The Student Loan Crisis is Worse than You Think
It’s the American Dream: Go to college, earn a degree, have a successful career and buy a house. Many people, however, need financial help to make the American dream become a reality.
As young people eagerly start their journey, they rely on student loans to give them the financial support they need to have a prosperous life.
Student loans are always presented as the obvious choice when students need money for college. They have every intention to be able to repay it when they graduate and land a job. Unfortunately, it’s not that simple, and the current student loan crisis is proof.
According to the latest statistics, more than 44 million borrowers have outstanding student loans, and the amount owed, in total, is an estimated $1.3 trillion. More than 30% of these loans are not being paid or is in default. Given these staggering numbers, the student loan crisis is far worse than the housing crisis of 2008.
Cause of the Student Loan Crisis
Why is there so much student loan debt? How come so many people unable to repay their loans? Why didn’t lenders do anything to prevent the crisis from happening?
There’s a lot of speculation regarding the answers to all three of these questions, but there are some plausible theories:
- A significant amount of loans should never have been approved in the first place
- Lenders are trying to service both borrowers and benefactors, which is difficult to juggle
- The cost of secondary education has sky-rocketed
- The current job market can’t support the number of graduates
- The average income isn’t enough to support the cost of living and the average monthly student loan payment
Effects of the Student Loan Crisis
Student loan debt has long-term ramifications, not only on borrowers but the economy, as well.
On an individual level, the effects of student loan debt include the inability to get ahead financially, working past the age of retirement, and huge hits on their credit. On a larger scale, the student loan crisis has impacted the economy by slowing the housing market, stifling spending, and preventing the growth of new businesses. This crisis affects everyone – even those who haven’t borrowed.
Avoiding the Problem
If you need help paying for college, but you don’t want to suffer the long-term consequences that are associated with taking out loans, take comfort in knowing that there are ways that you can get the funds you need without contributing to the harrowing statistics related to the student loan crisis.
- Look into grants and scholarships. These are free sources of money that you can apply toward the cost of college and will help to minimize the amount you need to borrow.
- Don’t borrow more than your first year’s salary. It can be hard to predict how much you are going to make annually after you graduate college, but you can make a fairly accurate calculation. Do some research to find out how much the average yearly salary is in your field of study, and don’t borrow more than that amount.
- Forego private loans and opt for federal loans. Generally, federal loans are more flexible than private loans and offer fixed interest rates, which can make it easier to repay.
If you are stuck in the middle of the student loan crisis or just have student loan questions, Tayne Law Group, P.C. is here to help. We specialize in debt relief and can help you find ways to ease your student loan debt.