The $1.2 trillion college debt crisis is crippling students, parents and the economy, writes Christopher Denhart on the College Affordability blog.
Two-thirds of college graduates have some debt, Denhart writes. The average borrower will graduate $26,600 in the red, according to the The Institute for College Access and Success (TICAS) Project on Student Debt. One in 10 graduates owe more than $40,000.
Student debt now totals $1.2 trillion, 6 percent of the overall national debt.
. . . national debt carries many consequences including slowing economic growth (translating into fewer jobs being created) and rising interest rates. Capital will not be as easy to access.
The majority of student loans are backed by the U.S. government through banks like Sallie Mae, or since 2010, by the Department of Education. Translation: the creditor in this scenario is the U.S. tax payer, who if students default on these loans will be subject to carry the burden of these loans.
Community college students are borrowing too, writes Denhart. Thirty-eight percent of community college graduates in 2008 had student loans. The average debt load at a public two-year institution is $7,000.
One community college, Henry Ford Community College in Dearborn, Mich., is offering a one-time student debt amnesty program that will allow students who owed a balance prior to or including the winter 2012 semester to afford to return to the college. The program “offers the opportunity for students to pay 50% of what is owed on their account to settle their debt with the College.” Will this become a norm within the two-year degree space as more and more debt is accumulated?
“With more and more emphasis being placed on college education for all, raising costs of an already expensive degree, and underemployment of college graduates running rampant, student loan debt is a problem that will cripple economic possibilities and success to come,” Denhart concludes.