Financial News Story of the Day – Outrageous Student Loan Debt Bankrupting Graduates
Student loan debt is the next bubble to pop, and if something isn’t done, it could be the next thing the pull the U.S. economy down if housing doesn’t kill us first. You might as well call it the silent killer, as graduates from college are burdened by an average debt of $25,000 while heading into the worst recession on record in U.S. history. How’s that for odds stacked against you? The Huffington Post had a great article that highlighted the dangers growing tuition costs, with some schools raising prices by nearly 40% in just 2 years time. And the worst part is that students are willing to undertake large loans for the promise of a brighter future. Sound familiar? It’s the exact scenario that played out in the housing bubble that we are still trying to recover from 4 years later. Unlike mortgage loans however, student loan debt cannot be discharged through bankruptcy. If your loan is sold to a third party collection agency, they have the right to garnish your wages from here to eternity. If the older generation of boomers and other adults couldn’t manage their mortgages successfully, what chances do their children have of managing their school loans? Many boomers are also dependent on selling their homes to the next generation in order to finance a retirement they never saved for, leading to a new set of problems down the line.
Excerpt: “”Take it from those of us on the frontline of economic distress in America: This could very well be the next debt bomb for the U.S. economy,” William E. Brewer, Jr., president of the NACBA said in a statement accompanying the survey.
As college costs spiral out of control and public universities cut back on financial aid, more students and their parents are taking on loans to pay tuition, according to the Los Angeles Times. At about one trillion dollars, Americans’ student loan debt surpassed credit card debt for the first time in history in August 2010.” (source: HuffingtonPost.com)
Update: Check out this story on WealthSharp.com, where college financial aid offices are seemingly making financial aid packages more difficult for students to understand. No wonder they are taking on more debt and going broke as a result.