost and tactics of some for-profit schools. Sen. Tom Harkin, D-Iowa, led an investigation last year that found that nearly one-fourth of students from for-profit colleges default on their loans within three years of leaving school, most without a degree. The senator’s report: “Debt without a Diploma.”
- “Nearly half of all federal student loan defaults occur at for-profit schools, although the schools have only 10% of higher education students, Harkin found. (A default is a loan at least nine months behind in payments.)
- “Some undergraduates such as older adults seeking a non-traditional education can borrow up to $57,500 in federal Stafford loans.”
- “The federal government backs the student loans but has limited risks because of its strong collection powers. Credit card companies collect less than 10 cents on the dollar of every bad loan while the federal government gets 85 cents, says Mark Kantrowitz, publisher of FinAid.org.”
If you need some ideas on how to get around your debts and paying them off, you will love this infographic -Filling the Gap: How Students Pay for College [infographic].