It is no secret that
student debt is becoming a massive problem in the United States, threatening both the
financial futures of students bogged by debt as well as the economy as
a whole. But according to new data released by the Education Department,
it may be even worse than many people thought. In fact, the student loan
system may be failing fast.
With tuition rates the highest they have ever been (and still rising),
many students are forced to take out massive loans to cover the costs
of their education. The problem is, unless they can find equally well-paying
jobs after graduation, paying back their loans may be enormously difficult.
And currently, the market for well-paying jobs is scarce. Even if a graduate
is lucky enough to find a low-wage job, between rising food and housing
costs, paying back student loans may be impossible. Many students find
themselves in a seemingly endless loop of paying down interest without
ever touching the principal of their loan.
In the past, Congress calculated the percentage of borrowers who have recently
left college and have defaulted on their federal loans and applied this
data to a college’s eligibility in the financial aid system. While
this rule was successful in reducing the number of colleges with default
rates that were too high, it was not an entirely accurate way to measure
the root of the problem. Now, instead of using
default rates, Congress is usingnonrepayment rates, which measure the rate of borrowers and defaulters who have not repaid
a single penny of their loans. The results of this adjustment are surprising
– American National University, for example, formerly had a
default rate of 8.5 percent, but their five-year
non-repaymentrate was a staggering 71 percent. Nearly three-quarters of their students
had not made a single payment towards their principal, because nearly
three-quarters of their students had to delay their payments due to financial
hardship or other factors. The popular for-profit institution University
of Phoenix is in a similar boat.
Nearly 700 colleges across the nation have a rate of nonrepayment of over
50 percent, and yet nearly all of them are still eligible for financial
aid through the federal government. The colleges with the lowest rates
of student loan repayment include a number of public and private for-profit
and not-for-profit institutions, including several historically black
colleges. (In fact, research has found that student loan defaults are
largely concentrated amongst racially and economically marginalized students.
This is perhaps just one piece of evidence showing the cycle of economic
inequality certain racial groups face when it comes to education.)
The data shows that this system is in no way sustainable, and could have
a huge impact on our country’s economy. Hopefully this data will
convince Congress to revisit the broken student loan system and find some
sort of lasting solution that will help people find a solution to their debt.
Don’t Let Yourself Be Overwhelmed By Student Loan Debt: Call Sulaiman
Law Group, LTD Today!
Sulaiman Law Group, LTD has decades of experience helping people find solutions
to their student loan debt troubles. If you are struggling to repay student
loan debt, we are here to help you come up with a way to manage what you
owe that best fits your needs.
Contact a Chicago consumer lawyer from our firm to discuss your case during
a case evaluation: (312) 313-1613.