Students continue to be weighed down by loans, as their debts exceed one trillion dollars, surpassing credit card debt and auto loans. Economists fear that student loan debt could be the next housing bubble, perpetuating the recession.
More people are attending college than ever before and hard economic times have accelerated rising attendance rates. Unable to find work, people are returning to school and pursuing post graduate degrees.
While continuing education seems like the best viable option to those who can’t find work, a lot of people can’t afford school and are taking out loans they can’t realistically pay back.
Students may not realize that student loans will stay with you, even if you file for bankruptcy.
Senator Richard Durbin (Dem. Ill.) sponsored the Fairness for Struggling Students Act of 2011, an act that would hopefully allow for commercial student loans to be discharged in bankruptcy proceedings. Sen. Durbin has been one of the most active members of congress in trying to solve the problem of rising student loans.
Not only do students and parents have to deal with increased debt, but also the Federal Government is shouldering a lot of the burden as well-eight out of ten loans are government issued or granted. Economists worry that this is threatening our economic recovery.
However, some disagree, believing that although student debt is a problem, it is far from a crisis
Tammy Luhby stated in an article for CNN Money that the severity of student loan debt is being exaggerated, pointing out that because there are more students, obviously there are more loans.
Emily McGowan, a sophomore at the University of Maryland studying history and criminology, said she takes out around $5000 dollars each semester. Although her parents take care of it now they expect that she will pay them back.
“It’s a dark cloud over your head because you know when you graduate, even if you manage to get a job, you’ll have all those loans to pay off,” said McGowan. “It doesn’t just affect your financial wellbeing, but also your personal life. You become restricted in what you can accomplish because you’re burdened by debt.”
Maria Theodori, sophomore engineering major, expressed similar concerns.
“It puts a lot of pressure on you. If you can’t find a good job when you graduate college, you can’t pay off your loans and interest rates rise,” said Theodori.
Many students share Theodori’s fear for the future. On a personal level the burden of student loans is extremely stressful, and on an economic level it’s a weight the fragile recovery process just can’t handle.