Although student loan debt was already a problem in the United States, the recession coupled with skyrocketing tuition costs over the past three decades has greatly intensified the financial stress new graduates now face — to the point that total student loan debt exceeds credit card debt in the U.S., standing at an estimated $898 billion to $1 trillion.
Unreasonably High Education Costs Fuel Debt
About 1.6 million Americans, many of them recent graduates, are currently struggling — and more times than not, failing — to get by on a day-to-day basis and make their loan payments at the same time. Over the past thirty years, the cost of a college education tripled, and has already jumped 8 percent since last year.
A student who attended a state institution of higher learning usually leaves school with $22,000 to $28,000 in loan debt. Those who went to private schools can owe in the six-figure range. During the recession, in an effort to re-tool themselves for new careers, many people went back to school and took out student loans to be able to afford to do so.
Returning Students Did Not Count on Long Recession
Although economists are still arguing about exactly when the recession began, the economy was showing definite signs of stalling in 2008. Now, three years later, unemployment is still hovering at 9.1 percent. The very people who went back to school because they were unemployed are beginning to graduate and the job market is as bad, or worse. But now, their existing financial problems are compounded by the burden of student loans.
The weight of these debts can be crushing. One of the leaders of the current Occupy Wall Street protests, who also maintains a ForgiveStudentLoanDebt website, graduated law school with $65,000 in debt. Because he had to negotiate forbearance, a period during which he made no payments, did not default, but did accrue interest, he currently owes approximately $88,000 — even after resuming a regular payment schedule seven years ago.
Call for Student Loan Consolidation or Forgiveness
This problem of instant indebtedness in the 20-something generation is a major part of the discontent and disaffection with government driving the Occupy protests. In response, the Obama administration has outlined a plan that would include allowing for the consolidation of multiple loans and the negotiation of a lower interest rate.
Many protestors, however, want to see complete loan forgiveness in the interest of returning significant purchasing power back to more than 1.5 million Americans. While this would, arguably, amount to a kind of stimulus package to address the ongoing economic instability, it’s not likely to happen. It is sure, however, that the problem of long-term student debt will be central to the political discussion going into the 2012 presidential election season.
It is significant, however, to consider that this problem of extended student loan debt has made a college education more a burden than an asset. Already more high school graduates are choosing not to go to college because they do not want to be saddled with the student loads. If left unaddressed, this problem will undoubtedly change the face of higher education in America for generations to come.