Student debt

Student loans can be used to meet financial need of students in higher education when personal resources, grants, and scholarships are insufficient for the cost of attendance. A student's debt is the sum of the amount borrowed and interest accrued minus payments made. While several countries offer students loans of various types, the size of student debt in the US has increased to what some consider crisis levels.If there’s a way of a society committing mass suicide, what better way than to take all the youngest, most energetic, creative, joyous people in your society and saddle them with, like $50,000 of debt so they have to be slaves? There goes your music. There goes your culture. There goes everything new that would pop out. And in a way, this is what’s happened to our society. We’re a society that has lost any ability to incorporate the interesting, creative and eccentric people. Student loans can be used to meet financial need of students in higher education when personal resources, grants, and scholarships are insufficient for the cost of attendance. A student's debt is the sum of the amount borrowed and interest accrued minus payments made. While several countries offer students loans of various types, the size of student debt in the US has increased to what some consider crisis levels. As of June 2018, Forbes reported that total US student debt was $1.52 trillion and that 44.2 million people owed debt. The average student debt is $38,390. The median student debt is between $10,000 and $25,000, while 2% of borrowers owe $100,000 or more. The table below shows the distribution of outstanding balances. Student debt is so ubiquitous that 68 members of the U.S. Congress (13%) either owe debt themselves or have family members who owe student debt. According to Roll Call, “Collectively, the 44 Democrats and 24 Republicans have higher education liabilities of $2.5 million, according to recent financial disclosures. The median student loan debt is $15,000, while average debt is $37,000.” In this respect, Congressional borrowers mirror the general population. The lent amount, often referred to as a student loan, may be owed to the school (or bank) if the student has dropped classes and withdrawn from the school. Students who withdraw from an institution, especially with poor grades, often end up disqualifying for further financial aid. For low and no-income students, student loans are the sole factor that enable them to go to school, as loans typically cover tuition, room and board, meal plans, text books, and miscellaneous necessities. During repayment of student loans, renegotiation and bankruptcy are strictly regulated. As with most other types of debt, student debt defaults after a given period of non-response to requests by the school or the lender for information, payment or negotiation. At that point, the debt is turned over to a Student Loan Guarantor or a collection agency. In the United States, Congress created a rule called the ‘Cohort Default rate’. Annually, the Department of Education evaluates the proportion of students who have received student loans, withdrawn from college, and defaulted on their federal government backed loans. If that nonpayment (default) rate is too high, the college will be refused government financial aid. Financial aid may also be refused to individuals whose GPAs fall below a certain point, or if a lack of commitment is perceived. According to Adam Looney and Constantine Yannelis in the Brookings Papers on Economic Activity, in 2011, “borrowers at for-profit and 2-year institutions represented almost half of student-loan borrowers leaving school and starting to repay loans, and accounted for 70 percent of student loan defaults.' The 'Cohort Default rate' rule was an instantaneous achievement, as over fifteen hundred for-profit institutions were denied financial aid based on their proportions of defaulted students. Colleges have had to alter their funding habits to adhere to governmental guidelines. Many colleges are continuously forced to lower their nonpayment rates; but the number of defaulters has not changed, they are only tracked differently. Origin and Evolution of US Student Loans