(Picture: Ayanna Pressley at a really against Supreme Court nominee Brett Kavanaugh in Boston, October 1, 2018 (REUTERS/Brian Snyder)
The student loan debt is a crisis that not so many people are comfortable talking about. Perhaps most people shy away from the topic because they are a victim of this crisis. The latest student loan debt in the country depicts a picture that needs immediate attention as the student loan crisis not cuts across all demographics and age group.
Currently, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt bringing the debt to the second-largest debt in the country after mortgage debt. The crisis has become a burden, not just for the young Americans, but also for the American Economy as well. Most people who recently graduated are really suffering from this debt, which makes me wonder, where is all this debt coming from? Who are the people holding it? and why is it increasing so rapidly?
Education is becoming expensive Making Student Loan Crisis deepening
Ten years after the great recession, the American dream might remain a dream for most people. Many of the Americans in their 20s, 30s, and 40s who are in jobs consider themselves lucky as they can be able to service their student loan debt, however, very less can be said of the 44 million who took a bet on themselves and decided to borrow money to study and now they owe money on those debts, making their dreams and ambitions take on a very different turn, shaped by the burden of an early debt.
For a fact, the college price in the U.S has a high price tag but for most people, it is really necessary to be competitive in an ever-changing job environment. According to Georgetown Center on Education and the Workforce, 65 percent of all jobs in the American economy will require post-secondary education by 2020. Therefore, based on the diverse requirement on educational standards and the increasing tuition fees, it is very likely that the student loan crisis will continue to be felt across the country.
If you are a student loan borrower get in touch with the Eric Lawrence Frazier to know your options. He will provide you with latest the student loan debt statistics that can help you make an informed decision with regards to refinancing options, student loan consolidations, and the repayment options and channels available to you.
More than two-thirds of the college student graduate with a large loan amount of the student loan debt and one in four Americans adults are paying off their debts. The chamber of Commerce reports that 60 percent of all students are having some form of debt by graduation with the average debt of a student loan borrower graduating in 2016 being $37,102. That compared with the statistics from a decade ago represents a 78 percent increase.
If we get into finer details of the loan debt, you will find that the vast majority of the student loans were issued by the federal government. The total federal student debt amounts to $1.5 trillion with the total federal student loan borrowers is 44.5 million. Private debt, when compared to the federal debt, is relatively a minute fraction of the total debt. The total private student debt amounts to $64.2 billion.
A Bill to protect Private Student Loan Borrowers
While most people are busy marveling at the peaks of the student loan, something else is happening underground, something dangerous where I foresee the private student loan borrowers being harassed by their benefactors. While the federal student loans are made by the government, with the terms and conditions set by law and include many benefits such as fixed interest rates and income-driven repayment plans, these benefits are not reflected in the private loans and even if they are, not as flexible as in the case with the federal laws. Private student loans are made by organizations such as the banks, credit unions, and state-based organizations and usually, the terms and conditions are set by the lender, making them somehow predatory and exploitive.
One of the risks associated with private student loans is that they have no limits placed on the amount that they can be borrowed. It is important to know that banks and other lenders are out to make money, unlike the federal government whose goal is to raise education level in the country. Therefore, the lender may not put a loan limit thus they may not care how much debt you have.
Given the huge risks private student loan borrowers are exposed to, I think the H.R. 3621, the Student Borrower Credit Improvement Act comes at a convenient time when it is needed the most. Congresswoman Ayanna Pressley (D-Mass) introduced legislation that is aimed at helping private student loan borrowers to improve their credit. What the bill seeks is to establish processes that are similar to protections granted to the delinquent federal student loan borrowers. basically, what Congresswoman Ayanna is seeking is a credit rehabilitation process for borrowers and proper mechanisms to be put in place to help struggling borrowers repair their credit scores.
“My bill will help those borrowers who had to resort to private student loans — one of the riskiest ways to finance a college degree because these loans lack important consumer protections and repayment options,” Pressley said in a speech. “Private student loans make up nearly 10% of the total outstanding student debt. And unlike federal student loan borrowers, these borrowers are oftentimes left without a pathway to financial stability during hard times.” She added.
I think this is a good bill. At times life just happens and meeting the requirements set by lenders may be difficult due to extenuating circumstances. When you fall behind with your payments, this will damage your credit score and what’s worse, is that it is out of your control. For the low-to-moderate income earners who fall behind their monthly payments, the results could be catastrophic for their credit. “Even if we were to forgive all student loans tomorrow, borrowers with derogatory marks on their credit would still be left waiting 7 years for a clean slate!”
The bill aims at establishing a similar cushion of protection granted to the delinquent or the defaulted federal borrowers. Thus, providing an added layer of protection and flexibility for the borrowers who may be under financial distress. What’s even worse is that student loan borrowers who may have been making consistent payments o their loans would still be eligible to have derogatory marks removed from their credit profile.
“My bill will help us get one step closer to establishing parity among borrowers and a credit reporting system that works for people when they need it most”
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Eric Lawrence Frazier MBA
Vice President and Mortgage Advisor of First Bank
President and CEO of The Power Is Now Inc.
Ephrat Livni. “$1.5 Trillion of US Student Loan Debt Has Transformed the American Dream.” Quartz, Quartz, 24 Aug. 2018, qz.com/1367412/1-5-trillion-of-us-student-loan-debt-has-transformed-the-american-dream/.
“Federal Versus Private Loans.” Federal Student Aid, 24 Aug. 2018. Accessed 23 July 2019.
https://www.facebook.com/thebalancecom. “A Breakdown of Student Loan Debt in the U.S.” The Balance, 2018. Accessed 23 July 2019.
“What Are Student Loan Borrower Protections – College Raptor.” College Raptor Blog, 2017. Accessed 23 July 2019.