Know about massive student loan bubble

Tuesday, May 28, 2013

Know about massive student loan bubble

Being a student, if you want to take out a loan for furthering your education, then you must be informed that there is already a massive student loan bubble in the United States that is about to burst. 

Before you borrow a student loan, learn some imperative factors related to such a loan and refrain from being deep down in debt. Here are the factors that you must know about student loan bubble. 

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  • More number of students – More number of students are going to colleges, and this is a long term trend. 
  • Great de-leveraging – Americans have become accustomed to debt; they have tempered appetite for debt especially in the aftermath of the great recession. However, when it comes to student debt, it has surpassed all sorts of outstanding debts including credit card debt, auto loan, home equity lines of credit etc. As of now, the total number of documented outstanding student debt is about 1 trillion USD.
  • More debts – Over the long term economic trend, as an outcome of the recession, many Americans faced difficulties finding a job and instead many of them returned to school to develop their skills and studies. And, many students had to pull out loan to do it. Consequently, the number of Americans with student debt has been moving steeply higher.
  • Cost of education – The cost of education, especially at the college level, has been increasing like anything in the country. Over the last 3 decades, it’s been up by over 1000%.
  • More dollars – This is not just the number of people pushing students deep into debt. The average student debt amount is getting higher.
  • The reality – The new reality is that student loan has become a everyday fact of life especially for the Y generation Americans. About 42% of the total number of students around 25 years of age are carrying student debt as estimated during 2012. The percentage was 27% even just 8 years ago.
  • Timely repayment – Even just a modest quantity of student loan can be pricey if it is not paid in a timely manner. For students, who left colleges during and right after the recession, things have become extremely difficult. For instance, joblessness for the college grads is still higher in comparison to the historical standards. However, it is cheaper than joblessness for students without a college degree.
  • The exception – The figures mentioned above includes people over 25 years of age. However, according to a dependable report on the job possibilities in America for the recent graduates has shown higher unemployment rate for students between the age groups of 20 and 29. Survey has shown that the population of students graduated in the year 2011, either through an undergraduate program or a graduate program – possessed a redundancy rate of about 12.5%. However, if you consider this statistic those with a bachelor’s degree, the rate is almost 13.5%. Nevertheless, the employed people are not secure financially. And the most unfortunate thing about the students with employment is that they earn less.
  • The consequence – Therefore,  number of student debts are getting grumpy.  Student loan debt is ticking higher in the recent month. Moreover, the numbers expectedly downgrade the debt crisis as over 40% debtors are estimated to be presently in a deferment or grace period during which payments don’t need to be made.
Discussed above are some of the most salient points that you must know about student loan bubble.
Author’s Bio

 Sam Payn is a seasoned loan industry blogger. From student loan to home loan – his write-ups include them all.

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