Student Loan Debt Closing in on $1.5 Trillion

Student debt now exceeds the nation’s total credit card debt and the total owed on car loans – and it may equal or exceed them both in a short time. This should be completely terrifying. While the share of subprime mortgages was originally a small ratio of total mortgages, it was still $600 billion or over 20 percent of all loans originated at its peak in 2006. These student loans are the mortgages that young people take on in order to secure their future careers, and more are joining them every school year. Young people have little experience in the financial system, but today’s college bound grads may be taking on their own loans even as their parents pay their own off.

Or not.

When the Wall Street Journal starts to get jittery, it might be time to look at the bursting of a bubble that never should have been. Student loans originated in 1965 to give students greater access to tertiary education and attain degrees that would allow social mobility, growing the progressive middle class that has always been the backbone of American society. In theory, it worked. More Americans sought out education after high school than ever before. Somewhere along the line, it was turned into a gravy train for loan originators, loan servicers, for-profit colleges, and turned into a night mare for students who became indentured to their debt in not just one recession but three – 1990, 2001, and 2007. We are now looking at three generations of student debt for Generation X, Millennials, and Generation Z.

The sobering truth is that it’s not the new graduate with a five-figure debt load, or holder of advanced or terminal degrees shelling out $1,200 a month in loan payments who are in default. They’re pinched as they start their careers, but over their professional lifetimes they will be able to pay off their loans. Instead, as CNBC notes, it’s the smaller borrower, the community college or trade school student who is in the most trouble and most likely to default. These students, older than your average college freshman, poorer, and often working to support families. These people are at once most in need of social mobility and paradoxically the least likely to attain the degrees or certifications that would allow them to manage it. They are also more likely to be the victims of fraudulent schools and their recruiting scams.

If you are in debt for federal, state, or private student loans – no matter how much – and are having problems repaying, we can help you or at the very least advise you on how to proceed on your own. We offer a free consultation, and you’ll find loads of information on handling collectors and other tips on our blog. Don’t let these loans derail your life, get your paperwork together and contact us today. Our law group has lots of experience getting people back on track toward the life they had in mind when they took out those loans.