Do you have a kid getting ready for college or already enrolled? Well then, class is in session. Sit down, face forward and pay attention… Today’s average college student is going to graduate with a loan debt of $25,250; that’s up a stunning 5% from last year and will cause many to seek debt relief in the future. This shocking trend is only gaining momentum with reports indicating that roughly two thirds of the class of 2010 had to borrow to cover their college expenses.
Headlines were recently made across the country as government, banking and private sources all concurred that America’s student loan debt now weighs the country’s credit card debt. When we view these debt figures alongside our country’s unemployment rate, it would seem that graduates are going to have a tough time finding the right job that will allow them to tackle their student debt.
Mark Kanrowitz, of FinAid.org told USA Today, “Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children.”
This increase in student loan debt has caused the newly created Consumer Financial Protection Bureau to take notice and start asking for public feedback regarding issues borrowers may be having with private student loans. This feedback will be used to create a report to Congress about private student lending due in July 2012.
In a recent article by Business Week, Raj Date, an official with CFPB, stated that the private student loan market is one of the least understood in the consumer credit market. Date was quoted as saying, “Shedding light on this industry will benefit students, lenders, and the market as a whole.”
It is important to note that Private Student loans issued by banks do not come with the same guaranteed protections as U.S. Department of Education issued loans and these bank loans tend to have higher, variable interest rates.