US Economy Battered by Alarming Student Loan Debt
Kevin Craig— In the year 1965, the federal student loan program seemed to come back. The students take out this loan for pursuing their college education and pay it off later when they get a suitable job. The U.S. student loan debt surging above $1 trillion has exceeded the credit card debt and auto-loan debt. This debt explosion risks the recovery, enhances the burden on taxpayers and probably sets the stage for a new economic crisis. The students are finding it difficult to pay off these loans due to the shaky job market. Many students are going back to their school due to the failure to get suitable jobs. The average student loan debt has topped $25,000 recently which is up by 25 percent in the last 10 years.
President Barrack Obama has offered several schemes which are aimed at modifying the system and making the repayments easier. However, the predicament of debt-burdened earlier students did not succeed to engender notice in the GOP presidential campaign. Rather, the candidates are flippant of student loan programs by the government in general and the proposals of Obama in particular.
Mitt Romney criticizes what he calls a “government takeover” of the program. Then Gingrich calls student loans a “Ponzi scheme” under which the students spend the borrowed money at present but will “have to pay off the national debt” afterwards in future as taxpayers. Ron Paul wants to put an end to the program completely. The student debt seems to rise higher and higher that is the soaring cost of attending schools with the tuition fees increasing at a rapid rate than the rate of inflation.
The chief economist at Moody’s Analytics, Mark Zandi, argues that the government loans and subsidies are not cost-effective for the taxpayers because the universities and the colleges seem to increase the tuition fees. It does not enhance affordability and neither does it make easier to go to college. He also said that it is very hard for the children who have passed through this hook and they’ll not be able to come out of it.
As per the new report by the Federal Reserve Bank of New York, the parents and the federal government carry a considerable part of the post secondary education bill. Some of the borrowers are baby boomers near or at the age of retirement. According to the Fed research, it has been found that the Americans who are aged 60 years and above, still have $36 billion in student loans. The report said that nearly 3 in 10 of all student loans have past balances of 30 days or more.
Student loans cannot be set free or diminished in bankruptcy proceedings as the other delinquent debts can. This limitation was extended in the year 2005 to comprise of student loans made by the banks and other private financial institutions. The president of the National Association of Consumer Bankruptcy Attorneys, William Brewer said that this seems to be the next debt crisis for the U.S. Economy.
This is a guest post by Kevin Craig who is a financial writer associated with Oak View Law Group. He has been providing prudent advice on measures to rid debt since 2007 to lead people to a debt free life. Also, he has written many informative articles on bankruptcy, credit counseling, credit repair, debt relief plan, personal injury and so on. You can get in touch with Kevin Craig at firstname.lastname@example.org.