The US student loan crisis is truly alarming and is a much debated issue in the country. One in 3 borrowers owe more than an amount of $25,000. This year will witness the total student loan exceeding $ 100 billion Banks are tightening the criteria to get a student loan as the repayment rate goes down. In the US, U.S. Bancorp USB is pulling back from the student loan services while JP Morgan Chase has reduced the lending rates.
Around 20 million Americans attend college every year and 60% among that borrow to cover the costs and 37 million students among them are with outstanding student loans. According to a report in 2012, the average amount of student debt outstanding was $26,600. Over the past 4 years student debt has risen by $327 billion, at an increasing rate of 51.2%. Other forms of debt including housing loan, auto loans, and credit card loans form only $ 1.7 billion.
Studies conducted by The Federal Bank of New York shows $1 trillion of outstanding student in 2012.In that $85 billion is due. Around 85% of student loan is backed by the US Government. Experts foresee student loan market getting closer to what happened in the mortgage markets five to six years ago.
The phenomena of job loss have affected the repayment which reduced the ROI in education. Job cuts and frequent lay offs contribute to the non repayment. Between 2004 and 2012 the rate of student loan increased to a 14% per year. Two- third of the borrowers is under forty, one-third of them under twenty and thirty. Older people also have a share but it’s comparatively very small.
Two million US citizens who are over 60 has unpaid student debt. Total federal student loans are $864 billion and private student loan will come up to $150 billion. The borrowers generally don’t understand the risk of the repayment while they take the loan. For eeach student loan defaulter, two or more borrower becomes delinquent with default. 41% of borrowers become delinquent in the first five years of the repayment
Most of the borrowers are not getting any proper counseling prior to the loan. 65% of them are not aware about the loan process. They misunderstand the repayment terms, interest rates and the monthly payments.
Consumer Financial Protection Bureau (CFPB) decided in the month of February that they will help the policy makers to make terms and conditions which make the repayment easier.
Around 20 million Americans attend college every year and 60% among that borrow to cover the costs and 37 million students among them are with outstanding student loans. According to a report in 2012, the average amount of student debt outstanding was $26,600. Over the past 4 years student debt has risen by $327 billion, at an increasing rate of 51.2%. Other forms of debt including housing loan, auto loans, and credit card loans form only $ 1.7 billion.
Studies conducted by The Federal Bank of New York shows $1 trillion of outstanding student in 2012.In that $85 billion is due. Around 85% of student loan is backed by the US Government. Experts foresee student loan market getting closer to what happened in the mortgage markets five to six years ago.
The phenomena of job loss have affected the repayment which reduced the ROI in education. Job cuts and frequent lay offs contribute to the non repayment. Between 2004 and 2012 the rate of student loan increased to a 14% per year. Two- third of the borrowers is under forty, one-third of them under twenty and thirty. Older people also have a share but it’s comparatively very small.
Two million US citizens who are over 60 has unpaid student debt. Total federal student loans are $864 billion and private student loan will come up to $150 billion. The borrowers generally don’t understand the risk of the repayment while they take the loan. For eeach student loan defaulter, two or more borrower becomes delinquent with default. 41% of borrowers become delinquent in the first five years of the repayment
Most of the borrowers are not getting any proper counseling prior to the loan. 65% of them are not aware about the loan process. They misunderstand the repayment terms, interest rates and the monthly payments.
Consumer Financial Protection Bureau (CFPB) decided in the month of February that they will help the policy makers to make terms and conditions which make the repayment easier.
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