Student Loans: An Increasing Burden

This summer, millions of college graduates passing into the working world will be facing a nearly 8 percent national unemployment rate. If they can find a job, odds are they may still have a hard time making ends meet, thanks to student loan debt. 

There is roughly $1 trillion in outstanding loan debt in the U.S. today, and the majority of borrowers still paying back their loans are in their 30's or older. With hopes of boosting the slumped national economy and decreasing student loan debt, President Obama and his administration are implementing the Pay as You Earn program, which will cap loan payments at 10 percent of discretionary income and forgive loans after 20 years of payments. This will be a decrease from the current Income-Based Repayment program, which caps payments at 15 percent and forgives loans after 25 years.

According to Pam Macias, student financial aid director at Point Loma Nazarene University, PAYE is the government’s attempt to provide a solution to widespread cuts to federal and state financial aid funding.

“What we see happening is it’s going to continue to reduce free aid, entitlement aid, to students both at the state and the federal level,” Macias said, “either through removal of programs or by increasing the requirements to be eligible for it to the point where there are certain students who are going to end up losing the eligibility, and therefore the funding.”

“I think any move [the government] makes trying to make it easier for students to have choice to go to the school they want to is a good move,” she said.

Pam Macias advises students to think before they borrow. 

According to Macias, 69 percent of students at Point Loma Nazarene University borrow at some point, and the average debt for public loans is $22,112. The default rate for loan payments at this private university is 3.1 percent, well below the national average of 13.4 percent. But, schools like PLNU are hamstrung in how much assistance they can provide, because they don’t provide degrees in the professions that often lead to the largest salaries: students who want to become doctors or lawyers must pursue their graduate degrees elsewhere, and those schools are more likely to see alumni donating money back into the school.

The Department of Education has set for PAYE to go into effect on Dec. 21, and the changes will take effect for new borrowers starting in 2014. 

            For more on national student loan statistics, and the history of student loans, see the charts below. 



http://www.polleverywhere.com/multiple_choice_polls/MzI0MzI0NDI2

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The History of Student Loans

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