The future holds bleak for students surviving college with the help of student loans. At present, the student loan debt is more than one trillion dollars, which means that an average student will be graduating with a $26,000 debt in his sleeve. This further means that you will be spending the next 5 to 10 years of your employed life working to pay off the debts that got you through college. This is not an ideal situation to be trapped in but it happens.
Students Left their Souls with Loan Servicers
The debt of an average college graduate these days is about 50% more than that recorded figure in 2005, when Congress put a stop to students seeking help from banks to lose their debts in the bankruptcy courts.
However, the millstone of debt has a huge impact on graduates. Apparently, education has become more like a privilege than a right with graduates being neck-high in money owed. Already stuck in debt, fresh graduates would also be faced with unemployment and a chronic shortage of jobs that pay well. As a result, you would have an almost impossible time keeping tabs of your month to month financial responsibilities.
The Future of Graduates in Debt
Many economists believe that the rise of graduate students struggling to pay off loans will have a ripple effect to students’ lives. The cost of your loans will most likely stop you from saving for future retirement or securing investments like cars and properties. Hence, according to the report released by the Urban Institute, once you reach 40, you would have a relatively lower net worth than someone who is still in their 30’s but without the weight of student loans dragging them down.
But the graduates are not the only ones bugged down by student loans because parents suffer too. According to the financial analysts from the University of Wisconsin, the net worth of average American households have plummeted to 40%, mainly because of the student loans and the interest rates that they incur over time. Add to that would be the toll on housing, prices of commodities like gas and food and the unemployment rate and families struggle a lot more.
What the Government is Doing
At present, there is a pending legislation in Congress that would restore the right of graduates to discharge their student loans by filing bankruptcies. There is also a proposed option to pay back student loans by the time you reach 60 and that the payment would come from your social security money.
Although subject to thorough discussions and a lot of major revisions, the pending legislation is a strong proof that the government cares about you and your future despite your student loan responsibilities. After all, any debt can affect the economy in the long run.