Student Loan Debt Reaches An All Time High At Almost 27,000 dollars
Student Loan Debt Reaches An All Time High At Almost 27,000 dollars
Everyone’s aware of the ongoing financial calamity at present. It not only includes a tough job market, but also rising tuition as far as education is concerned. Reports say that college seniors had graduated with nearly 27,000 dollars average debt in 2011. Almost two-thirds of the class of 2011 held student loans till graduation. The average borrower owed around 26,600 dollars. This was revealed by a report from the Institute of College Access & Success’ Project on Student Debt. This is actually 5 percent higher than that of 2010. In fact, it’s the maximum level of debt that has been published in the last 7 years’ report.
This noticeable increase has been observed during a period when unemployment has also remained relentlessly high for the college graduates. Statistics say that it was 8.8 percent in the year 2011. This obviously makes a few things quite blatant. The ones who don’t have a college degree are obviously twice as likely to land up without a job. Last year, that is, in 2011 the unemployment rates for high school graduates stood at 19.1 percent.
It also remains a fact that a lot of students had enrolled into college sometime before recession had hit all over. This sudden change in the financial state of affairs left most families in the lurch. They found themselves in a situation where they couldn’t afford tuition payments all of a sudden. Moreover, this was an unanticipated financial change. Simultaneously, quite a few public colleges had raised their tuition fees which was obviously in response to the state budget cuts. Not to forget the private colleges that had been constantly increasing over time.
Many consider increased financial aid to be a major cause behind growing unemployment and student debt load. Undeniably a college degree is the best weapon that can be used to get hold of a job. However, it’s a fact that with rising debt levels, students are scared of huge loan amounts and hence they’re mostly unable to get the necessary qualifications required for decent paying jobs.
Now, the school one chooses also makes a lot of difference. This is because of the fact that the amount of debt that a student has upon graduating varies from school to school. The report finds that it’s not just tuition that contributes to the outstanding student debt amount. There are several other contributing factors like fees, accessibility of financial aid as well as the cost of living along with the obvious factor of tuition that amounts to the total quantity of student debt.
Both parents and students need to be aware of the basic fact that debts can vary a lot even amongst the so-called similar looking schools. It’s also a fact that the private student loans are considered to be far more risky and expensive when compared to the federal loans available. In fact, the private loans happen to account for about one-fifth of the total amount of debt that the students actually owe.
Unfortunately, reality is sometimes harsh. The more debt a student incurs, that much more difficult it is for the students to repay them. Statistics go on to show that the percentage of borrowers who were seen to have failed to pay up their federal student loans within the first 2 years had very much increased in the fiscal year of 2011.
By Allen Rey, guest author.
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