Student Loan Debt Continues to Rise Over Time
September 27, 2019
It’s one of the million-dollar questions that hasn’t been answered in the past.
Who should be blamed? The government or the students?
How comes student loans have accumulated to $1.6 trillion? What has happened?
In a report released by the Federal Reserve, it was found that up to 54 percent of youths who passed through college education at some point must have applied for this merchant funding – student loans.
“Repayment of this debt can be challenging,” the Federation stated. “In 2018, 2 in 10 of those who still owe money are behind on their payments — little changed from the prior year. Individuals who did not complete their degree or who attended a for-profit institution are more likely to struggle with repayment than those who completed a degree from a public or private not-for-profit institution, even including those who took on a relatively large amount of debt.”
It has been found out that most people joining college finance their education using student loans. Twenty-four percent of them have applied for student loans using their credit cards while 7 percent have used a home equity line of credit to do the same, according to the Federation.
While some critics claim that student loan debt isn’t a crisis, the Federation is viewing it from a different perspective. The Fed can confirm that the typical debt amount rose from $20,000 to $24,000 in 2018.
But does the word, “typical” tell the real story?
A nonprofit group, StudentDebtCrisis has been encouraging borrowers to share their experiences with loan debt and here is what some of them had to say:
#1. Nicole from Houston: “Struggling mother trying to pay loan $32,000. I don’t even have a degree … I want to go back to school and do more for us, but I just can’t with this debt hanging over my head. It saddens me to know you have to be in all the debt to better your life.”
#2. Mark from Los Angeles: “It’s crushing my family and me. I am 57 yrs old and constantly putting it in forbearance. I fear it will follow me into retirement.”
#3. Stephanie from Illinois: “I’m a social worker, and most social work jobs are low paying. I understand that I chose this, but to be considered for a $30,000 job in my state, you need a Master Of Social Work degree. I work more than 40 hours per week, and I have $151,000 in debt, mostly it’s all interest because of my payment plan. I have a family, and I fear I will never pay this back. It’s like having a second mortgage.”
#4. Emily from Detroit: “I wanted to go to school to help people, and my master’s degree allows me to do that every day. But with over $75,000 in debt, partially due to ever-accruing interest, it feels like I’ll never get ahead and will struggle with this my entire life.”
And then there are a couple of borrowers who can’t keep up with their debts.
“Among those with outstanding student loans from their education, 2 in 10 adults are behind on their payments,” the Fed said. “Those who did not complete their degree are the most likely to be behind.”
With all these, it means that there is a problem somewhere. It’s either the loans are too easy to obtain, interest rates too high, or families and students do not understand that student loans are a debt that needs to be repaid.
AUTHOR BIO: As the FAM account executive, Michael Hollis has funded millions by using merchant funding solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.