Currently, consumers who have student loans in their names owe a nationwide total of more than $1 trillion, and many experts say the problem is only going to get worse in the future, particularly if the job market remains difficult for recent college graduates.
The topic of student loans has become hotly debated in the last few years as politicians and consumer advocates push for greater disclosure of information about the obligations college kids have when they deal with these accounts, according to a report from Bloomberg Businessweek. Consequently, many now believe that some sort of legislation is in the offing, which will mandate certain protections for consumers when they obtain this type of credit.
“We’re at the early stages of a transformation — 10 years from now, higher education won’t look the same,” Richard Vedder, an Ohio University economics professor who directs the Center for College Affordability and Productivity, told the news agency. “There are millions of people feeling the pain of student debt. When that number gets big enough, it starts to permeate the public consciousness.”
Currently, the college loan industry generates about $500 billion in annual revenues, employs 4 million people, and covers 20 million students, the report said. Further, colleges spend about $100 million a year in lobbying, and in both 2003 and 2008, used that influence to fend off bills that would have put into place cost controls. Many in the industry say that the average college student who attended a private university graduates with just $30,000 in debt.
However, many also finish school with significantly more than that, and it can put them in significant financial peril, particularly if they don’t find employment right out of college, the report said. Delinquency and default on student loan obligations, whether they’re controlled by federal or private lenders, are a major problem across the country, and put millions in serious jeopardy. This may be particularly problematic because in many cases, student loans are the first type of credit young adults tap.
It’s also important to note that millions of people with student loan debts have other obligations as well, such as auto loans and credit card bills that, when combined, can far outstrip their ability to make reasonable repayments.