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Thursday, October 20, 2011

U.S. student loan debt tops $100 billion dollar mark for the first time

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Student loan debt taken out nationwide last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans, on an average, now owe more on student loans than on credit cards.

Along with the average costs of college attendance today 150% over rates the early 1980's, students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. The end result is that college loans outstanding debt has doubled in the past five years.

Taxpayers and other lenders have little risk of losing money on the loans. Actions of the U.S.Congress in 1984 gave banking institutions and government lenders board collection powers with disallowing former students any rights to discharge a majority of student loans in bankruptcy.

The average full-time undergraduate students borrowed $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. Defaults are skyrocketing as 8.8% of student loan borrowers are in default by being more six months behind on payment. Student loan defaults doubled, averaging only 6.7% from 2007.

Some of the rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation’s largest for profit educational institution received a whopping 88% of its revenue from federal programs last year, from a majority of student loans.
"Federal student loans are like no other loans," says Alisa Cunningham, research chief at the Institute for Higher Education Policy. "The consequences are so high for making a mistake."
Reach Out Job Search Radio in a upcoming interview with Congressman Hansen Clarke (D-Detroit) on Sunday, November 13th @ 11:00 AM will discuss his proposal to reduce high rates of student loan defaults. Tune into this upcoming program for more details.

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