Being a student means not only parties, hanging out and exams, but also a big student loan that overshadows the bright future of graduates-to-be. The shadow is now bigger than $1 trillion.
It’s around 16% higher than previously thought, according to the Wall Street Journal. It is actually higher than the country's credit card debt.
A study by Young Invincibles, a non-profit group in Washington reveals that the average American student has a debt of about $76,000. Nearly two thirds of them signed a contract without fully examining ‘aspects of their loans or the student-loan process.’
Having such huge debts prevents graduates from buying a house or starting a family as it makes it harder for them to save money or to qualify for mortgages, experts say. Therefore the situation with student debts ultimately affects the housing market, which is still struggling to recover.
The Consumer Financial Protection Bureau (CFPB), which compiled the report, says there are a number of reasons behind the surging student debt in the US. Among them are the increased tuition fees, which cause many students to get into considerably more debt than they did in the past. While colleges say they boost fees to offset serious cuts in state funding.
Another reason is the increase in the number of students as many Americans have been entering college in recent years to escape the weak labor market. The fact that many student borrowers fall behind with their payments while paying back their loans also contributes to the growth of the total debt.
Student debt has become a problem not only for American students, but also for those in the UK after the government significantly raised fees two years ago. Meanwhile, students in many EU countries still enjoy nominal payments for their education despite the strained economic climate.