Student Loan Debt Tops $1 Trillion

Did you know that America's total student loan debt now surpasses the nation's total credit card debt?  It's true.  Sometime last year, credit card debt actually declined a little, as more and more people stopped using credit cards.  But student loan debt keeps going up, and up, with no sign of stopping. Worse, there's almost no chance that any of it will ever be paid off.

The student loan debt story is now a national economic crisis that's attracting attention in Washington, because economists say it's forcing some college grads to postpone buying homes, which could potentially slow the housing recovery.

Total student debt outstanding went over $1 trillion late last year, according to officials at the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis. That's roughly 16% higher than an earlier estimate by the Federal Reserve Bank of New York.

CFPB officials say student debt is rising for several reasons, including a surge in Americans going to college in recent years to escape the weak labor market. Also, tuition increases—which many colleges say are needed to offset big cuts in state funding—have many students taking out bigger loans.

But economists say as more people go to college and assume bigger loans for education, they will take longer than previous generations to hit key milestones such as buying a house or getting married.  It could take longer for heavily indebted graduates to save money for a down payment on a home, or it could be harder for them to qualify for mortgages.

Student debt is a burden not just for recent college graduates in their 20s but also parents, who often co-sign their children's student loans, as well as mid career professionals who opted to go back to school during the sluggish recovery.

via Student-Loan Debt Tops $1 Trillion - WSJ.com.

The big question is why so many people think it's worthwhile to go deep in debt to get a college degree.  It's common for people to graduate with more than a hundred thousand dollars in student loans, before they even start looking for a job. They have that coveted degree, but they are what amounts to "indentured" students.

That's because unpaid student loans won't just go away. They will follow you through life and figure in your credit score until they're paid off.  Worse, student loans are not "bankruptable".  That means you can't get them written off by filing for bankruptcy.

The one good sign in this sad saga is that more and more young people and families are not taking that road to college.  Many are living at home and attending community colleges, paying as they go, out of their own pockets and savings.  Then they transfer to a nearby four year school to complete their degrees, all without borrowing any money. They have the joy of graduating with no student loan debt.

This crisis has many people thinking student loans, with their easy availability, have done an entire generation of American students far more harm than good.