New college graduates face a very bleak job market, one of the worst in decades. The unemployment rate among youths is a very high 14.5 percent. Adding to the worry of these recent grads is their huge amount of student loans. Since 2008, over 500,000 students have defaulted on student loans.
The difference between getting relief from these and other loans is that bankruptcy is not an option.
Some students are earning the same amount as they did before getting a degree, thanks to their expensive loan payments. Up to two-thirds of U.S. students are in debt when they graduate. Average student loan debt is $24,000. However, some 7,000 students start their careers with debt exceeding $100,000.
The situation has been likened to graduating with a home mortgage without having a house. Students often experience disbelief when they realize the repayment terms. Some signed up for both private and federal loans without understanding the difference.
Private loans often feature non-negotiable terms and expensive payments. After tacking on interest, some students repay three times what they borrowed.
Should they experience difficulty finding a job or encounter situation like pregnancy that limits their repayment ability, they soon begin receiving collection calls. Payday loans may help with a short-term financial slump but these add to debt over the long run. Some students are advised to file bankruptcy, which is not smart because private student loans are not dischargeable under federal law.
For now, students are stuck with education debt for a lifetime. The House Judiciary Committee recently heard arguments from former students who want the relevant law repealed. Though students admit they bear the responsibility of reading the fine print of their college financing, they feel the situation is unrealistic.
Until the law is altered or repealed, they must continue student loan payments or face collection calls.
[...] Collapse Doesn’t Erase Student Loans Matters [...]