Students now leave college with a debt of around $25,000 dollars a piece. When you choose a job after assuming that kind of debt, do you stay in places with generally low salaries like Oklahoma, Arkansas, Kansas, Missouri, or do you get out and head for the coast where the salaries often run double for the same job? What effect does this brain drain have on the economic development of these states, the viability of their communities and the kind of people elected to public office?
According to their data (Chronicle of Higher Education), of the student loans that entered repayment in 1995, one of every five has since gone into default. That’s correct, fully 20% of those who borrowed could not meet the expectations set forth in their repayment schedule.
Fast Forward to 2010
While one in five is truly scary, one needs to understand that the average student loan debt from that period was roughly $13,000. Today it is nearly double that figure, $23,000 plus.
One might suggest, using simple math, that fifteen years from now we might expect a doubling of the rate of default.
So no, the crisis isn’t hyperbole. According to the Wall Street Journal, “consumers now owe more on their student loans than their credit cards.” According to the June 2010 figures from the Federal Reserve, Americans owe some $826.5 billion in revolving credit. The total owed on student loans comes to $829.8 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.
Over at the Huffington Post, op ed writer Zac Bissonnette noted the Chronicle data and went on to note that defaults are only the tip of the iceberg when it comes to the impact of student loans. Many students who were not in default likely managed to stay in good standing only by accepting career options based on pay instead of goals and lifestyle choices based on debt as opposed to following their heart.
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