According to new findings, an incredible 11.3 percent of student loans are now 90 days or more past due. To clarify, that adds up to over $100 billion.
And it’s a problem that’s only getting worse.
Young Americans are borrowing money to attend college with no real consideration of their ability to repay the debt taken into account. For example, a fine arts graduate earning $25,000 a year is facing a debt of $50,000 in student loans that will takes decades to pay off. In fact, our own Commander and Chief, President Barack Obama, finally paid off his student loans in 2008 – and he was about to become leader of the free world.
This ever-increasing pool of delinquent debt won’t only have impact on the debtors themselves, but it will become a significant burden on the economy as well. Students with defaulted loans could mean that they never truly become a productive member of society. In theory, they will buy fewer cars, save less for retirement and ultimately have a more stressful life because of the black cloud looming over their heads.
Once upon a time, a person could pay off his or her student loans by having a part-time job. It was around the same time that having a college education made sense, regardless of the cost or the major. But that time has long since passed, and with an estimated 11.3 percent in delinquency, it’s a situation that will only get worse.
Luckily, there might a light at the end of the tunnel. The private sector is creating opportunities for people to refinance their student loan debt if they have a good job and income. At least 19 student loan refinance options exist, and if a twenty-something has an interest rate above 6 percent, he or she could find themselves receiving a much lower rate with these new providers. In addition, new legislation has provided those with student loan debt to lower their payments with income-driven repayment plan that is designed to make the student loan debt more manageable by reducing what is owed every month.
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