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Record Number of Graduates Default on Student Loans
ASHLAND
Like the thousands of students at Southern Oregon University, Kylee Ruvalcaba has taken out loans to help pay for her college education.
And while she's currently in her third year, she's already thinking about how she's going to pay all of it back.
"It's a big deal not paying money back, so me and my mom are trying to set money aside, so when it's time to pay my loans I'll be full prepared," said Ruvalcaba.
The average student at S.O.U. pays $20,000 a year.
Meaning that if an in-state student graduates in the typical four years, they could be entering the work force with $80,000 already in debt.
There is an estimated 26 million Americans with ballooning student loans.
And now there are a record number of college graduates who are defaulting or are delinquent in paying back their loans.
"What we see more often than not is an economic hardship. We see students are maybe not able to find a job at the end, or sometimes students just want to take a year off before grad school," said Christina Negrete, Assitant Director of Finacial Aid at SOU.
Student loan debt is at an all time high.
Nationally the debt tops $870 billion, surpassing credit card debt and even auto loans.
A new study shows a third of former students are considered risky borrowers.
But Negrete says S.O.U. offers assistance to students and alumni who may need help.
"They can file for economic hardship or forbearance that way it can save their credit. There are loan repayment options and we council students on where they can find that information so they can make the decision after they graduate," Negrete explains.
That help is a sigh of relieve for Ruvalcaba who will soon face the real life lessons of economics that come after leaving college.
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Comments (9)
First, there shouldn't be any unsubsidized loans for the student. Interest rates should never be capitalizing while the student is in school.
Secondly, payments shouldn't start until 12 months after graduation. Reward those who start repayment within 6 months. However, as everything else this will mostly benefit the already rich kid, but it may help some who are fortunate enough to land that job quickly.
Thirdly, all outstanding student loans held by anyone should automatically have the interest rates reduced to 3%. It's sad that interest rates for home mortgages are lower than student loans.
Fourthly, cut some significant break to the student who isn't earning enough to keep their head above water. They shouldn't be paying more than 10% annually of their yearly salary, and maybe only 5% if annually income is less than $40,000.
Better yet get rid of the student loan program altogether.
It's ballooning and out of control because these companies are taking college graduates and treating them like uneducated high school dropouts. I'm working in a related field to what i went to college for and I'm making the same as a guy that dropped out of HS in the 11th Grade. I cant pay my bills to live much less my student loans. My student loans are 6 months behind because I'm making minimum wage what good is it to go to college and get a degree if you are just gonna graduate and the businesses are just gonna hire you like any body else and make you prove your self. I could have done that right out of HS. Mind you I don't have a Bachelors degree I have a Associates Degree in Graphic Design with Classes in Graphic Arts Tech and working in Screen printing printing T-shirts. My boss is making $10-$20 /shirt (probably more) but can't pay his educated, Reliable Hardworking employee more than $8/hr. I was told at my review that I shouldn't expect to make more I should work hard to prove myself. WHY THE HELL NOT !!!! What the Hell was the point in going to college and coming away with $30,000 in student loan debt then if I Shouldn't expect to make more than the uneducated HS dropout?????
If Midas had a golden touch, government has the rotten touch. Every government intervention creates market inefficiencies and secondary and tertiary problems. When the secondary and tertiary problems start to rear their ugly heads, the government is always there to jump in and "fix" the problems it initially created with yet more inefficiencies.
The student loan programs are no different. The government should stay completely out of the education and loan business altogether. Education would be much cheaper and higher quality if Big Brother would only quit meddling and screwing everything up.
@Violet Hill
Government subsidized education impacts the demand side of the Supply & Demand curves resulting in higher education prices for everyone. The price elasticity of supply is failrly inelastic resulting in a very small change in quantity supplied even though more people are paying higher prices. This is why higher education costs have risen so dramatically since the beginning of government grants and loans. Borrowing money for any reason should never be free nor should it be given government constraints. To try to pass legislation regulating the borromwing of monies is to ignore the Law of Scarcity which nature has shown to be a grave mistake in countless cases.
Violet Hill, that's possibly the most ignorant response I've ever read. Home loans have lower interest rates than student loans because there's collateral. This may upset you, banks are in business to make money. They assess risk and develop interest rates based on these risks.
Student loans should be no different. They certainly should not be subsidized by the federal government. Graduates should be fully responsible for the loans they take out, at whatever terms they've agreed to borrow the money at. This is called risk and reward. If you borrow money from a lender, don't blame the lender when it's time to repay! You asked for the money.
People need to take responsibility for their actions, to include students. If you used the money and couldn't get a job afterward than you made a life choice in error, now you must suffer the consequences. Don't blame the person who enabled your decision financially.
That's load of crap. Colleges and Universities have gotten more expensive because of LESS government interference. Up until the mid 80's the government heavily subsidized education. Since then there have been cuts after cuts after cuts to all of their budgets. Tuition has skyrocketed because there's significantly less government assistance available. Since tuition has gone up and there's a strong reduction in outside help the only option students have is to go to loan providers who can charge what ever interest rate they want because there is no real competition. Ultimately the student has no choice.
We need more regulation and more funding in our educational system if we want to keep up with the growing juggernauts in the world.
How can you be serious? Private student loan companies like Sallie Mae, can charge whatever interest they want. They are veritable loan sharks and if you cannot find a job that pays you enough to survive to pay them, they can garnish your wages up to 25%, put leans on your property, destroy your credit and, if you become disabled, garnish your Social Security Disability, or demand more than a third of it in payment. And except under the most extraordinary of circumstances, you cannot get rid of private student loans in bankruptcy. The Bush Administration gave Sallie Mae and others these extraordinary powers.
Before President Obama gave us the Income Based Repayment through federal student loans, which lowers student loan payments to a historic 10 percent of income. If you cannot find work, you have a reprieve from paying, and if you take a public service job, such as teaching in certain areas, working for a non-profit or the government, your loan will be forgiven in ten years. Wake up people. He had to fight really hard to get that through. He has also stood up to Sallie Mae and other loan shark student loan corporations. Most of the Republicans in Congress have fought him on this, including John Boehner, who is on the Education Committee and is also in the pocket of Sallie Mae. If you don't like how things are, call your Congressional and Senatorial representative and demand them to make fair changes regarding student loans, considering what we are all dealing with in this troubled economy.
Its yet another scam for citigroup etc. to make money off of unsophisticated borrowers