On July 1, 2013 federal student loan rates will double if congress doesn't intervene. As a result, students will have a more difficult time paying the inflated costs of education.
It should come as no surprise that I am not in favor of raising interest rates on student loans – as someone who has my fair share of student loans I understand the burden of repayment better than most.
Student loans are a major risk not only for younger individuals taking out student loans, but also for the economy as a whole. What was already difficult for younger individuals to pay off with interest rates at 6-10 percent, will become even more difficult when those rates increase in July.
The difficulty of living for individuals ages 20-24 cannot be understated. Adding an additional burden of student debt will only increase the problems that age group deals with already.
Jobless rates of individuals from ages 20-24 are at 13.2 percent; those are people actively looking for work and that is a rate at nearly twice that of the national unemployment rate.
Many students are forced to take unpaid internships to reach the 3+ years of experience most jobs require for an entry-level position. While I was searching for work I always found this 3+ years of service for an ENTRY level position ironic and moronic. What we have is a generation of slave labor rather than solid training for actual entry level employees.
Nevermind the fact that many young people are having difficulty finding work – some statisticians say actual jobless rates for 20-24 year-olds could be more than 30 percent, but most have given up looking or taken jobs well-below their qualifications; 48 percent of 25-34 year-olds say they're unemployed or under-employed. The same thing that happened with the mortgage loans and housing market is happening now with student loans.
Students are borrowing more than they can handle in order to pay for college tuition costs that have risen more than 1,000 percent in the last 30 years. As a result they enter the job market in debt and cannot afford to buy a house, start a family, buy a car – they can't really afford to do anything except pay back student loans.
At some point the student loan burden will overwhelm students and with nowhere to turn (student loans don't even go away with bankruptcy), the economy will collapse on the shoulders of those people holding student loan debt.
We as a country need to raise awareness and funding for the educational system. According to an AFP report, "The three-yearly OECD Programme for International Student Assessment (PISA) report, which compares the knowledge and skills of 15-year-olds in 70 countries around the world, ranked the United States 14th out of 34 OECD countries for reading skills, 17th for science and a below-average 25th for mathematics."
Page 2 of 2 - While we boast a strong higher education system – it is all but impossible for average students to pay for college without taking in student loan debt. About 70 percent of students graduating today will graduate with some student debt, with more than 10 percent of that 70 borrowing $40,000 or more according to American Student Assistance statistics. With 20 million American students attending college, the student loan bubble is more than $1 trillion. Of those students with student debt, 14 percent (5.4 million borrowers) have one loan past due.
Another disturbing fact: more than 30 percent of students who take out loans in college drop out of school before they graduate; taking their heavy debt into a career that doesn't require a college education.
I think it is time for Americans to consider the giant risk they are taking by letting college costs get out of hand while making student loans more difficult to pay off.
As a generation, we will not be able to support those generations that came before us while balancing student debt with the cost/reward of education. At some point students will simply have to stop attending school because paying for their education will become impossible. It has been said, "the quickest path to economic recovery is through an informed and educated workforce." What will happen when that educated workforce disappears?