Tag Archive | "Student Debt"

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Nation Grapples with Increasing Number of Student Loan Defaulters


By Savion Sage, Contributor

WASHINGTON, D.C. — A recent federal report found that one in seven federal student loan borrowers have defaulted on loan repayments, revealing how former students are still struggling to pack back their  loans due to the exorbitant education costs while the nation is still on the path to economic recovery.

According to the U.S Department of Education, the default rate of students who were liable to pay during the first three years, was at 14.7 percent that rose from 13.4 percent as recorded a year ago. Based on a comparative study of the facts, it has been found that default rates at the moment is at their highest level since 1995.

After learning about the fresh data from the DOE, former senior education policy adviser of  Obama’s  administration Zakiya Smith said she was alarmed by the figures. She confirmed that the increase in student loan default rates happened during a time period when both the ‘Income-Based Repayment’ as well as ‘Pay As You Earn’ debt relief programs were available to the student borrowers. This data, according to Smith shows how little people know about loan payments based on income.

student-loan-debt-hartfordThe growing number of student loan defaulters shows their real pain of borrowing to pay for their colleges. According to the financial experts, the student population is unable to recover from such a financial setback and so, they are way behind in terms of economic improvement. It is a kind of a financial mayhem for these student loan borrowers.

More, defaulting on their loans will inevitably affect their credit worthiness and may render them ineligible to qualify for further credit, thus aggravating their financial hardship beyond anyone’s imagination.

Defaulters who are 207 days behind in their payments

These defaulters consists of graduates as well as people who’ve dropped out of their college mid-way through their course. They are 207 days behind in making the loan repayments consecutively. However, this rate doesn’t provide any data regarding those who’ve put off making the repayments like students undergoing a deferment period or are taking advantage of forbearance due to severe economic hardship.

Moreover, this data also excludes those struggling borrowers who are making the repayments under the federal debt relief program known as the Income-Based Repayment (IBR) plan. This implies that their hardship has been understated when deriving these default rates.

As per the latest statistics, student loan borrowers in the country now owe more than $1.2 trillion as their outstanding debt amount. This includes both federal as well as private student loan borrowers from organizations like SLM Corp (SLM), that is popularly known as Sallie Mae. This debt amount has easily surpassed all the other kind of consumer debts in the country, except for the mortgage debt.

According to Mark Kantrowitz, one of the leading student financial aid expert in the country and the publisher of Edvisors.com, the task to keep a tab on all the loans and the debt payments due every month can be prove to be quite tricky for the undiscerning students. However, he said that, they can minimize the confusion by having their student loans consolidated.

Still, Betsy Mayotte, director of compliance for American Student Assistance, a non-profit pro-consumer organization that assists student loan borrowers manage their college debt, says that it is never a good idea to consolidate private student loans with that of federal ones.

In the year 2012, the DOE had revisited the way it used to report about student loan defaults in the country after a demand for a better and more comprehensive measure was raised by the Congress. This is due to the fact that counseling provided by the educational institutions to their students ask them to defer in making the repayments with the motive to drive down the default rates in the country.

Savion Sage is a financial writer who writes mainly on personal finance topics like credit, debt and retirement. 

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Our National Educational Dilemma and Back Breaking Student Debt


By Glenn Mollette, Op-Ed Contributor

Every American must have the opportunity to pursue college or vocational training. We are living in an era during which even previously trained persons need to sharpen their skills or retool for the future.

Too many people are completing their education facing a massive dilemma of debt. Their next dilemma is trying to break into the job market saddled with backbreaking debt.

We must make education within reach of all American citizens. The following will help make college possible for all:

Colleges and all institutions of higher education must work as all businesses to guard against escalating costs.

The government should provide low interest college or vocational loans to students who must borrow money for their education.

Graduates should be given a three-year grace period before the payback begins.

The government should forgive up to 20% of the loan if paid back in 10 years.

the-hartford-guardian-OpinionColleges should be encouraged to develop three year college programs which could cut as much as 25% of the cost of education. Everyone who has attended a four-year college knows they had four or five courses along the way they did not need for their degree program. This would also save tremendously on housing, food and fuel costs.

Colleges are throwing extra courses at their students and keeping them longer to make more money. This means the students borrow more and end up financially crippled. Schools like all businesses must be financially competitive and non-traditional in their programs in order to survive this new era. The number of struggling colleges is growing.

Already I hear someone screaming, “How are we going to compete with the Chinese, Japan and other foreign countries if we are cutting classes from education?” Most college programs have required approximately 30, four-hour classes or 40, three-hour classes. Everyone’s degree program will vary as they add additional courses. I like education as well as the next person. Hurrah for anyone who has the luxury of spending the time obtaining a 150-hour degree! This means a much greater expense, but if you can afford it, then so what? School can be fun and with that many additional classes you are surely learning a lot! My beef is that most American families cannot afford the luxury of a four-year degree being crammed into five, six or more years. We must keep the general college experience to four years to complete. If the college can help students complete the degree in three or three and a half years it saves students, the families and even the government a lot of money.

College trustees, administrators and faculty you are being served notice. Start doing your part to be part of America’s solution and not a central part of our problem. The people in America do not need another dilemma.

glen mollettGlenn Mollette is the author of American Issues, Every American Has An Opinion. He can be reached at gmollette@aol.comIllustration courtesy of occupyforaccountability.org.

The Hartford Guardian values diversity of thought and therefore fosters and advance conversations about issues relevant to Greater Hartford residents. We  present opinions from all perspectives, including opinions NOT shared by our editorial staff.

 

 

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