Student Debt – The Meteoric Growth
If you have student debt, you are part of a quickly growing segment of the population. Since 1999, student loan debt has increased by over 500%. In 1999, student loans totaled roughly $90 billion. They now total over $550 billion. That number’s higher than the GDP of Norway. And, the consequences for both students and society at large are huge.
Rising Tuition, Rising Debt
While more and more people are seeking secondary education, this is only a small part of the cause of rising student debt. The cost of a college education has gone up at several times the rate of inflation. Between 2000 and 2012, the average cost at a public college went from $10,000 a year to just over $14,000.
If the Bubble Bursts
The current default level on federal student loans is rising, going from 9% to 10% over the past three years. Student loan default can have a disastrous effect on your credit score. This debt stays on your credit report for many years. It cannot be discharged in a bankruptcy. Often, the only option for those who wish to repair credit and move on to opportunities like home ownership is expensive rehabilitation.
The costs of growing student loans is not limited to the individual. Our economy is consumer based. And, when people have less to spend, this leads to lower economic growth, as we saw during the housing crisis. Should the student loan bubble burst in the way the mortgage bubble did, it will lead to slowed growth in every segment. Fewer people will be able to purchase homes. Costs for products that range from credit cards to insurance will put a higher burden on a wider range of individuals.
For additional information on how to repair your credit score and deal with overwhelming student loans feel free to contact us at 617-265-7900 or request a free consultation below.