Student Loan Debt 2003-2013
On 1 July 2013, unless they make a deal, the US Congress will pass legislation to double interest rates from 3.4 percent to 6.8 percent on federal subsidized Stafford student loans. (See HR 1330 – The Student Loan Fairness Act of 2013.) For sixty percent of students who depend on these loans to fund their college education, this increase matters. More so for working class families with net worth of under $8,500. These families account for over half of all student loan debt.
I find it difficult to understand our government’s reasoning for wanting to place more burden on the working class. We already face a student loan debt crisis in the United States. Our outstanding student debt has already soared beyond one trillion dollars. That’s more than the nation’s combined auto and credit card debt.
Due to runaway college tuition, an increase of over fifty percent since 1999, students and their families have taken on crippling debt loads. My son is among the 37.1 million borrowers with outstanding student loans. Almost seven million of them are delinquent on their payments, totaling $113 billion.
I know the value of a college education. Our children who would like to pursue higher education should have a chance to do so. It’s not only an investment in their individual development and professional growth, but also beneficial to our communities, industries, and nation.
But our world was transformed by the global financial crisis of 2008. The job market shrunk. Competition for job openings is fierce. Our investment in a college education no longer guarantees a better and higher paying career path. In a time of austerity, maintaining loan payments becomes a struggle when we are faced with unemployment and under-employment.
Consider student loan debt statistics for the first Quarter of 2012. The average student loan balance was $24,301. Twenty five percent of borrowers owed more than $28,000. One percent, or 167,000 people, were crushed with balances exceeding $200,000. While 67 percent of borrowers were up to 39 years of age, 33 percent, or 12.5 million people, were forty years and older.
Borrowers who have Sallie Mae private student loans face even greater challenges with higher interest rates than Stafford loans. America’s largest private student loan lender owns about fifteen percent, or $162.5 billion, of our total student loan debt. This corporation does not care about students trapped in crippling debt. Only their profit counts.
Beginning our adult life with student loan debt sabotages our future. When the debt becomes burdensome, it hampers our potential to grow. Opportunities are lost. We put our lives on hold. The vision of our future is blurred or dismal. (Join young people working for affordable education.)
Under current market conditions, is a college education still worth it? If unchecked, can our student loan debt crisis crash our economy?