President Obama is taking steps to ease the burden of student loans. Student loans are set to reach 1 trillion dollars and have exceeded consumer credit card debt as of June 2010.
- Student loan payments capped at 10 percent of income.
- Some borrowers may qualify to have federal student loans consolidated at reduced interest rates.
- Federal loans forgiven after 20 years instead of the current 25 year law.
SmartMoney.com has put together a list of 10 things student loan companies won’t tell you. Each item contains a small article to educated you.
Here are the first 3:
1. Your co-signer could do you more harm than good
2. You may be in over your head
3. The more expensive your college, the cheaper your loans
The Wall Street Journal reports credit card offers are back on campus due to loop-holes. Here’s an example. The CARD Act prohibited issuers from giving out “tangible items.” Instead they offer online coupons or credits to an account. They report Citibank sometimes offers a $50 statement credit. That’s a lot better than a frisbees and t-shirts.
Read the full Wall Street Journal story here.
In 2011 it is projected student debt will exceed 1 trillion dollars. According to Rich Williams, of PIRG, this is the second year in a show student debt will top credit card debt in the U.S.
This is another example of a graduate being denied a professional license due to their student loans. Read how Ohio Supreme Court denied Hassan Jonathan Griffin his law license.
MoneyWatch.com Student Debt: A $400,000 Mistake
The Washington Post reports that despite new credit cards laws of 2009 college students are still being targeted. From a survey of 300 students by Professor Jim Hawkins at the University of Houston Law Center.
- 76% of 300 undergraduates received preapproved credit card offers last year.
- 2/3 of freshmen noticed credit card marketing on campus.
Read the full story about students being targeted by credit card lenders.
The International Business Times is reporting that the student debt crisis is a threat to the US economy. They state that based on recent data from the U.S. Department of Education student loans are headed in the same directions as the foreclosure crisis.
“The report shows that the national cohort default rate on federal student loans is 7 percent for borrowers who entered repayment in 2008, which is comparable with the default rate for credit cards (8.8 percent) and home mortgages (9.1 percent). In fact, earlier this year it came to light that the total amount outstanding on student loans was $875 billion, which actually exceeded the amount that Americans owe on their credit cards.”
Read the full story here.
The Project On Student Debt released their report on debt for the class of 2009 with an interactive state by state map. Forbes put together a list of colleges that leave students with the most in debt upon graduation. Some of these are Cleveland Institute of Art, American University, and Florida Institute of Technology.
Class of 2009 Debt Report (pdf file) by ProjectonStudentDebt.org
Legislation has been introduced to change bankruptcy law to treat private student loans like other consumer debt. On April 22, 2010 Congressman Steve Cohen chaired a hearing on the issue. Durbin first introduced this bill in 2007. Before bankruptcy law were changed 2005 only government issues student loans were protected in bankruptcy.
CBS Money Watch’s
Student Borrowers Could Shed Loans With Proposed Law
The Chronicle of Higher Education
Lawmakers Introduce Bills to Change Student-Loan Bankruptcy Policy
Chairman Mille, Committee of Education and Labor
Time to Restore Fairness for College Loan Borrowers in Bankruptcy
National Association of Student Financial Aid Administrator
Private Student Loans to Be Discharged in Bankruptcy
Student loans are up about 50% since 2007 according to data from Equifax credit bureau according to Reuters. This will create negative long-term consequences for the housing and auto markets.
According to Dann Adams, president of Equifax’ U.S. Consumer Information Solutions
“We’ve never seen these levels of debt for student loans”
“This generation of students will be less able to buy their first home given their debt load”
Read the full story Recession spurs student lending in U.S
Learn about rising student debt and practical solutions to this problem. There are several causes of student debt from loans to student credit cards. Each year we cover the average student loan debt including the latest statistics for 2008, 2009, and 2010.
There are things to get student debt relief including student loan consolidations, modification, deferment, and forbearance. All options should be explored to avoid a lifetime of student debt.