The unpaid student loans epidemic has now surpassed the $1 trillion marker. Based on that number only, home mortgages carry more consumer debt in the United States.
In a new report from the Department of Education, the agency claims that eleven percent of school loans are seriously delinquent by 90 days or more.
In comparison, only six percent of student loans were in default during a similar 2003 report.
While an increasing number of students are graduating from college, only 87 percent of those college graduates find a job. While that number is far higher than 67 percent among high school graduates, those high school grads are not burdened with tens and even hundreds of thousands in student loan debt.
The loan problem may compound itself after Congress agreed to double federal student loan rates to 6.8 percent. The new rate increase from 3.4 to 6.8 percent will begin on July 1 and affect 7.4 million students. Republicans in Congress pushed forward with a rate increase intervention on Thursday. Under the Republican-led play, student lending rates would reset every year and be tied to the 10-year US Treasure note plus 2.5 percent points for federal Stafford loans. Based on those numbers, rates would like reach 5 percent in 2014 and 7.7 percent in 2023.
Under new legislation, Federal Stafford Loans would be capped at 8.5 percent while graduates loans would be capped at 10.5 percent.
The legislation would cap undergraduate Stafford loans at 8.5 per cent with a higher maximum of 10.5 per cent for graduate loans.
Democrats are instead focusing on the Stafford subsidized rate. The subsidized rate allows students to avoid payments and interest rates when still in school. Students begin paying back their loans and interest payments after they graduate. Another rumored plan from the Democrats would cap student loan rates at 4 percent while allowing legacy student loan payments to be refinances at the lower 4 percent rate.
Do you think student loan payments need to be wrangled in to avoid a future financial disaster?
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