Student loan tsunami on the horizon: Of $847 billion in Direct Loan program, only $535 billion is actually being paid back

The amount of student debt continues to grow like a skyscraper reaching for the clouds.  There seems to be an unlimited amount of student debt that college students are willing to take.  As of today, there is $1.44 trillion in student debt outstanding.  But how much of this is being actively serviced?  After all, if you take out a mortgage or auto loan you start paying on it right off the bat.  You will be surprised at the small amount of student debt that is actually being paid back at the moment.  Young Americans that are already cash strapped are going to get even more budget tightening once they graduate and need to pay back the large amounts of loans they have taken on.

The student loan tidal wave

The amount of student debt outstanding is daunting.  We are already seeing very high levels of delinquencies on student debt.  Student debt has the highest delinquency rate of all debt sectors in our economy.  Like we mentioned before, with a mortgage or auto loan you start servicing the debt immediately.  With student debt it can be 4, 6, or even 10 years later when you make your first payment (assuming you go to med school or a Ph.D.).  Now some might say “well of course you pay after you study!”  And I would agree with that at some level but it also hides the repercussions of taking on too much debt and simply not earning enough to pay it back.  You hear countless stories of students taking on tens of thousands of dollars in debt and are working in low wage jobs.

  • frankw

    College education has become a scam. High school kids are brainwashed by teachers and parents to believe only a degree will ensure higher incomes and success. The only worthwhile degrees are in technical fields with real world applications.