Those Dirty Student Loans

Student borrowers shouldn’t have to pay  3.4 percent interest rates on government-issued student loans, when currently, federal funds pay 0.75 percent.

Although credit card debt has wavered up and down for the past couple of years, student loan debt has increased by 70 percent between 2004 and 2012. And while all federal student loans come with terms that protect the borrower from economic devastation, repayment is difficult.

The average college debt has grown from “$9,188 in 1993 to $35,200 now,” and while it is true that most students generally do not need to make payment while they are in school, a loan that is outstanding for a period of time will likely go up. For example, let’s say you have an outstanding loan for $5,000. After a period of time, let’s say four years, you’d owe $6,558 because of accrue interest. This type of loan is called unsubsidized–when federal loans accrue interest at a set fixed rate.

Currently, the total amount of outstanding student loans is $1 trillion, compared to the roughly $13.5 trillion in outstanding mortgage debt. We ask you, is this another taxpayer bailout of the student loan industry?

With subsidized student loans, the government pays  interest while the student is attending school or while the loan is in deferment.

To receive subsidized student loans, students must show the following:

  • Have an official need as determined by the FAFSA
  • And be an undergraduate student, because as of July 1, 2012, graduate students do not qualify. subsidized loans  

In recent years, student loan debt has become an increasing problem. It is estimated that there are more than 7.4 million students with federal subsidized student loans, and most of them are under 30 years old and attended for-profit colleges. The figure below shows trends in Student Aid 2012.

According to Dan Schawbel, a one-man consultant who bills himself as a Gen Y research and consulting firm, a college student needs to be doing a lot more than unpaid internships to pay off their debt.He said in an interview with forbes.com that “students should go after 30-40 jobs at once. ‘It’s like a full-time job to get a job now.” Students should take it upon themselves to pursue alternatives, like becoming a chef or a freelance specialist.
There’s no doubt that paying back student loans is a top priority for college graduates, the bottom line is that the problem will continue to get worse if tuition inflation continues to rise and student loan debt is not discharged in the same way as a credit card.

 

About Marcelle Hutchins

I am a Freelance Journalist and I provide important data and information to the public through Mytimetovote.
This entry was posted in Facts and Quotes and tagged , , , . Bookmark the permalink.