Part I: Student loans have risen by 511% in 10 years!

The first question I have to ask, “Is it wrong to offer college graduates who have student loans a government bailout?”  

If your first instinct is to say “no,” this is understandable.

However, if you believe that students should not be offered a bail out, then you must ask yourself: what about the massive packages that were offered to banks?  Should the U.S. government bail out banks?

The truth is that both groups are vital to the growth of the American economy and student loan debt is another drag on the middle class of whom the American economy depends on.

The Atlantic Magazine, reported that student loans have risen over 511% over the past decade to a total of $550 billion, while USA Today reports that student loan debt may be as high as $1 trillion this year. 

Along with the rise of student loan debt, there is student loan default.  According to the New York Fed, student loan defaults have risen from 5% to 10.6%, nationally.   Throughout the country, some defaults are as high as 20%.  

To put this default number in perspective with the current recession, according to Business Week, “8.8% of federally guaranteed student loans that entered repayment in 2009, were in default by the end of 2010. To put that in perspective, keep in mind that in this case “default” means nine months of missed payments.”

This is terrible news.  Most people do not realize that making consistent, on-time, monthly payments to their student loan does not improve their credit score but going into default will make your credit score complete road kill. 

So what does all this mean? 

The Bottom line: Borrowers of student loan debt are not and will not contribute to the American economy?  Why? Simply because there is and will be less money to spend on housing, large electronics, supporting small businesses, investments, and the list goes on. 

Stay Tuned for Part II of the Student Loan series:  President Obama Helps with Student Loan Repayment

Live Positive!

Joveline

The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of Holland Turner Media Group, or any employee thereof. Holland Turner Media Group reserves the right to delete, edit, or alter content in any manner it sees fit or deems unacceptable.