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Rising Student Loan Debt and the Consequences

A student loan is intended to help students bear their education costs. It generally differs from other type of loans in terms of the interest rates and repayment schedule. The interest for student loans usually is lower and the repayment schedule may be postponed till the student’s education gets completed.

A student loan differs from one country to another in terms of the strictness of the law. In the United States there are mainly two types of student loans and these are federal loans and private student loans. The federal loans are sponsored by the federal government and most of the students opt for this type of loan.

The need for education coupled with the growing cost of education has fuelled the need for student loans. According to the reports of the Federal Reserve Bank New York, the percentage of student loan debt and ill timed payment of loans has increased at an alarming rate. On June 30, 2012, the bank reported an education debt of $912 billion whereas other debts collectively were of 1.6 trillion. Around 8.92% of the education loan borrowers delayed their payment as much as 90 days in June 2012. The rate could be twice as high as most of the loans are either in the grace period or in forbearance or in the deferment period. These therefore do not come under the repayment cycle.

Student loan at the moment is perhaps the only educational issue that people are talking about. The student debt keeps on growing at a steady clip. If the current trends keep in soaring then there will not just be problems for young people but for all of us.

As per the data from the Department of Education, federal student loan debt is growing with the growing number of people unable to keep up with the interest payments. This is resulting in growing debt for people who have even left school. Too much debt calls for too much risks for young people already struggling in today’s economy.

The queues of job seekers are long, household budgets are straining, and young consumers are bearing their student loan bills which they were told would be a key to better life. Therefore, when it comes to financing a college education, students and their parents need to have a clear understanding of how much money they need to borrow and what the monthly payments on the debt are going to be. Whether or not education financing and student debt becomes another debacle that only time will tell.

Author’s Bio

The author Stephen Rhett is an expert from the financial sector. His articles offer you invaluable information on student loan and student loan debt.

This was posted in Bdaily's Members' News section by Stephen Rhett .