Post Classifieds
Student loan debt bubble reaching its bursting point
By Jacob Tierney
On April 26, 2012
Congratulations, college students. You've worked hard to get your education, and probably
racked up a fair amount of debt along the way.
But more and more graduates are finding it difficult to pay back these debts. The student loan
industry is spiraling out of control, and if the problem is not reigned in, it might push a still-shaky
economy over the edge.
Some estimates have put the U.S. student loan debt at over $1 trillion, higher than the nation's
credit card and auto loan debt. Anyone can see the problem with this.
A few years ago, the nation's mortgage debt grew beyond anybody's ability to control it. The
housing bubble burst, dragging most of the economy down with it. And it doesn't seem at all
unlikely that student loans are the next financial time bomb.
If you're reading this, you are probably a student here at Buffalo State. This is good news for
you, as public colleges have drastically lower rates than their private counterparts. You may
still graduate with student debt, but as long as you play things smart it won't be high enough to
cause too much of a problem.
But what about those who plan to go on to law school or medical school? They will probably
be saddled with debt for decades. The average college senior graduates with $24,000 worth of
debt.
And it might get worse. Unless Congress moves quickly, the interest rate for many government
student loans will double to 6.8 percent on July 1. There are currently initiatives in Congress to
keep rates low, but with all of the political infighting of late the future of any bill is always up in
the air.
The rising cost of education is coupled with a shaky economy. About 50 percent of recent
graduates are either unemployed or underemployed. And their parents, who are often struggling
to find work themselves, are finding it more and more difficult to help their children with the price
of school.
Do you see what's wrong with this picture? One of the highest consumer debt burdens in the
country is being placed squarely on the backs of those least able to pay it back. This is a recipe
for disaster.
College students will spend years struggling to pay back their debts, unable to put money
aside to build any kind of future for themselves or their own children. They will not be able to
contribute to the economy in any meaningful way, and when they are unable to pay their loans
back they will negatively impact the financial stability of the entire nation.
Hopefully Congress will act to keep interest rates low, but this will not be enough to remove the
risk. The student loans system needs to be examined long and hard, and reforms must be made
to prevent financial disaster.
Jacob Tierney can be reached by email at tierney.record@live.com.
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