While education is often seen as the key to a better life, skyrocketing student debt will exceed $1 trillion this year and could lead to “a generation of wage slavery,” say some strapped borrowers.
Soaring college costs and a soft job market have been factors, and last year the amount borrowed crossed the $100 billion threshold as student borrowers scrambled to afford higher learning. Even adjusting for inflation, students are borrowing twice what they did just a decade ago, with the amount borrowed for student loans exceeding that of credit cards in the US.
Coupled with larger debts, return on investment for degrees has been diminished, leading to uncertainty among students as they head out into the job market. And the costs are borne largely by hopeful students, whose debts are often staggering and cannot be discharged through traditional means like bankruptcy. Mark Kantrowitz, publisher of FinAid.org, noted that “students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children.”
Other experts predict similar consequences for students who make choices that may not pan out in the way of higher-paying careers:
“Federal student loans are like no other loans,” says Alisa Cunningham, research chief at the Institute for Higher Education Policy. “The consequences are so high for making a mistake.”
One consequence of the higher rates of borrowing is, of course, more instances of default on student loans. According to the most recent data available, rates of default climbed to 8.8% in 2009, up from 6.7% in 2007.
Have you found paying for an education to be prohibitive? Are student loan repayment terms too harsh?