Student Loan Debt Crosses the $1.5 Trillion Mark

Student Loan Consolidation

Student loan debt has long passed being an epidemic and has entered crisis territory. It was just announced that the amount due hit a record $1.5 trillion and continues to climb rapidly. A lot of it has to do with the increasingly higher cost of college, but students aren’t paying their bill.

The problem is, they can’t pay their debt and their rent at the same time. This is why a lot of young adults are living at home and working two jobs just to keep up with their bills. Depending on how much they owe, students pay as much monthly as it costs to rent a cheap apartment.

Repayment often begins as soon as the student graduates. This forces them to use payment adjustment schemes that might offer short-term relief by cutting monthly payments, but it doesn’t do the trick. You still owe the entire amount that you borrowed. This “strategy” only ensures that young adults carry student loan debt longer than they would normally.

Student Loan Debt Rising

Overall, the US student debt has grown by $500 billion since the 2010 to 2011 school year. It’s interesting to see that while the amount of debt piles up, actual lending volumes have been falling. The number of people obtaining student loans has been declining as well. This is causing a major problem.

Because students answer this repayment program that make monthly payments smaller, they don’t realize they’re not lowering the interest rate at the same time. That means they’re stretching out the life of their loan while even more interest keeps piling on. On top of that, if they miss a payment, additional fees are added.


John Anglim of S&P agrees that the interest rates are what’s allowing the banks to make a killing off interest.

“By reducing the payments, they allow borrowers to stay current, but the balance keeps growing. That’s what we’re seeing now,” he said. “If the government is serious and concerned about growing student debt, then we need to come up with a broader plan rather than one that just helps a select few.”

Student Loan Debt Hurting the Economy

It’s easy to understand how debt can be a drag on the average U.S. household. Paying towards student loan debt takes money out of your pockets that can go towards your life. Because so many young people have debt, it has become a major drain on the economy. If more people are paying towards something, it’s not being reinvested back into the economy.

This is causing everyone from the poorest American to the highest-paid politician worried about the future of this country. How much more expensive will student loans get? Vincent Deluard, a strategist for INTL FCStone, sees it as a growing danger towards future economic growth.

“A significant portion of the millennial generation has gone bankrupt before it could start building wealth, which is a — still-unaddressed — threat to the long-term health of the US economy,” he said in a report.

In January, a report came out from the think-tank Brookings, revealing that the number of graduates who default on their student loans could reach as high as 40% by 2023. Overall, the government has to do a better job at creating student loan forgiveness programs.

Some currently exist, but no one knows how long they’ll be around. President Trump tried to cut these programs in his first budget, but had to give in to pass this year’s budget. Eventually, this problem will have to be passed to the government to figure out, as the amount of debt continues to climb.

Last modified: January 14, 2019