A Silver Lining in the Student Loan Bubble
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UPDATED: Nov 12, 2012
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The student loan debt crisis continues to plague the nation. Earlier this year, the student loan bubble overtook credit card debt and reached an estimated $1 trillion, according to the Federal Reserve. No small number to shrug at. Aside from rising college costs, the number of students seeking bachelor degrees has also risen.
According to the Pew research Center, 33 percent of Americans aged 25 to 29 have a four-year degree. In effect, a third of young people in America have a college education.
Unfortunately, these students will eventually have to repay the student loans they borrowed. According to the Project on Student Debt, the average student loan debt is hovering around $26,600. Aside from winning the lottery, the only way that student loan borrowers can repay their debt is with an income stream—namely a job. But finding a job in this economy is no small feat.
According to Anthony Carnevale from the Center on Education and the Workforce, people with degrees did much better in the economic recession than those without degrees. However, jobs are all too scarce for experienced adults, let alone for novice youth fresh out of college with little to no experience.
A silver lining amid all this debt will be a more educated workforce that’s more capable of growing the economy with their knowledge and skill sets. The future may very well be shaped by the resourceful, intelligent, and even scrappy young adults who survived the recession clinging onto their five- and six-figure degrees.
This same gargantuan debt may be handled—at least partially—by more than just jobs. New payment plans from the federal government will be sure to dent the student loan bubble and make life more affordable for many young borrowers.
The Income Based Repayment (IBR) plan, as well as ongoing efforts by universities to aid their debt-laden students, can further deflate the bubble in coming years.
“Especially in this economy, IBR could be helping millions more people make affordable payments instead of falling so deep in the hole that they can’t climb out. More needs to be done to tell struggling borrowers about IBR,” said Lauren Asher, President of the Institute for College Access and Success, in an interview with Opposing Views.
The student loan bubble may not be so intimidating after all, and neither should the gradually improving economy.
While doom and gloomers may think that we are in store for worsening economic situations, the world has begun to slowly recover from the devastating recession. Fortunately, bad economies come and go, and as the job market and global economy slowly recover, our students will be able to find full-time employment. They may even utilize other avenues that will allow them to begin repaying their student loans. In the coming years, no one should be surprised at the successes of wise and resourceful young adults that have “run the gauntlet” of college debt amid history’s worst recession.