Student Loan Debt up in 2012, Impact Could be felt for Student’s Lifetime

The class of 2012 have not only earned their college degrees, they also earned the dubious distinction of having the most student loan debt ever.  The average debt held by each graduate in 2012 was $29,400, besting the debt amount of 2011 graduates which was $26,600.  The Institute for College Access & Success’ Project on Student Debt released the numbers and said that student loan debt Imagehas risen at an average rate of 6% per year from 2008 through 2012.  Seven in ten seniors graduated with student loan debt. 69% of Ohio students graduated with student loans, averaging $29,037 in debt.

To make matters worse, the job market is still poor for recent graduates, leaving many college graduates with little to no income upon graduation.

What may be most disheartening is that researchers are just learning the impact student loans can have on a graduate for the rest of their lives.  While it is true that college graduates have higher lifetime earnings on average than non-graduates, those who graduate without any student loan debt are in a much better position than those with student loan debt.  A new study by the public policy institute Demos has determined that education debt of $53,000 will lead to a $208,000 lifetime loss of wealth.  If current student borrowing trends continue, student debt will reach $2 trillion by 2025. The study found that $1 trillion in outstanding student debt will lead to a total lifetime loss of $4 trillion for affected households.

Student Loans – A New Debt Crisis for the Nation

According to a new federal report, more than 1 in 4 borrowers are likely delinquent in repaying their student loans, a number much higher than the 14.6% delinquency rate suggested by previous calculations.

Student Loan Debt on the Thinker      The Federal Reserve Bank of New York calculated delinquency rate of 14.6% by comparing the total number of people with student loans (about 37 million) to the number of people with at least one past-due student loan account (about 5.4 million).

But the Los Angeles Times reports that this undercounts the actual rate of student loan delinquency.  The calculation used by the Federal Reserve fails to consider that federally guaranteed loans don’t have to be repaid until six months after a student graduates.  According to the Times report, adding borrowers with outstanding federally guaranteed loans, the rate of past-due student loan balances jumps to 27%.

Not only is the amount of delinquent student loan borrowers soaring, the amount owed is also astronomical.  According to the Federal Reserve, Americans owe about $870 billion in outstanding student loans – more than what Americans owe for credit card debt ($693 billion) and car loans $730 billion).  On average, student loan balance stands at $23,300 per borrower.  But there are about 167,000 student loans borrowers – about 0.5% of the total – who owe more than $200,000.

If you have student loans that are to burdensome to manage other debt, contact The Law Office of Zachary Bushatz, LLC at 937-331-8061 to see how I can help you with debt relief or visit my website www.bushatzlaw.com