The most prominent statistic in student loan debt is the nationwide total of $1.1 trillion spread across 37 million borrowers. The problem could be getting worse with an increasing number of first-year students resorting to loans to pay for higher education. However, student loans are not just an issue for young adults early in their careers.
Based on statistics from the Urban Institute, 35 percent of those who are currently paying back student loans are over the age of 40 — 19 percent between 40-49, 12 percent between 50-59, and 4 percent over 60 years old.
Maybe those who are older are making stable payments and don’t have to worry about their loans too much. It’s not always the case, though — 41 percent of 60+ year olds say they worry about paying back student loans (59 percent for ages 40-49, and 58 percent for ages 50-59).
Over the summer, Congress was contemplating a change in interest rates for government-backed student loans. Rates were to double from 3.4 percent to 6.8 percent, but Congress decided to tie rates on student loans to a variable 10-year treasury note. The interest rate is fixed once the loan is taken out. The current interest rate for direct subsidized loans for undergraduates is at 3.86 percent.
Independent Senator Bernie Sanders stated on the Senate floor that Congress should extend the 3.4 percent interest rate for two years in order to develop better legislation.
In a previous article, Rolling Stone’s Matt Taibi asserted that the problem with student loan debt has nothing to do with interest rates. The system itself has many instances that set student up for failure. High school graduates make decisions to take out guaranteed loans to pay for high tuition rates, sometimes with details and caveats not disclosed to them.
Generally, the return on investment for student loans makes it worthwhile, but that’s not to say student shouldn’t be smart about using loans. The Public Policy Institute of California investigated: Is College Worth It?
Lead researcher Hans Johnson stated that it makes economic sense to go into debt with student loans, but of course, post-graduate wages depend heavily on the field of study.
There are many variables that go into student loan debt. Private colleges generally cost more and their students end up in more debt than public college counterparts.
About 90 percent of student loans are government-backed , but repayment plans vary depending on when the loan was taken out. Private loans are much less forgiving when it comes to payment plans and refinancing.
The burden of student loan debt holds people back from fully participating in the economy; inherently, it is in the government’s interest to act on this issue.