A generational approach of college student debt
There’s a common misperception that student loans are a “good” kind of debt, because it represents an investment in the future. Some even believe that a student loans are somehow different from other forms of debt, like credit card debt or automobile loans, and future lenders will be more understanding about the outstanding balance. Unfortunately, this is far from the truth.
Regardless of how the debt is accrued, it still puts the debtor in a precarious position of owing money regardless of their financial situation. In fact, unlike other forms of debt, federal student loan borrowers are unable to declare bankruptcy, even if they’re in default. In fact, one in 12 federal student loan borrowers end up in default, which can trigger liens on Social Security and other retirement benefits.
With the cost of tuition increasing by 500 percent over the last 60 years, students need to rely on loans more than ever to finance their degrees, as most families and individuals are unable to pay for higher education costs entirely out of pocket. And these student loans are larger than ever to cover those rising costs. The compound interest on these loans are likely to leave the average student paying off his or her education well into his or her 40s.
It’s important to find out more about the true cost of higher education by learning the details about student loans. This infographic clearly outlines the past, present and future costs of student loan debt.