THE STUDENT loan rate is growing by 7.8 percent on average every year, turning into a crisis in the trillions.
Student debt has increased 93 percent since 2009, according to an Experion Data report in August 2022.
How many Americans have student loan debt?
With it continuing to worsen, college graduates owe a collective $1.75trillion in student loans.
As of October 2022, there is an estimated 42.8million Americans who have student loan debt, according to Education Data.org.
Part of the reason student debt is so high is inflation, with the average student borrowing $39,381.
Another issue weighing heavily on the student loan crisis is if their degree will now be enough.
In recent years, a Master’s Degree has now been considered to have taken the place of a Bachelor’s Degree, with more jobs requiring advanced education to be hired or promoted in a job.
For those 25 and older, about 13 percent moved on to receive their Master’s degree, resulting in an average of an additional $71,287 in student loan debt.
What has Joe Biden done about student loan debt?
President Joe Biden made a vow to cancel $10k in student debt per borrower starting when he embarked on his campaign trail in 2020.
The President made the official announcement on August 24, 2022, that millions of borrowers would be receiving student loan relief.
Anyone with outstanding student debt who earns less than $125k annually qualifies for forgiveness.
The relief can go as high as $20k for those who went to college with a Pell Grant. But others will receive $10k in debt relief per borrower.
The relief program was rolled out on October 14 and as of November 9, nearly 26million people have applied, according to Essence.
However, six GOP-led states including Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina are fighting the reimbursement program, saying Biden has “overstepped his authority and threatened the revenue of state entities that profit from federal student loans.”
The appeals court is in the process of making a decision to grant a preliminary injunction the states collectively requested.
If the decision is in favor of the GOP-led states, the student loan program will be halted and deliberation will continue while the court hears from both sides.
However, if the injunction doesn’t get approved, the debt forgiveness checks may roll out while the appeal is processed.
Individuals have until the end of the year to apply for debt relief, but Time, borrowers should apply by November 15 to have their loans processed quickly.
“The urgency is simple: the administration wants to forgive as much debt as possible as quickly as possible,” student loan expert and founder of The College Investor, Robert Farrington, told the outlet.
“It’s really hard to put the cat back in the bag. Once forgiveness actually starts on loans, it would be very hard for anyone to stop it.”
Additionally, Biden has paused student loan payments four different times to help relieve the burden on Americans who were financially hurt during the Covid-19 pandemic.
Along with the decision to forgive thousands of dollars in student loans, the Biden administration announced it was extending the student loan repayment pause one final time, expiring on December 31, 2022.
“Borrowers should plan to resume payments in January 2023,” the education department said.
Why has the cost of college increased so drastically?
At the start of the millennium, the average American who received their Bachelor’s Degree accrued a student loan debt of about $17,297, roughly $13k less than the average debt in 2021.
The student debt crisis took hold during the 2008-2009 recession, prompting students to cross the $1trillion threshold in student debt.
Since 2000, the nation has seen a 76 percent growth in student loan debt at the time of graduation.
Forbes reported in 2021 that the tuition for a college education is a contender for the top spot for increasing in cost, only second behind hospital care.
College tuition has increased faster even than the cost of housing, child care, and medical services over the last twenty years.
As more students pursue a college education, the cost comes down to supply and demand with more students taking out student loans in the hope it will benefit them long term.
Nicole Smith, a chief economist at the Georgetown University Center on Education and the Workforce spoke with CNBC last year to explain the reason for the general uptick in loans.
“People who went to school in the ’70s and the ’60s, they actually paid for college while working,” she said.
“They would take a summer job and they would pay their tuition.
“And by the time they graduated, they would be debt-free or just, a couple [of] hundred dollars, a couple [of] thousand dollars to get by, they pay that off in a couple of years and move on with their lives.”
She said in 2020 that roughly 30 percent of students went into default on their student loans, were late in their payments, or stopped making payments altogether.
The result is a delay in students crossing life milestones such as getting married, buying a house, and having children.
Smith said: “If you view student loan debt as negative wealth, as money that could have been used to save for wealth or to purchase a home or to invest in the stock market to accumulate wealth, that potential wealth is now used to repay loans.”
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