Post by unlawflcombatnt on Oct 29, 2012 22:17:57 GMT -6
from the Tennessean:
"Kourtnee Brooks, a 21-year-old Middle Tennessee State University student, welcomes the help that federal student loans provide, but she also fears them.
“Without the loans, I wouldn’t be able to attend school,” said the nursing student.
But then she added, “I know I am borrowing too much.”
Brooks, a junior from Jackson, has been borrowing about $5,000 a year, which she combines with federal grants, some scholarship funds and money she earns working as a waitress three times a week, to make ends meet.....
Brooks is typical of a growing number of American college students who face the dilemma of not wanting to go in debt but seeing no other choice if they are to obtain a college degree.
In all, 66% of students who graduated in 2011 left college with debt averaging $26,600, according to a report this month from the Institute for College Access and Success, an independent, nonprofit organization in Washington....
Regardless, outstanding student loans nationwide total more than $1 trillion and now rank as the largest form of U.S. consumer debt, according to a report from the Federal Reserve Bank of New York....
Some see the loans as another potential credit bubble, just waiting to jolt the economy if defaults continue to rise rapidly. For those receiving federal student loans, 13.4% default within 3 years of leaving school, the latest figures show. For privately issued loans, the default rate is 5.4%.
A campaign issue
Student loans have become an issue in the presidential race as well....
Mitt Romney says Obama’s attempts to increase student aid have had an inflationary effect on college costs and have added to government debt....
Romney has said the real problem lies with Obama not helping to create an economy in which graduating students can find jobs.
Students are taking their debt totals into an uncertain job market, potentially casting a pall over their financial futures, said William Brewer of Raleigh, N.C., president of the National Association of Consumer Bankruptcy Attorneys. That threatens to create a generation locked into “a metaphorical debtors’ prison,” he said.
In some regards, Brewer compares it to the subprime mortgage crisis of 2006-08, saying some private lenders have aggressively marketed student loans to use them as backing for securities traded on capital markets.
“The underwriting is not too rigorous,” he said.
As they emerge from college and start families and start making big purchases, he said, the young have traditionally been a major driver of economic growth, but debt-laden students have a much harder time fulfilling that role.
Brewer faults Congress for taking away the “safety net” for student-borrowers — education loans can no longer be discharged through bankruptcy except in cases of a severe hardship, such as someone becoming disabled and unable to work.
In 1998, Congress eliminated the option of discharging federal student loans through Chapter 7 bankruptcy, and in 2005, Congress made it impossible to discharge privately issued loans as well, although it again created an extreme hardship exemption.
Brewer’s group says Congress should return to making both types of loans dischargeable — after a waiting period to see what kind of earnings the graduate attains.
For now, he said, too many students are obtaining degrees only to realize that their debts mean “your life is over financially,” he said."
"Kourtnee Brooks, a 21-year-old Middle Tennessee State University student, welcomes the help that federal student loans provide, but she also fears them.
“Without the loans, I wouldn’t be able to attend school,” said the nursing student.
But then she added, “I know I am borrowing too much.”
Brooks, a junior from Jackson, has been borrowing about $5,000 a year, which she combines with federal grants, some scholarship funds and money she earns working as a waitress three times a week, to make ends meet.....
Brooks is typical of a growing number of American college students who face the dilemma of not wanting to go in debt but seeing no other choice if they are to obtain a college degree.
In all, 66% of students who graduated in 2011 left college with debt averaging $26,600, according to a report this month from the Institute for College Access and Success, an independent, nonprofit organization in Washington....
Regardless, outstanding student loans nationwide total more than $1 trillion and now rank as the largest form of U.S. consumer debt, according to a report from the Federal Reserve Bank of New York....
Some see the loans as another potential credit bubble, just waiting to jolt the economy if defaults continue to rise rapidly. For those receiving federal student loans, 13.4% default within 3 years of leaving school, the latest figures show. For privately issued loans, the default rate is 5.4%.
A campaign issue
Student loans have become an issue in the presidential race as well....
Mitt Romney says Obama’s attempts to increase student aid have had an inflationary effect on college costs and have added to government debt....
Romney has said the real problem lies with Obama not helping to create an economy in which graduating students can find jobs.
Students are taking their debt totals into an uncertain job market, potentially casting a pall over their financial futures, said William Brewer of Raleigh, N.C., president of the National Association of Consumer Bankruptcy Attorneys. That threatens to create a generation locked into “a metaphorical debtors’ prison,” he said.
In some regards, Brewer compares it to the subprime mortgage crisis of 2006-08, saying some private lenders have aggressively marketed student loans to use them as backing for securities traded on capital markets.
“The underwriting is not too rigorous,” he said.
As they emerge from college and start families and start making big purchases, he said, the young have traditionally been a major driver of economic growth, but debt-laden students have a much harder time fulfilling that role.
Brewer faults Congress for taking away the “safety net” for student-borrowers — education loans can no longer be discharged through bankruptcy except in cases of a severe hardship, such as someone becoming disabled and unable to work.
In 1998, Congress eliminated the option of discharging federal student loans through Chapter 7 bankruptcy, and in 2005, Congress made it impossible to discharge privately issued loans as well, although it again created an extreme hardship exemption.
Brewer’s group says Congress should return to making both types of loans dischargeable — after a waiting period to see what kind of earnings the graduate attains.
For now, he said, too many students are obtaining degrees only to realize that their debts mean “your life is over financially,” he said."