A study released by the Brookings Institute on February 16, 2018 painted a harsh reality for student loan borrowers and the long road of repayment ahead of them. College graduation is supposed to be a time of embarking on the new chapter in your life instead of agonizing over how to make your student loan payment. The student loan crisis echoes that of the jumbo mortgage situation in the mid-2000’s. The Brookings Institute focused on large student loan balances, those exceeding $50,000, and found the following key points:
Student Loan Debt Key Points
- Borrowers who left school in 2010 had failed to pay down any of their debt by 2014. Instead, the balances had risen by about 5% due to interest.
- As of 2014, 5 million borrowers out of 40 million Americans with student loan debt have balances of at least $50,000.
- For student borrowers who left school in 2014, 17% of those had over $50,000 in student loan debt. This is a massive jump from the 2% of large balance borrowers back in 1990, even after adjusting for inflation.
- Large balance borrowers owe 58% of the outstanding $1.4 trillion in student loan debt. Half of that 58% attended graduate school while the other half attended undergraduate school or is a parent paying for a child.
- One-third of borrowers who left graduate school in 2009 had not paid down any of their debt in 5 years; whereas, a little over 50% of undergraduate students had not paid down any of their student loan debt after 5 years.
These statistics are for those who are paying on their loans and are not in default. The report went on to look at public universities across the country to compare their graduates student loan balances to their findings. A link to access the full report can be found here.
Unless policies surrounding student loan borrowing and repayment are changed, more and more students are going to take on crippling debt that they cannot repay. Higher education is important, but preventing students from being set up for a life of financial doom is just as important.
For those looking into student loans, educate yourself on the career field of your choosing, know the terms of the loans, and make sure the repayment is feasible. Those who were not privy to the education about student loans that is available in today’s world and are struggling with student loan debt, contact a student loan debt attorney at McCarthy Law about your situation. We would be happy to provide a free consultation on what we can do to provide relief from the burden of private student loans.