The Student Loan Debt Dilemma
By Brett Pawlowski
The increasing cost of postsecondary education is a huge issue. According to College Board, the cost of a four-year college degree has nearly doubled since 2000 (from $4,845/year to $9,410/year) and for two-year college degrees, the cost has increased by half ($2,268/year to $3,435/year). [Source 1] Increasingly, those higher costs are being financed with student loans. In fact, about 70 percent of 2013 graduates left college with an average of $28,400 in debt. [Source 2]
While this is alarming on its own, the Wall Street Journal added a new wrinkle yesterday when it reported that “More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.” [Source 3]
According to the article:
“About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment. Three million more owed roughly $66 billion and were at least a month behind.
Meantime, another three million people owing almost $110 billion were in “forbearance” or “deferment,” meaning they had received permission to temporarily halt payments due to a financial emergency, such as unemployment. The figures exclude borrowers still in school and those with government-guaranteed private loans.”
I don’t pretend to know the solution here – but I do know that a loan program, even one from the federal government, is not sustainable if 40% of borrowers are not making regular payments. Something will undoubtedly change in the near future, and for those of us who want to see students pursuing postsecondary education, this is an issue we should all keep a very close eye on.