Wednesday, June 5, 2013

The June Fight Over Student Loans

Dave Johnson
May 31, 2013

Today President Obama is joining college students at a White House event launching a new push to keep student loan rates from doubling in July. Among the various plans offered, Sen. Elizabeth Warren’s plan is the most affordable for students, while the Republican plan tries to “make money” off of students using fluctuating “market rates.”

Student Loan Rates Set To Double

Student loan rates for more than 7.4 million students with federal “Stafford loans” are scheduled to double July 1 from 3.4 percent to 6.8 percent if nothing is done. The amount of student loan debt is massive. U.S. students currently owe almost $1.1 trillion in student loan debt, and this amount is increasing at a rate of about $2,853.88 per second. This amount is greater than total credit card debt currently owed. Thirty-five percent of people under 30 are near default on their student loans, and approximately 32 percent of those are between the ages of 30 and 49.

In 2005 average student loan debt was just over $17,000. By 2012 it was above $27,250. This was a 58 percent increase in just seven years. This debt creates a drag on the U.S. economy – home ownership and car ownership have declined for young households.

Read More