AMERICAN student loan debt increased at a rate of 20 percent in the last ten years, leaving college graduates with hefty payments.
In the US, the student debt rate is growing by 7.8 percent every year, leaving them with far higher payments due to tacked-on interest rates.
How many Americans have student loan debt?
The student loan debt in the US is a growing crisis with college graduates owing a collective $1.75trillion in student loans.
According to EducationData.org, the growing rate of student loans is growing six times faster than the nation's economy.
In 2021, there are 44.7million Americans who have student loan debt averaging about $30,000 at the time of receiving their undergraduate degree.
The drastic inflation of the cost of college has risen by 602.5 percent since 2000, according to the EducationData website.
However, a Master's Degree is now considered to have taken the place of a Bachelor's Degree, with more jobs requiring advanced education to be hired or promoted in a job.
For those 25 and older, about 13 percent moved on to receive their Master's degree, resulting in an average of an additional $71,287 in student loan debt.
The number of students receiving their Master's Degree in 2021, is roughly the same amount of people who received their Bachelor's Degree 60 years ago.
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What did Joe Biden say about student loan debt?
Student loan payments were originally set to restart on October 1, 2021. Then, the Biden Administration announced an extension until January 31, 2022.
President Biden said the following about the student loan extension in a statement released from the White House:
"This will give the Department of Education and borrowers more time and more certainty as they prepare to restart student loan payments. It will also ensure a smoother transition that minimizes loan defaults and delinquencies that hurt families and undermine our economic recovery.”
On Wednesday, December 22, it was announced that student loan repayment would be paused even further.
Due to the pandemic, the Biden Administration extended the pause on student loan repayments until May 1, 2022.
Debt notices and collection efforts will not be resumed until the date of May 1.
In a statement to the press through the White House's official website, Joe Biden said "We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments."
"Given these considerations, today my Administration is extending the pause on federal student loan repayments for an additional 90 days — through May 1, 2022 — as we manage the ongoing pandemic and further strengthen our economic recovery," Biden continued.
"Meanwhile, the Department of Education will continue working with borrowers to ensure they have the support they need to transition smoothly back into repayment and advance economic stability for their own households and for our nation," he added.
"Take full advantage of the Department of Education’s resources to help you prepare for payments to resume; look at options to lower your payments through income-based repayment plans; explore public service loan forgiveness; and make sure you are vaccinated and boosted when eligible," Biden concluded.
Secretary of United States Education, Miguel Cardona, also stated to the media, "The continued pause will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic, and will allow our administration to assess the impacts of omicron on student borrowers."
Why has the cost of college increased so drastically?
At the start of the millennium, the average American who received their Bachelor's Degree accrued a student loan debt of about $17,297, roughly $13,000 less than the average debt in 2021.
The student debt crisis took hold during the 2008-2009 recession, prompting students to cross the $1trillion threshold in student debt.
Since 2000, the nation has seen a 76 percent growth in student loan debt at the time of graduation.
Forbes reported last year that the tuition for a college education is a contender for the top spot for increasing in cost, only second behind hospital care.
College tuition has increased faster even than the cost of housing, child care, and medical services over the last twenty years.
As more students pursue a college education, the cost comes down to a supply and demand with more students taking out student loans in the hope it will benefit them long term.
Nicole Smith, a chief economist at the Georgetown University Center on Education and the Workforce spoke with CNBC last year to explain the reason for the general uptick in loans.
“People who went to school in the ’70s and the ’60s, they actually paid for college while working. They would take a summer job and they would pay their tuition,” she said.
“And by the time they graduated, they would be debt-free or just, a couple hundred dollars, a couple thousand dollars to get by, they pay that off in a couple of years and move on with their lives.”
She said in 2020, roughly 30 percent of students have gone into default on their student loans, are late in their payments, or have stopped making payments altogether.
The result is a delay in students crossing life milestones such as getting married, buying a house, and having children.
Smith said, "…If you view student loan debt as negative wealth, as money that could have been used to save for wealth or to purchase a home or to invest in the stock market to accumulate wealth, that potential wealth is now used to repay loans."
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